In 2023, according to the European Commission, more than 32% of international companies encountered legal difficulties at the very first stage of entering new markets, and direct losses from legal errors and unaccounted regulatory risks exceeded 21 billion euros. Even more telling: according to the World Bank Doing Business analysis, companies that ignore compliance and substance requirements are 2.7 times more likely to face account blocks or sanction restrictions.
In practice, the COREDO team has encountered dozens of cases where subtle nuances of corporate structuring, compliance, and tax planning became critical to the success or failure of an international project. In this article, I will thoroughly discuss how strategically and tactically to build legal protection for a business when entering new markets: from jurisdiction selection to supporting M&A deals and integrating ESG compliance. Read till the end: you will get answers to the most pressing questions and practical tools that will minimize legal risks and ensure the long-term sustainability of your business.
Legal Protection of Business in a New Market
Legal protection of business in a new market requires a careful approach to new rules and regulatory nuances faced by companies during international expansion. Understanding potential legal risks and a competent legal strategy are key to a successful entry and sustainable business development abroad.
Legal Risks in International Expansion
International expansion is always accompanied by legal turbulence: differences in regulations, sanction compliance, requirements for corporate transparency, and risks of being blacklisted by the EU and FATF. Common errors include:
- Ignoring local substance requirements (real presence), leading to tax claims and account blocks.
- Underestimating sanction restrictions, especially for companies from the CIS working with European and Asian markets.
- Lack of systematic legal risk management, for example, an opaque ownership structure or neglected KYC requirements.
In one of COREDO’s cases, when a technology company entered the Southeast Asian market, the lack of prior reputational check of a local partner led to the blocking of all payments due to its connection with individuals on the OFAC sanctions list. Only immediate background checks and restructuring of contractual relations allowed restoring payments and avoiding litigation.
Structuring and Asset Protection Abroad
Corporate structuring is the key to asset protection abroad and minimizing legal risks. The use of corporate holdings, SPV structures, and captive trading companies are not only tax optimization tools but also effective mechanisms for protecting trade secrets and managing conflicts of interest.
Implementing such structures requires deep knowledge of international contract law, Double Tax Treaties, and the specifics of corporate taxation in chosen jurisdictions. COREDO’s practice confirms: a correctly structured holding not only protects assets from external claims but also boosts the company’s business rating, easing access to international financial institutions.
Where to Register a Business Abroad?
The question “Where to register a business abroad?” is relevant for entrepreneurs aiming for growth and global scaling of their business. Choosing a country for registration directly influences the tax burden, access to foreign markets, and the ability to integrate with international payment systems. Next, we will consider the main features of opening a company in the EU, Asia, and Africa.
Where to Open a Company in the EU, Asia, or Africa
The selection of jurisdiction for business determines not just the tax burden but also the level of compliance requirements, access to banking services, and risks of being included in sanction lists. Key criteria include:
- Tax rate and availability of Double Tax Treaties
- Substance requirements and corporate transparency
- Business rating (Doing Business) and jurisdiction reputation
- Banking compliance specifics and AML procedures
Below is a comparative table of popular jurisdictions:
| Jurisdiction | Taxes | Substance Requirements | Bank Accounts | Blacklist Risks | Compliance Features |
|---|---|---|---|---|---|
| Cyprus | Medium | High | Moderately difficult | Low | Strict AML/KYC |
| Singapore | Low | High | Easy | Very low | Transparency, ESG |
| UAE | Low | Medium | Easy | Low | Flexible requirements |
| Hong Kong | Medium | Medium | Difficult | Medium | Strict KYC |
COREDO’s experience shows: for technology and fintech companies, Singapore and the UAE remain optimal payment hubs, while for holding structures with a European orientation, Cyprus and Luxembourg are preferable.
Substance and Business Transparency Requirements
Since 2020, EU and Asian regulators have tightened substance requirements: the presence of an office, employees, management infrastructure. Non-compliance leads to loss of tax benefits and the risk of being deemed a shell company.
A crucial aspect is corporate transparency and disclosure of beneficial ownership. An example from COREDO’s practice: when structuring a holding for an international trading group in the Czech Republic, implementing a corporate transparency system with registration of all beneficiaries allowed not just passing bank Due Diligence, but also avoiding tax authority claims regarding tax residence.
AML and Compliance: How to Avoid Account Blocking
Today, AML and compliance are key tools for protecting businesses from account blocking and sanctions. Proper implementation of AML procedures and adherence to KYC help international companies minimize risks associated with suspicious transactions and regulatory requirements.
AML and KYC for International Companies
Modern international AML/KYC standards require not only client and partner verification but also ongoing transaction monitoring, implementation of automated compliance procedures, and conducting due diligence on suppliers. KYC specifics in the EU, Asia, and Africa vary in depth of checks, but everywhere the key importance lies in:
- Documentary confirmation of source of funds
- Checks against sanction lists and PEP
- Compliance with automatic tax information exchange (CRS) requirements
In one of COREDO’s projects on supporting the registration of a payment company in Estonia, implementing a comprehensive KYC platform allowed not only passing the licensing review but also reducing the risk of account blocking in European banks.
In conditions of constantly tightening regulatory requirements, it is especially important to understand what mistakes can lead to being blacklisted by the EU or FATF, and how to avoid them.
How Not to Get Blacklisted by the EU and FATF
Getting blacklisted by the EU or FATF can paralyze international payments and lead to asset blocking. To minimize these risks, it is important to:
- Conduct regular background checks on all key counterparties
- Implement sanction compliance at the corporate policy level
- Use specialized IT solutions for transaction monitoring
The solution developed by COREDO for one of the export-import holdings included automated verification of all new counterparties against global sanction databases, which allowed avoiding blacklists and maintaining access to international payment systems.
International Tax Planning
International tax planning allows companies and investors to efficiently manage tax liabilities when entering foreign markets. A competent approach to ATP helps reduce the tax burden legally and take into account all potential risks.
Tax Risks When Entering Foreign Markets
Effective international tax planning is based on using Double Tax Treaties, correctly determining tax residence and considering CFC (Controlled Foreign Companies) rules. It is important to:
- Structure the holding in accordance with treaties between countries
- Ensure compliance with substance requirements
- Conduct regular legal audits of international operations
In the COREDO case of restructuring a group of companies with offices in the EU and Asia, implementing an SPV structure in Singapore reduced tax burden by 18% and ensured legitimacy of cross-border transfers.
How to Prepare for CRS Reporting
CRS (Common Reporting Standard) obliges financial institutions to automatically transmit tax information about non-resident accounts. To prepare a company for CRS, it is necessary to:
- Ensure correct determination of all beneficiaries’ tax residence
- Implement corporate transparency procedures
- Collect and update the document package for banks and regulators
COREDO’s practice showed that companies that pre-implemented internal CRS procedures did not face account blocking and tax authority claims when scaling the business.
Opening Accounts and Integrating with Payment Systems
Opening accounts and integrating with payment systems are key stages for launching and scaling a business working with international transactions. This process includes both selecting a suitable bank or fintech platform and implementing modern payment services for customer convenience and company efficiency.
Opening Accounts in Foreign Banks and Fintech
Opening an account in a foreign bank is one of the most challenging procedures for international business. The requirements in the EU, Asia, and Africa differ in document volume, depth of KYC, and application review periods.
| Region | Main Documents | Opening Period | KYC/AML Features |
|---|---|---|---|
| EU | Charter, proof of substance, beneficiary KYC | 2–6 weeks | Strict AML, background checks |
| Asia | Charter, business plan, licenses, KYC | 1–4 weeks | Focus on source of funds |
| Africa | Charter, KYC, address confirmation | 2–8 weeks | Flexible approach, but often manual check |
The COREDO team implemented integration with fintech platforms for clients working in e-commerce and IT, significantly speeding up settlements and reducing currency operation costs.
Currency Regulation and Operations
Currency legislation in the EU and Asia requires considering the specifics of cross-border payments, controlling the source of funds, and complying with operation limits. Key advice for managing currency risks:
- Use multi-currency accounts and payment platforms
- Implement automated systems for exchange rate and limit control
- Conduct regular legal audits of currency operations
Implementing such solutions in COREDO projects allowed clients to reduce conversion costs and avoid fines for violating currency regulations.
Brand and Intellectual Property Protection
Brand and intellectual property protection: this is a strategic task for any business aiming to retain its competitive edge and market exclusivity. Trademark and patent registration legally secures rights to unique developments, preventing unauthorized use by third parties.
Trademark and Patent Registration Worldwide
Intellectual property protection when entering a market starts with registering trademarks and patents in target jurisdictions. Features include:
- In the EU – a unified registration system through EUIPO
- In Asia – national procedures, often with mandatory localization
- In Africa – regional organizations (ARIPO, OAPI)
A typical mistake: delaying registration until sales launch. COREDO’s experience shows: prior registration of brand and patents reduces the risk of litigation and saves up to 60% on rights protection costs.
Protection of Trade Secrets and Reputation
Tools for protecting trade secrets include NDA, internal information access policies, background checks for hiring and partner selection. In one of COREDO’s cases, implementing a system of reputational checks revealed hidden connections between top management of a partner company and offshore entities, preventing commercial information leaks and reputational losses.
M&A and Cross-Border Deal Support
M&A and cross-border deal support requires a deep understanding of legal, financial, and organizational aspects, especially for projects involving foreign jurisdictions. Quality legal support minimizes risks and ensures successful execution of even the most complex and large-scale deals.
Legal Support for M&A Abroad
M&A deals abroad require thorough due diligence, contract law analysis, sanction, and tax risk assessment. In COREDO’s practice, supporting M&A in the EU included:
- Checking ownership and beneficiary structures
- Analyzing corporate agreements
- Assessing compliance procedures in both jurisdictions
This prevented legal consequences of business scaling and ensured asset integration without blocks.
Further stages of support often include interaction with foreign authorities, dispute resolution, and unlocking assets.
Unblocking Foreign Assets and Disputes
Unblocking foreign assets requires a comprehensive approach: from negotiations with banks and regulators to participating in international litigation. COREDO’s solutions include:
- Legal audit of blockage reasons
- Developing a strategy for interaction with regulators
- Supporting court proceedings in the EU and Asia
In one case, thanks to competent work with trust managers and local lawyers, access to assets was restored within 4 months.
ESG Compliance for Legal Entities
ESG compliance for legal entities becomes a key element of responsible and sustainable business, reflecting the requirements for environmental, social, and governance aspects of a company’s activities. Implementing ESG standards helps organizations not only comply with regulatory norms but also create competitive advantages in the modern business environment.
ESG Standards in Company Strategy
ESG compliance (Environment, Social, and Governance standards) becomes a mandatory element for companies focused on long-term sustainability and investment appeal. Implementing ESG policies allows:
- Improving business rating
- Reducing legal and reputational risks
- Ensuring compliance with international investor requirements
In COREDO projects, integrating ESG compliance often becomes a key factor for successful fundraising and market entry.
ROI of Legal Support for Expansion
Evaluating the effectiveness of legal support can be done through the following ROI metrics:
- Reduction in the number of legal incidents
- Tax and fine savings
- Speed of market entry and payment system integration
- Resilience of corporate structure to external risks
Strategic foresight of risks and regular audits of legal processes not only minimize losses but also increase business value during scaling.
Practical Advice for Entrepreneurs
- Conduct comprehensive due diligence on the market and partners
- Select a jurisdiction considering tax, compliance, and substance requirements
- Register trademarks and patents before market entry
- Implement automated compliance and AML/KYC procedures
- Regularly update documents for banks and regulators
- Conduct legal audits of international operations at least once a year
- Assesses reputational risks and integrate ESG standards
Choosing a legal partner is critical: pay attention to their experience in supporting international business, expertise in selected jurisdictions, and ability to work with complex structures.
Frequently Asked Questions from Entrepreneurs
How to choose a jurisdiction for business registration?
Evaluate the tax rate, substance requirements, business rating, access to banking services, and sanction risks. Use comparative tables and consult COREDO experts for individual analysis.
What documents are needed to open an account in a foreign bank?
Typically: charter, substance documents, beneficiary KYC, business plan, address confirmation, licenses (if necessary).
How to ensure compliance and avoid sanctions?
Implement regular background checks, automated AML/KYC procedures, track changes in sanction lists.
How to protect intellectual property?
Register trademarks and patents in target jurisdictions before market entry, implement NDA and internal trade secret protection policies.
Main Conclusions and Recommendations
- Legal protection of a business entering new markets is not just about registering a company abroad but a comprehensive system for managing legal, tax, and reputational risks.
- Critically important are: jurisdiction selection, compliance with substance and corporate transparency requirements, implementation of modern compliance and AML procedures.
- Regular legal audits, integration of ESG standards, and strategic foresight of risks ensure long-term sustainability and investment attractiveness of the business.
- To minimize legal risks and ensure successful international expansion, use checklists, automated tools, and consult experts with confirmed international business support experience.
If you plan to enter new markets or encounter legal issues when scaling your business, the COREDO team is ready to offer strategic solutions based on deep expertise and practical experience in the EU, Asia, and Africa.