1.​ CORPORATE RELOCATION:

Relocation by way of continuation is the term used to describe the international corporate procedure whereby companies registered or incorporated in a specific country decide, often due to commercial or tax benefits, to transfer their registered office to another country while maintaining the same legal personality. This procedure differs from the regular incorporation of companies abroad taking into consideration that in the described case, by using this procedure, legal entities will continue carrying out their activities as the same corporation incorporated in their home jurisdiction, and not as a new company.

In some instances, relocation by way of continuation might end up being extremely complicated or even impossible to carry out, most likely as a result of legal conflicts between the corporate rules of each of the countries involved in the process. The procedure can also be relatively straightforward, and in certain jurisdictions many legal entities are using this mechanism for a variety of purposes that provide them with benefits to their future activities or revenue streams.

After reviewing the way in which many countries around the world address these relocation procedures, it is evident that in the majority of them, the rule is focused specifically in corporate business matters, such as having the correct shareholders or board of directors’ agreements, certificates of good standing, certificates of incumbency, cancellation or de-registration of the previous registry, etc.

For instance, pursuant to section 88 of the Bahamian Chapter 309 International Business Companies Act, any company incorporated under those rules may continue as a company incorporated under the laws of a jurisdiction outside The Bahamas, in the manner provided under the foreign jurisdiction's laws, and vice versa. Additionally, according to sections 2 (2) and 84 of the same rule, any company incorporated previously in any foreign jurisdiction may be relocated by way of continuation into The Bahamas, once they meet with Bahamian law's other corporate requirements.

This trend is evident in traditional UK jurisdictions beyond the Bahamas. Pursuant to section 10 of the Companies (Transfer of Domicile) Act 1998 of the Isle of Man, the main concern of its Financial Supervision Commission during a relocation procedure is to certify that continuation has been successfully achieved in the foreign jurisdiction. Moreover, companies already established abroad are able to continue their operations under these Isle of Man corporate rules.

Likewise, under section 226 of the Cayman Islands Companies Law (2004 Revision), even companies that have been previously registered by way of continuation in the Cayman Islands, can be registered by way of continuation under the laws of any jurisdiction outside the Islands.

In South America, the practice of relocation by way of continuation finds similarly favourable legislation. Pursuant to article 394 of the Peruvian Companies Act No. 26887 - Ley General de Sociedades, there is no restriction to foreign entities registered abroad to be registered in Peru by way of continuation, unless company’s articles specifically restrict such operation, requiring them only to meet the regular corporate requirements as any other incorporator would. Peru does require that the continuing legal entity submit a certificate of de-registration from the previous home jurisdiction's registry at the end of the relocation procedure, but this is the sole impediment to the process.

Of course, such requirements seem to be adequate considering that relocation procedures are, after all, corporate mechanisms which are aimed at allowing continuing a company’s activities with a new registration in a different jurisdiction.

On the other hand, although corporate matters appear to be the primary issues to consider in contemplating a relocation procedure, there are other corporate legal-related subjects [i.e. competing regulatory matters] that may be relevant in this procedure, such as tax and competition law, which operate to regulate the procedure from an economic point of view.

Without a doubt, competition has begun to emerge in the European Community at the level of company formation. Currently firms from Member States seeking incorporation have chosen to incorporate in the United Kingdom in order to avoid minimum capital requirements and expensive formation formalities in their home jurisdictions, even when these firms have no intention of doing business in the United Kingdom.

In Europe, despite the fact that the recent rule relates only to relocation of corporations within European Union Members States, it is important to highlight the fact that according to the European Court of Justice “Cartesio” case (case No C-210/06), issued on December 2008, the Court considered that there is no standard European Community definition of what companies’ freedom of establishment meant under article 43 of the EC Treaty. It was the Court's determination that in the absence of this standard, in case the relevant national provisions allowed the relocation or “emigration” process of national companies into any foreign jurisdiction, this was to be accepted and therefore the legal position of that state. However, it might be argued whether EC freedom of establishment will allow Member States to place any limit on the relocation process of companies registered in their respective jurisdictions, or whether such freedom to determine the relocation procedure will ultimately cover the transfer of the administrative seat of the legal entity, as well as the transfer of the registered office.

2.​ INDIVIDUALS MIGRATION

After reviewing the corporate key rules for relocating entities abroad, it is convenient to start assessing the rules that apply to individuals travelling around the world.

In this case, we will focus on individuals migrating for commercial purposes, such as work or investments. As the assessment will move on, it will be noticed how the requirements and “ratio legis” of each of the rules, compared to the corporate ones, differ from each other despite the business link they both have, bearing in mind the fact that the more foreign investment a host country receives, the more probabilities that such investor will require, at least at the first stage of the project, individuals that can be reliable for the work, either for trust or for know-how.

Conversely, while the relocation of corporations appears understood and addressed, the same cannot be said of the jurisdictional rule of individual immigration. This article will explore how relocation rules vary significantly around the world despite what is, or what should be, a very similar procedure in addressing an individual right to become a migrant, especially in terms of regulation of foreign investors’ activities and the granting of visas.

When it comes to the individual applicant, immigration rules around the world are more focused on assessing the amount of money the foreign investor is willing to invest in the host country, the amount of jobs such investment will create and the period of time the investor will spend in the country, among others, in order to determine whether the individual is entitled or not to receive an investor immigration status. Under this scenario, being able to enter and stay in the host country becomes a consequence of the individual's investment capabilities.

The aim of this work therefore is to analyze and emphasize the differences between immigration treatment on corporate relocation and individual relocation. To do so, the most common characteristics that international immigration rules tend to place on foreign individuals will be described and assessed. From the basis of this assessment these characteristics and attributes will be compared to the requirements and rules that supervise corporate relocations. The striking similarity in scenario between any foreign entity – individual or corporate – attempting to enter and develop activities in a new jurisdiction and the radically different ways in which they are regulated will become apparent.

3.​ IMMIGRATION RULES: DIFFERENCES BETWEEN INDIVIDUALS AND CORPORATIONS

If corporate immigration is regulated internationally with paramount importance given to general corporate legal requirements, when it comes to the granting of visas to individual citizens, individual immigration rules tend to be focused on pure economic motivators. In most countries, the amount of money the individual applying for a visa held at the time of the application either by examining his current or previous savings or income, along with other requirements, appears to be the driver behind associated legislation. For the jurisdiction of choice for relocation, the purpose in this analysis is to be able to determine the individual applicant's economic capacity and also the assets that applicant may bring to the country, whether by investing money, being a high qualified worker or by providing certain kind of knowledge that is not available in the local market.

3.1​ International Immigration Rules

As mentioned above, immigration rules around the world share in many ways similar mechanisms to restrict the entrance of aliens to their countries. Most of them grant the same migratory status for each of their applicants (i.e. tourist, business, investor, student, worker, etc). The following is an overview of the adhered to trends in individual immigration rules.

In the UK, this individual immigration is now regulated under the Tier 1 (General). Tier 1 (General) Migrant of the Points Based System was launched for foreign nationals living in the UK on 29 February 2008 and replaced the Highly Skilled Migrant Programme (HSMP). On 30 June 2008 three additional sub-tiers were rolled-out and the programme was extended to include applicants resident overseas. The four sub-tiers created were Tier 1 (General) Migrant, Tier 1 (Investor), Tier 1 (Entrepreneur) and Tier 1 (Post-Study Work). Each of these Tiers have a set of requirements with corresponding assessment points that allows UK immigration officials to verify that foreign individuals trying to enter the country meet the set standard. The requirements grant specific valuation points for each of the individual applicant's characteristics, such as academic or professional degrees, age, and most importantly cash availability, among others.

In the US, the Immigration and Nationality Act includes similar requirements and also includes interviews with an immigration officer in which the foreign individual trying to obtain leave to enter is required to explain and/or confirm the reasons of his/her entry.

In Europe, the concept of "third countries" is used. Under Council Rule (EC) No 539/2001, following the Schengen Protocol, there is a list of third countries whose nationals must be in possession of visas when crossing the external borders of the EU in order to enter to any of the other Member States. This extended list is governed by a considered, case-by-case assessment of a variety of criteria relating, interalia, to illegal immigration, public policy and security, and to the European Union's external relations with third countries. Also considered are the implications of individual immigration on regional coherence and reciprocity.

However, such immigration rules and restrictions are not limited to only developed countries. In Peru, there are also restrictions to specific countries’ citizens from entering the country, as in many other developing countries. For instance, when an Indian citizen wishes to visit Peru, the applicant will need to obtain a leave to enter the country and therefore will need to apply for a tourist or business visa depending on the activities he/she is planning to carry out inside the country. Only once he/she managed to obtain the correct visa he/she will be entitled to legally enter into Peru.

3.2​ Comparison between corporate and individual rules

While individual immigration is focused primarily on funds and nationality, as aforementioned, an assessment of corporate rules around the world has exposed their focus to be corporate legal. Relocation and regular incorporation procedures require the submission of many documents, such as articles of association, bylaws and the decision of a valid legal structure, and, unlike in individual immigration rule, there is no restriction on the shareholders’ nationality.

In this sense, in corporate rules the nationality of the shareholders or the country from which an entity is being continued – in the case of relocation procedures – is not an issue that requires special attention. During the evaluation for granting foreign investor visas or leave to enter into the majority of countries, immigration authorities around the world thus focus their rules on totally different matters that are closely related to one and other under the commercial point of view.

For instance, while citizens from countries in Latin American require a visa for entering certain countries in Europe, the US and the Caribbean, even if it is just for tourism, there is no specific restriction whatsoever with the relocation of companies registered in Latin America into those same places. Moreover, there is no corporate restriction in most of these countries that limits or discriminates the nationality of shareholders; it being possible to have European, American or Caribbean registered corporations with the 100% of their shares owned by Latin American citizens or other legal entities.

Closely connected, according to the corporate regulation of the State of Florida in the US, there is no specific restriction with regards to the incorporator’ nationality in Florida whatsoever, allowing foreigners to be entitled to incorporate any kind of company in that state's registry for whatever legal purpose they desire. In fact, there is not even an obligation for the corporation to have a minimum capital amount. Of course, this relaxed regime doesn’t modify the immigration status of any of the foreign shareholders, in case they need a visa to enter the country, but nevertheless, those same shareholders are legally entitled to manage a company and develop economic activities in the state.

Certainly, domestic immigration rules are aimed at protecting and strengthening countries. They are designed by lawmakers to buttress against a number of things: unemployment, insecurity, criminality, and social unrest. Regardless, these reasons are not able to explain why corporations around the world have unrestricted immigration “visas” that allow them to relocate and move throughout the globe that are provided without any (warranted) consideration of a corporation's nationality, the amount of money it will invest in the host country (in most of the cases, corporate rules do not even require a minimum amount of capital to be incorporated or relocated under their jurisdictions), nor restrictions on the activities these entities will carry out.

For instance in England and Wales, under the Companies Act 2006, no minimum share capital is required for the incorporation of private companies and there is no restriction on companies’ activities so long as they are lawful. Moreover, according to section 402 of the Business Corporation Law of the State of New York, the purposes of a new company trying to be registered in such jurisdiction can be to engage in any lawful act or activity for which corporations may be organized in the State, not being any restriction to the activities a company owned by foreign citizens may carry out. This same type of limited regulatory regime exists in the State of Delaware in the United States and many other Caribbean jurisdictions, such as The Bahamas.

Evidently, there are some kinds of activities that cannot be done by corporations and can only be carried out by individuals, and here particularly moral, social and even criminal matters come into play. However, considering the recent tendencies in corporate affairs related to corporate social responsible investment, green funds or corporate crime liability either for the legal entities in common law or directors and its members in civil law, this last statement regarding which kind of activities can be done or at least are plausible to be done by corporations and individuals are not that clear anymore from a corporate point of view. Companies carried out with no regard to ethical matters can certainly breach a country's moral or social values as well as promote criminal activities once established. Nevertheless, it appears that only individuals require these strict evaluations of their personhood and history in order to enter foreign countries. Even then, in most of the cases, moral or social values are not examined during the granting of visas procedures and instead, as highlighted already, it is economic availability that remains the central factor in determining individual rights to migrate. In fact, common to most of the immigration rules around the world, investor visas are granted only if the individual is able to invest certain amount of cash in the country; it not being necessary to submit any domestic criminal record or certificate stating the foreign applicant’s good conduct or behaviour in his country, so long as financial provision is demonstrated.

Examples of these weak regulation concerning immigrant’s moral or social values can be found in Peruvian legislation, where the investor visa is granted without any requirement that a personal statement declaring any previous criminal record be made by the applicant. All that Peru does require is that the applicant makes a declaration to the effect that he/she has not to be included in the INTERPOL international criminal wanted list. Similarly in the UK, immigration rules require only a statement signed by the applicant in the visa application form declaring any past criminal convictions (not even any pending prosecutions). The UK does not require the applicant to submit any domestic judicial or police certificate in this regard.

From the abovementioned, It is clear that one type of rule might be more facilitative than the other. It is therefore important to determine the values that underlie these different approaches.

For instance, if it is agreed that corporate relocations are more beneficial than individuals’ migrations, due to economic reasons, then such idea should be supported by a more extended economical review of the companies registering in certain countries and more benefits should be granted to those individuals deciding to invest abroad.

However, under such idea it would be advisable to bear in mind that, as mentioned previously, foreign investment usually does not come only with money but also with human capital and such asset should not be limited from the first one under a full business scope.

In this sense, it is also important to assess the practical consequences that these immigration and corporate policies may bring in future. Considering that in many corporate rules, once a company hires an international employee, he can obtain a visa that allows him to work in the company’s country. Knowing that incorporation or relocation rules in many countries do not restrict by nationality of the relocated company or its shareholders, or even put upon those same entities a requirement for a minimum capital amount, it is evident that these legal entities could be used as legal vehicles to avoid individual immigration restrictions, giving its members the same immigration freedom the corporations have. This point is crucial, and leads us to the consequential question: what is the real purpose of requesting visas to individuals in commercial or corporate matters if corporations are not? Should corporations not also be required to obtain visas in future? Is there coherence and integrity in their parallel operation?

This matter should be well considered in order to determine which will be the best way to address this corporate immigration matters considering the increasing amount of free trade agreements that are being subscribed all over the world.

In order to answer these questions, we return to our example of the Indian citizen migrating to Peru. In that case, taking into account the restrictions on Indian migration due to supposed threats to security, social cohesion, or the economy, the way in which an Indian citizen can manage to obtain a leave to enter using the corporate rules is simple: in essence it is avoidance. First, the Indian citizen must manage to obtain enough shares from a company incorporated in Peru, whether by a share purchase agreement or by incorporating one (although in this latter case, the Indian citizen will be required first to grant a power of attorney to any Peruvian resident in order to sign the incorporation public deed on his behalf). After having acquired a percentage of shares that allow him control the management of the local company (easy done taking into account that there’s no minimum capital requirement, and therefore companies’ share values can be extremely low) he can then start the process of hiring foreign personnel into his company. This process is considered and permitted by Peruvian rules so long the foreign worker is hired in a managerial position or as a high qualified professional.

As imagined in this example, the Indian citizen could not only hire himself as the company’s general manager, and therefore obtain his foreign work permit, but he can also hire more Indian citizens, so long they are hired in managerial positions. Thus, corporate rules allow for an easier mechanism than individual immigration rules to circumvent immigration schemes; reaching such a point to where better advice as an immigration consultant would be to recommend the establishment of a company in the country where the client is planning to emigrate rather than commence the regular individual immigration procedure.

Similar conditions occur in the UK, where any citizen who requires a leave to enter can apply to the Tier 1 entrepreneur category. The Tier 1 category requires an individual applicant to have, among other requirements, at least £200 000 disposable in any UK financial institution regulated by the Financial Services Authority and be willing to invest such amount in the UK. As in the Peru-India example, once this foreign entrepreneur complies with the requirements, he will be able to establish a company and subsequently hire individuals. That owner will be able to employ any foreign worker where no highly skilled workers in the local UK market meet with the company’s requirements, ostensibly filling the gaps in the UK workforce. Although presumably unintended by the legislators of those corporate provisions, immigration practitioners are aware that such requirement can be met easily by offering a position in the market for a period of time and, after "not finding anyone qualified" for the position or “not taking any applicant at all”, the Point Based System Tier 2 (Skilled Worker) work permit category immigration procedure can be started. It is plainly clear how corporate immigration rules can be extremely related with immigration rules of individuals, depending on the foreign individual's objectives.

The immigration provisions stated above clearly demonstrate that the key factor for achieving a leave to enter the majority of jurisdictions is the economic capacity the applicant. Money is critical to an applicant's chances when applying for a visa, and relocation rules promote financial latitude as the key factor in determining status despite what may be questionable social or moral values. Indeed, these other factors are assessed as secondary issues, or might not even be considered during the procedure at all. Additionally, as it has been mentioned before, criminal matters are only partially examined during the granting of investor visas in most of the international immigration rules. For example, according to the requirements for obtaining the American E-2 visa classification, investors placing capital at risk in the commercial sense with the objective of generating a profit in a bona fide enterprise in the US must only show, with regards to the economic investment, that the funds have not been obtained, directly or indirectly, from criminal activity. Thus, only the funds that are being invested are subject to criminal analysis but any additional relevant criminal issue with regards to the investor, such as again, his domestic criminal record, pending prosecutions, etc. is totally ignored.

4. CONCLUSIONS

Immigration matters have become a major concern in many countries in Europe and in the US. Provisions modifying and restricting an individual's right to, and the requirements for, migration in the UK and Italy are case in point. Both countries have witnessed a concerted effort by legislative authorities to strengthen immigration rules year after year; in effect reducing the number of immigrants allowed into each country, facilitating the increased deportation of illegal immigrants. Such efforts are not unique to Europe. The state of Arizona in the US has already declared having an illegal immigration status as a criminal offence, despite the criticisms of many Mexican and Latin American organizations in the US, thereby reducing some of the consequences that illegal individual movements have has on their population and market. Certainly, it is not the aim of this article to determine what the benefits of immigration are in certain countries, or to consider the negative impact it can cause in particular economic markets. The goal is trying to understand the reasons why the analysis differs as between individuals and corporations despite the obvious connection they in the relocation process and under any immigration regulatory regime.

Once again, should companies be required to obtain a “corporate visa” in order to be relocated or be managed by a foreign majority or even carry out operations in new jurisdictions? The answer should be no if international immigration rules have the goal of attracting and ensuring more investments and economic profits in each respective jurisdiction. Regulators might start considering amending said rules looking towards strictly to the economic impact. Within the current regulatory framework, corporate rules constantly assume foreign corporations are, by nature, more beneficial than individuals, and thus are entitled to better treatment via weaker regulation when entering a different jurisdiction.

Nevertheless, after reviewing some of the provisions around the world that allow companies to carry out activities with few restrictions and requirements, such assumption seems to be not always correct. Despite the fact this assumption is also mistaken, regulators understand that any company, regardless of its nationality or its shareholders’ nationality, will more easily create jobs or benefit the market, not being in fact a minimum amount of employees required to companies in most of the corporate rules. And yet, individual investors are usually required to create a minimum amount of jobs in order to obtain their investor visas (for instance, in the UK entrepreneurs are required to create 2 jobs in a three years time, while in Peru investors are required to create 5 jobs during 2 years) proving that in this case, individuals are more likely to achieve what companies are not obliged to. Hence, either rules for corporate should become more accurate or individual rules for investors should become more straight forward, avoiding requirements of high amounts of cash, that are not required to any foreign or domestic legal entity nor request the creation of specific number of jobs.

It is that considering the relative lack of restriction and scrutiny on corporate migration, it should be noted how corporate responsibility in these cases can be also affected by not having enough mechanisms to supervise the impact of such companies in their communities, being probably necessary to increase the awareness of corporate responsibility in corporate relocation procedures.

Unquestionably, in order to fully understand the reasons for the differences on global corporate and immigration rules and be able to propose a hypothetical solution to this matter, it will require further analysis and deeper assessment on the reasons that sustained the current rules. However, the purpose of this article has been to raise this topic into attention fostering further discussion and development in future.