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Use of administrative sources for identification of EGs in Slovenia

Use of administrative sources for identification of EGs in Slovenia. Aleksandra Lešnjek Mojca Zaletel. Activities of setting up EG register. Analysing the available administrative and statistical sources Setting up a pilot EG register as analytical data base

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Use of administrative sources for identification of EGs in Slovenia

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  1. Use of administrative sources for identification of EGs in Slovenia Aleksandra Lešnjek Mojca Zaletel

  2. Activities of setting up EG register • Analysing the available administrative and statistical sources • Setting up a pilot EG register as analytical data base • Upgrade and integrate the pilot EG as transactional data base within the ISIS – new project of modernisation of IT infrastructure in the business statistics domain Geneva, 18-19 June 2007

  3. Analysing the available administrative and statistical sources • Central Securities Clearing Corporation - Register of dematerialised securities and monetary settelment of securities transactions • Court register • Bank of Slovenia - Statistical reports on capital investment among residents and non-residents • Data kept by AJPES (Agency for Public Legal Records and Related Services), consolidated accounts • Internet data available Geneva, 18-19 June 2007

  4. Register of dematerialised securities (1) • Central Securities Clearing Corporation was established by law regulating the securities market for performing the services of calculation, equalisation and providing payment on the basis of securities transactions on organised sequrities market • Is the first and only institution in Slovenia to provide central securities custody services, clearance and settlement of securities transactions and maintenance of the central registry of holders of dematerialised securities in the Republic of Slovenia. • Keep the data on securities in the central IT data base (daily updated) • It is a potential source of data for identifying parent companies of Slovenian joint stock companies (based on ownership shares of parent companies in daughter companies); non-residents legal and natural persons included Geneva, 18-19 June 2007

  5. Register of dematerialised securities (2) • Data in e-format yearly: • Data on Slovenian joint stock companies (jsc) • Data on the number and types of issued jsc’s shares • Name, address on holders of the shares (legal units and natural persons, residents and non-residents) • Data on the number and types of holder’s shares • Data on holder’s country of residence (ISO Standard) • Information if the jsc quoted on the organised sequrities market Geneva, 18-19 June 2007

  6. Court Register (1) • The legislation stipulates that all companies-legal units with the exception of small and medium-sized sole proprietors must be registered in the Court Register • By entry into the court register, companies obtain the status of legal persons. Beside the ordinary variables, it comprises the structure of ownership for all legal persons that are subject of entry in the register • It is a potential source of data for identifying parent companies of Slovenian limited liability companies (based on ownership shares of parent companies in daughter companies); non-residents legal and natural persons included Geneva, 18-19 June 2007

  7. Court register (2) • Data in e-format yearly: • data on Slovenian limited liability companies • structure of ownership for all legal and natural persons that are subject of entry in the register in absolute values • Name, address on holders of the shares (legal units and natural persons, residents and non-residents) • Data on holder’s country of residence (ISO standard) Geneva, 18-19 June 2007

  8. Bank of Slovenia (1) Capital investment report among residents and non-residents: • data on holdings of Slovene residents abroad (directly affiliated investments abroad) • data on holdings of directly affiliated companies abroad in other companies abroad (indirectly affiliated investments abroad) on condition that directly and indirectly affiliated investments equal or are greater than 10% • data on holdings of non-residents in companies in Slovenia (directly affiliated investments in Slovenia) Geneva, 18-19 June 2007

  9. Bank of Slovenia (2) Entities obliged to report (i.e. reporting units) are: • residents – legal persons and individual private entrepreneurs that in the reporting year owned participating interest or shares of legal persons abroad, founded an affiliate abroad (performing profit activity) or owned real estate abroad • residents in which the reporting year non-residents (legal and natural persons) are owners of participating interest or shares of legal persons abroad, founders of an affiliate (performing profit activity), and (co)founders of an institution or foundation in the Republic of Slovenia Geneva, 18-19 June 2007

  10. Agency for Public Legal Records (1) • was established in July 2002 • e-collection, e-processing of data from different kind of annual reports • manages various administrative registers (business register, register of non possesory liens and seized movable property) • collects information of credit standing of individual legal units operating in SLO, CRO, MK • it is an authorised producer of some statistical surveys Geneva, 18-19 June 2007

  11. Agency for Public Legal Records (2) • Consolidated annual account are not electronically processed yet (only scanned format available) • Discussions between institutions are on going • It will increase the potential use of available data in the EG’s domain Geneva, 18-19 June 2007

  12. Making a contract • SORS made a contract with all relevant institutions to recive the relevant data in e-format. • On the basis of the National Statistics Act, for the purpose of rational implementation of the activities of the national statistics, SORS makes use of identifiable individual data from various official and other administrative data collections of the public and private sectors (records, registers, databases, etc.) which are kept on the basis of law or written consent of the individual. • In compliance with the Statististical Act, register holders must, free of charge, submit to SORS all the requested information. Geneva, 18-19 June 2007

  13. Preparation of a common database of shares and control based on the combination of 3 main sources • Preparation of guidelines for creating the common database of shares and control relationships between economic operators • Programming the common database of financial relationships and control • Filling the common database • Control of data in the common database of financial relationships and control Geneva, 18-19 June 2007

  14. Programming the algorithm for identification of enterprise groups (1) • The algorithm was programmed on the basis of direct or indirect relationship of the parent unit over the daughter unit • The algorithm operates by combining the top-down and the bottom-down approach, so that in an efficient way in addition to the group head also the identification of all its units is provided. Geneva, 18-19 June 2007

  15. Programming the algorithm for identification of enterprise groups (2) • In the first stage every unit that appears in the common table of relationships represents the starting group of enterprises. Further on the program operates according to the bottom-up principle, taking into account direct and indirect control • The unit is evaluated by searching for the appropriate parent unit which controls it, so that the unit is moved to the group which controls it. Geneva, 18-19 June 2007

  16. Programming the algorithm for identification of enterprise groups (3) • Then the algorithm follows a top-down approach identifying all daughter units in a group by the direct control method. • This cycle is repeated as many times as necessary to appropriately classify all units into groups. • Units that no one controls are eliminated. Geneva, 18-19 June 2007

  17. Linking the data from the algorithm with the Statistical Business Register • Data as results of the algorithm are in the next stage linked with the data from the Statistical Business Register in order to obtain and recalculate some general data for enterprise group (number of employees, main activity code, etc.). • With this approach the pilot national register was set out. The next step is planned for 2008 to upgrade it as a transactional database. Geneva, 18-19 June 2007

  18. Graphic presentation of groups • Graphic presentation of the group include some general data on its component parts (name of the unit, country of the unit, ownership share) • We selected between Visio and GoDiagrams Win Professional • The main advantage of GoDiagrams is good presentation of both small and large groups and in contrast to Visio is a manage.net library. Geneva, 18-19 June 2007

  19. Problems encountered and solutions found or proposed (1) • Technically unparalleled content of sources • We have used three main sources which are maintained by different institutions. They are not linked and their data are used for different purposes, so we had to transform the data into a technically and methodologically comparable form. • The data were transformed so that the relationship “legal unit–holder–share of the holder in the legal unit” was determined Geneva, 18-19 June 2007

  20. Problems encountered and solutions found or proposed (2) • Individual records concerning legal units can appear in several sources at the same time • rules of priority have to be settled out that enable us to make the data editing as efficiently as possible and to check and process the data on the couples simultaneously Geneva, 18-19 June 2007

  21. Problems encountered and solutions found or proposed (3) • The identifier of non-residents • The data for non-residents do not have unique identifier and they appear in different sources at the same time • We could identify them only considering name, address and state. However, names and addresses in different sources are not written down uniformly, so we used matching (matching rules) by certain criteria for selection and finally checked the entries manually which could increase the mistakes. Geneva, 18-19 June 2007

  22. Main conclusion and questions • No need to use commercial sources for resident and truncated EGs, but strong need to link the data with the Euro Group Register for multinational groups • How to define the countinuity rules for EGs? • Natural persons – to identify them as group heads or not? • Republic of Slovenia - to identify it as group head or not? Geneva, 18-19 June 2007

  23. Continuity rules for Slovenian register (practical criteria ) • The enterprise group is changed if at least one of below conditions is complied • Small EG ( up to 5 units ): • Change of group head • Change of enterprises belonging to the group except group head • Large EG ( more than 5 units ) • Change of group head • Change of the share of old units in a new group is less than 50% ( share= number of old units in a new group/ number all units in a new group ) Geneva, 18-19 June 2007

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