Integration of Register’s and Surveys’ data on MNEs

1. Integration of Register’s and Surveys’ data on MNEs Morganti E. – ISTAT 21th Wiesbaden City Group – International Roundtable on Business Survey FramesParis – 24 – 27 November 2008 Session No 6c –Measurements of Multinationals and Enterprise Groups

2. Titolo del convegno anche su più righe anche su più righe Titolo slide titolo slide titolo slide Titolo slide titolo slide titolo slide • The Italian Business Register on EG is built up from: • INTEGRATION OF: • Administrative sources • Advantages • Limitations • Statistical survey • Problems, inconcistencies • Improvement in quality Similar problems to be faced soon with EGR

3. 1. Administrative sources’ integration • The Register is build up annually, integrating three different administrative sources: • The archive of all shareholders of non listed companies (Chamber of commerce) • The archive of all shareholders of listed companies (Stock Exchange) • Consolidated Accounts

4. Advantages: • Each source collects information about shareholders or control relationships on the basis of a legal provision • The timing of updating of the sources is coherent, with some exceptions for the financial sector only. • All the three sources contain a common identification code for all resident units

5. Result of administrative sources integration:

6. Abroad • Global Group Head • STOCK EXCHANGE 1 • First Shot • CHAMBERS OF COMMERCE 2 ITALY 3 • Resident units • CHAMBERS OF COMMERCE, • STOCK EXCHANGE • CONSOLIDATED ACCOUNTS 4a 4b 4c 5a Abroad 5b 5c • Foreign affiliates • STOCK EXCHANGE, • CONSOLIDATED ACCOUNTS 6a Contribution from each source to coverage of resident and non resident units

7. Candidates for Group Head after process of integration • a real Domestic Global Group Head of a multinational group; • a real Foreign Global Group Head of a multinational group; • a Domestic Truncated Group Head of a multinational group; • a Foreign First Shot unit (or immediate parent), whose Global Group Head could be either foreign or even domestic; • a Foreign Branch registered in Italy, whose Global Group Head is Foreign.

8. c) b) GB GB a) IT IT IT IT IT IT d) e) ? IT ? ? GB BRANCH IT IT IT IT Candidates for Group Head after process of integration

9. 2. Survey’ structure • Biannual • Enterprises and local units (branches) • From C to K and M-N-O of the NACE • The respondent self-classifies itself: • independent enterprise, • an enterprise belonging to a group with domestic control, • an enterprise belonging to a group with foreign control, • a branch of a foreign enterprise. • In case of non independency: • denomination of the Ultimate Controlling Unit (UCI) • country of residence of the Ultimate Controlling Unit (UCI) • No other information about its immediate parent or the upward chain of control between itself and the UCI.

10. Feedback from the Survey • The respondent units was not included into the Register • the survey provides it and its UCI. • The respondent unit is a GH in the Register • The surveys indicates a superior UCI. • The respondent unit is intermediate in the Register • the survey indicates an UCI different from the GH of the Register. How to integrate?

11. 1. GB …….?......... IT Titolo del convegno anche su più righe anche su più righe • The respondent units was not included into the Register • the survey provides it and its UCI. • A non resident unit is included into the BR • A new indirect relationship is created • A new group is created

12. 2. IT GB ……?.….. IT IT IT Titolo del convegno anche su più righe anche su più righe • The respondent unit is a GH in the Register • The surveys indicates a superior UCI. • A new indirect relationship is created

13. The respondent unit is intermediate in the Register • the survey indicates an UCI different from the GH of the Register. 3. Group before survey Feedback from survey GB FR IT ……?........ IT IT Surveyed unit 3.I – One group Change of UCI 3.II – Two groups Keep downward relationships 3.III – Two groups Break downward relationships FR GB GB IT GB IT FR ……?........ FR IT IT IT IT …?... ……?........ ? Titolo del convegno anche su più righe anche su più righe

14. Titolo del convegno anche su più righe anche su più righe Solution applied • Complex solutions based on the principle of: • minimising the breaking of groups’ structures in the Register • S.t a good level of coherence with the survey’s result • By taking into account: • Distance of the respondent unit to the UCI • Dimension of the respondent unit • Number of units involved in the change and their dimension • Final check of coherency with survey’s result and with Register’s structure

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17. Titolo del convegno anche su più righe anche su più righe Conceptual differences and main problems • The feasibility of having natural persons as Ultimate Controlling Unit in the Register • The operational criteria to identify the country of residence of the UCI • The definition and treatment of truncated groups • The identification and treatment of changes in groups’ structure

18. Titolo del convegno anche su più righe anche su più righe 1. The feasibility of having natural persons as Ultimate Controlling Unit in the Register Requested by the Survey, according to the Guidelines of the FATS Recommendation Manual Conditional for the BR 177/2008 on availability of information Feasible only in few European countries Strong need for harmonisation

19. 3. The operational criteria to identify the country of residence of the UCI Titolo del convegno anche su più righe anche su più righe • BR Regulation: • 4.12b. Optional: Country of registration of Global GH • 4.16. Optional: Country of Global decision centre • FATS: • The place of residency of an UCI should be the country of registration of it. Not always corresponds to nationality. • Special situations: Multiple minority ownership, Joint ventures • Special solutions: the characteristic “residency” is considered separated from the unit itself.

20. GB L.U. 3 L.U. 2 L.U. 1 Complex enterprise Titolo del convegno anche su più righe anche su più righe 4. The definition and treatment of truncated groups IT For the Italian BR is it ONE Truncated Group or THREE? ONE: ok, then the C.E. is within the Truncated Group THREE: then the C.E. cannot be reconstructed?

21. FR GB GB IT GB IT FR FR IT IT IT IT 2. The identification and treatment of changes in groups’ structure Titolo del convegno anche su più righe anche su più righe • Register and respondent have different time reference • Different effects of the country of residence of the UCI on the whole group structure The whole group goes under FR Part of the group goes under FR, the rest under GB Only the respondent goes under FR

22. Titolo del convegno anche su più righe anche su più righe IMPACTS ON EGR • The feasibility of having natural persons as Ultimate Controlling Unit in the Register • Effect on coherency b/w Registers • The operational criteria to identify the country of residence of the UCI • Effect on coherency b/w Inward - Outward • The definition and treatment of truncated groups • Effect on the definition of the Complex Enterprises within the Truncated Groups • The identification and treatment of changes in groups’ structure • Effect on groups’ structure and quality

23. THANK YOU!