Friday, 30 May 2014

How to protect US subsidiaries

As the excesses of the US legal and regulatory process become more and more extreme it is time that companies - especially large ones with deep pockets - start thinking about protecting themselves against compensation claims and punitive damages that are in a direct line from the infamous McDonald's coffee scalding case.
In the run up to WWII certain large companies protected their overseas assets, in particular their US assets, from a potential takeover by Nazi Germany in the event their country was invaded and occupied. All these assets were put into a separate company that would have been out of reach for the occupiers.
Maybe it is time that major companies isolate their US assets in a similar fashion by setting up legal entities that shelter the parent company against any US claims. Special care should be put into designing a capital structure that would make it easy to cut loose this entity.
Of course, it would be helpful it the EU in particular could take a tougher line against the US overreach but at present that seems to be no more than a vain dream. The wet rags in Brussels and the major EU capitals are all in the pocket of the 'International' (i.e. Washington-inspired) consensus.

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