#locallaw

Take Your Business Global in 10 Easy Steps

Step 7 – Familiarise Yourself with Local Law 

International expansion projects often operate to rapid deployment timescales, tight budgets and urgent in-country requirements. The pressing nature of getting into a new market can sometimes lead to corners cut and snap decisions made. From this, risky situations can arise. Although operating internationally will undeniably broaden your organisation’s horizons, ignoring potential legal red-flags risks will impact compliance and can lead to headaches, penalties and damage control further down the line.

Your venture will run far more smoothly if you arm yourself with a working knowledge of your target country’s legal landscape. In this week’s Step 7 of Take Your Business Global in 10 Easy Steps, we give some guidance on where to focus your legal research.

Think Beyond Your Product

In our pursuit of profit, we sometimes get clouded by the logistical requirements of our product or service and forget the “hidden” legalities of operating an overseas entity. Consider corporate taxation, permanent establishment, labour and immigration laws as well as the laws associated with your product offering, such as import and export regulations.

Visas and Immigration

Ensure that your plans comply to the letter of the law- don’t assume you can send your regional sales manager out to work long-term in South Africa on a tourist visa when he will need a work permit to do so. This type of assumption can cost you huge amounts of money and put your employees at risk. Check the worker’s nationality, the activities that are permissible on different types of available visa and the visa types your local entity can support. Also consider the amount of time the individual will be in-country along with any entries and exits that will be required for things like home visits and business trips.

Employment Law

Be mindful that employment laws may differ from those of your home country and you may need to take professional advice. In fact, we highly encourage this. Mauve’s employment law experts frequently have to step in to assist businesses who have terminated overseas employees according to the labour laws of their home countries, not realising that they have actually unfairly dismissed the employee. That employee may then return with a lawsuit – the judgement often falls in their favour in this situation as they are actually making a completely legitimate claim.

Financial payouts in such a case can be huge – and can spark other employees to follow suit. Mauve’s experts have seen this happen in Italy, the UAE, Japan- all because companies make the assumption they can do things how they do them in their own country. It is very important to avoid that costly mistake.

SLAs

Carefully research any local legal partners and take recommendations from trusted sources. On the subject of partners and suppliers, ensure you have watertight SLAs in place with any local providers you take on, legal or otherwise. If you are not on-the-ground to monitor their activities, you should make your expectations crystal clear contractually - never rely on trust or verbal arrangements. Although local expertise and connections are valuable, make sure you have the right protections in place to minimise the impact of any breaches.

Compliance is Key

If there is one area where you should not economise, it is compliance - the penalties and legal processes relating to non-compliance can be financially disabling and can result in jail - naivety will not be tolerated as an excuse by most authorities.

Companies expanding internationally can benefit from risk assessment monitoring. These reports assess the individual, current circumstances of the company’s operations in their chosen country, and shed light on operational red flags and recommendations. Focus areas of potential risk include disguised employment, correct entity registration, risk of permanent establishment, contracts and labour issues, and tax and accounting compliance.