Adjustment of multinational corporations' policies to local legal requirements
Most multinational corporations, including those in pharmaceuticals, have internal policies regarding corporate business processes, employees, counterparties, and other third parties.
Things that are important to remember
- Policies require adjustment to each specific jurisdiction.
Many multinational corporations operate on a "unified organism" principle and consider the group of companies as a unified entity. However, multinational corporations are usually a group of separate legal entities located in different jurisdictions.
A unified group policy may work correctly in one jurisdiction and contradict laws or enforcement practices in another.
In practice, policies may exist "within a group" without being adjusted toa particular company. This means that such a policy cannot be used as explanation of the reasons for certain management's behaviour.
The solution is to adjust the policies to a specific jurisdiction and implement them as a separate local legal act within that company.
- When adjusting policies, it is important not only to formally check its provisions, but also to take into account the law enforcement practice, e.g. in terms of tax consequences.
For example, a company's policy may provide for a "discount" on the sale of the company's inventory to the employees.
It is important to take into account that a legitimate discount in one jurisdiction, may be a potential offence in another.
For example, 1) the sale of inventory not at market price may be subject to inspection by tax authorities, especially in liquidation of legal entity or representative office, 2) such discount, depending on the circumstances, may be considered as income of a particular employee and subject to taxation.
Thus, when adjusting policies, it is necessary to take into account not only the legislation of the jurisdiction, but also the law enforcement practice, as well as the algorithms of actions necessary to implement the provisions of the policies.
- Policy provisions that most frequently require adjustment:
- anti-corruption policies;
- provisions which may havetax consequences (discounts, gifts, in-kind incentives, loans, etc.);
- labour relations with employees;
- marketing and advertising;
- antitrust regulation and protection of competition in procurement;
- personal data;
- communications with officials;
- others.
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