The Corporate Secretarial Services Market in Latin America

Craig Dempsey  |

As Latin American markets continue to look promising in 2019 and beyond, there has been a huge rise in the number of corporate secretarial services businesses opening up in markets such as Brazil, Colombia, and Mexico, who offer back-office services designed to help firms make a splash in international markets. Today, I take a look at the corporate secretarial services market and explore some of the ways in which it is changing…

Who uses corporate secretarial services in Latin America?

Whilst there are huge variations in corporate secretarial services clients, many operate in markets such as fintech, mining, and technology, with the majority company executives and corporations looking for international growth. Perhaps one of the best parts about working in the sector is that no two days are the same - one, you’re working for an energy business that wants to take advantage of the growing demand for green energy (Costa Rica was the first country in the world to operate entirely on renewable energy for 300 days in 2017), the next you’re working with a tech firm wanting to increase its market presence in Latin America.

In today’s competitive times, clients are looking to take their businesses global, and many choose to incorporate local Latin American subsidiaries and offshoots to capitalize on the growing markets and middle-class citizenship, which increases demand for luxury goods. Working with a corporate secretarial services company affords them a single point of contact when expanding, helps them to navigate the complexities of such a market, and offers them access to unique local knowledge and expertise without spending months researching.

How important is regulation?

Latin American countries are basking in the glory of tremendous growth and development, and as such the political landscape is changing with it. Countries are introducing new laws and legislature designed to encourage foreign direct investment, and in some cases prevent it in lucrative or commercially sensitive industries, so working with a back-office company gives firms additional reassurances that they are incorporating and operating within the law.

As many clients have businesses around the world, working with a single service provider for their Latin American operations enables them to understand the compliance requirements in each and every country, and stay atop of new changes in the law so that their businesses do not fall into unlawful practices. On top of that, you must consider services such as board resolutions, resignations, articles of association, intercompany agreements, transfer shares, winding down or liquidating companies and changing directors or shareholders. All of these responsibilities cannot be executed by just anyone - an experienced local lawyer is required.

Mitigating risk and knowing there is an experienced lawyer or business professional at the other end of the phone is useful, particularly in fast-growing or changing industries where licenses and permits are required for growth, and in the countries where incorporation for industry requires a local director, a local fiscal address and foreign ownership below 50%.

Why are clients choosing to outsource rather than do it all in-house?

Clients are seeking a complete package solution that considers all aspects - financial, accounting and legal - and provide a commercial solution. And working with a recruitment agency rather than a corporate secretarial services firm doesn’t offer clients the same attention to detail, either. International businesses need to be able to trust a single entity to manage all of their expansion plans; bringing lots of staff in-house is not only very expensive but requires significant market and legal knowledge and training, something most executives don’t have the time to do. The need for an experienced team only increases when expanding in a LATAM market where competition is rife. Waiting months to hire a lawyer won’t cut it.

Both growing firms and multinational corporations prefer to work with back-office services companies because they can get everything they need in one place. Say they want to start by expanding into Mexico, and realize that they’re on to a winner, and so they want to move into Brazil or Colombia. Having a single team who can assist and effectively ‘cut and paste’ a successful roll-out into other territories enables growth and allows businesses to really thrive.

What are the biggest challenges in the sector?

One of the biggest challenges in the corporate secretarial services market is keeping up with the ever-changing regulation and political landscapes, especially in a market as broad as Latin America. Many of our clients don’t want to expand into just one Latin American market but don’t understand the specific regulations and legislature in each country, so being able to offer our clients that level of legal and political background and knowledge, whilst helping them to navigate these markets as a single entity, can be challenging, albeit rewarding.

At the end of the day, it's really about how companies market their business, and how they add value to their clients’ business, whilst continuing to ensure services are responsive and personalized. No two clients are ever the same, and so corporate secretarial services firms must be flexible to appease a wide clientele, and reactive to enable their market expansion.

So who are the players in the sector?

Well-established accounting companies, such as PricewaterhouseCoopers, Ernst & Young, Deloitte Touche Tohmatsu, and KPMG are some of the key players, alongside corporate secretarial firms such as Vistra and TMF. And in recent years, you have our firm, the Biz Latin Hub, which is an up-and-coming market entrant that is challenging the big market players. Otherwise, within the market, the remaining players are fragmented and are country-specific, meaning they can’t support clients on a regional basis who require multinational rollouts.

In the growing Latin American region, it’s expected that there will be significant merger and acquisition activity as we head through 2019 and into 2020. As businesses look to increase their international offerings and deliver services in new territories to customers, acquisitions allow for overnight expansion and market entry, rather than relying on slow natural growth.

Finally, what should companies look for in a corporate secretarial service firm?

It’s important to find a company that you can trust, that has a record of delivering results to clients. I’d ask to see case studies or a list of their previous customers, and always check out reviews and testimonials to determine whether they’re the right fit for you. A good back-office firm will have a great understanding of Latin America and should be able to provide you with a clear path on how to establish and operate your business within the region. Good luck!

DISCLOSURE: I am the Founder and Managing Partner of the Biz Latin Hub.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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