We’ve blogged about the importance of accurate corporate translations in cross-border insolvency cases. Multinational Enterprise Groups (MEGs) are businesses comprised of separate entities that operate in more than one country. Needless to say, MEGs dominate the global marketplace. However, because of their global structure, it is difficult to apply regulations to them. MEGs tend to fall between the cracks in the domestic and international legal rules. And there is no fully developed body of law aimed at this area. This lack of regulation often manifests itself in the context of insolvency.
There are insolvency laws for multilingual cross-border cases, but MEGs – as groups – fall outside the body of international law. One reason for this lack of regulation is the complexity of the group composition – any regulation would have severe consequences on its operations and relations with stakeholders. For example, recognizing the group structure would require to see the group as one whole, which during insolvency could interfere with such basic corporate laws as the separate personality and limited liability of the corporation. More so, any international regulation would, undoubtedly, challenge state sovereignty over the individual entities of the MEG.
This is important to know when representing a company which does business around the world. With the advantages in mind, setting up individual entities in a particular jurisdiction to create a MEG is probably advisable. However, this does create more legal work, as each entity will have to incorporate according to the foreign jurisdiction’s regulations and will have to include a foreign language translation in all its corporate filings.
Up Next: Professional Translation in Light of The Hague Evidence Convention