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Wealth Management

DON’T RISK IT ALL WITH NON-COMPLIANCE

By Paul Sleath, CEO at PEO Worldwide

 

Did you know non-compliance costs more than twice the cost of maintaining or meeting compliance requirements?

Yet, companies continue to overlook proper compliance procedures, choosing to ‘wing it’ or do it on a shoestring budget instead.

We get it. Today’s business owners have a multitude of priorities to juggle, top of which is turning a profit and growing. When you’re focusing on driving success, compliance can easily fall by the wayside.

But success is of little consequence if a government entity dissolves your company because you failed to comply with certain legal requirements.

Keeping on top of regulations

In the corporate world, compliance involves adhering to a wide range of laws and standards designed to protect your employees, customers and other stakeholders — and generally making sure you “do the right thing”.

No matter what industry or type of business you work in, compliance is a big deal. But when you’re looking to expand your operations into markets all over the world, it’s an entirely different ballgame.

As you grow and move into new jurisdictions, you’ll encounter a whole host of new regulations — from tax returns and statutory filing to international employment rules about payroll — and face much higher compliance costs than operating solely in one location.

Many countries require that filings and contracts are made in the local language and change their regulations frequently. Without a contact on the ground, it can be difficult to keep up. Each country will also have its own authorities and governing bodies to deal with.

For example, in the US, you have the Occupational Safety and Health Administration (OSHA) to contend with while companies operating in the UK will need to comply with the Health and Safety Executive’s (HSE) standards.

 

Compliance across borders

The point is, no two countries are the same, and when you’re trying to operate across multiple locations, things can get messy.

Late filing in Denmark could lead to your company being dissolved within a few months. In Serbia, the tax regulations are so confusing that many companies have taken to paying extra tax where they have no liability just to ensure they don’t get stung with any penalties.

If you’re expanding into Spain, it’s worth knowing that terminating employee contracts is notoriously tricky, and you’ll have to budget for a severance fee (which equates to 33 days of salary per employment year).

In Singapore, you’ll be responsible for sending the monthly payment (including both yours and the employee’s respective contributions) to the Central Provident Fund (CPF) — a key pillar of the country’s social security system. This payment has to be sent by the 14th of the following month.

A couple of notable points to bear in mind if you’re expanding into Germany is that employees can only be leased for a maximum of 18 months. After this, you must hire them permanently or let them go. Chain leasing is also prohibited, meaning the company holding the licence must contract directly with the party receiving the labour.

And if you’re global expansion journey is taking you down under to Australia, you’ll need to pay a Fringe Benefit Tax (FBT) if you’re providing certain benefits to your employees — even if a third party provides them.

Without this knowledge of local regulations, you quickly (albeit unintentionally) run the risk of non-compliance and find yourself on the wrong side of the law.

So, what could happen if you don’t comply?

There’s no way around it, if you fall foul of compliance, you’ll end up paying for it — one way or another.

Penalties come in multiple forms. The most common penalties for non-compliance are fines, which may be levied against the company or individual directors.

However, one of the most financially damaging events a company faces is having their products blocked at the border or being forced to destroy merchandise due to compliance issues. In some cases, non-compliance can even result in the mandatory closure of ALL operations within that country or imprisonment of the directors.

Even if your organisation is not given an actual penalty, the inconvenience and costs of righting the mistake, damage to the company’s reputation and possible loss of contracts could prove disastrous.

But the highest cost of non-compliance is business disruption. When found to be non-compliant, you may be forced to implement changes before business can resume, which can have a knock-on effect on other areas of your organisation.

Whether you’re looking for a PEO in the UK, US, Spain or Singapore, compliance should be your top priority. So, it’s worth seeking the help of a Global PEO with local knowledge of your chosen country to ensure you always remain on the right side of international employment laws.

That’s where we come in. At PEO Worldwide, we ensure you remain compliant at all times by taking full responsibility for hiring, contracts, employee benefits, payroll and termination if needed. To find out more about our global employment services, don’t hesitate to get in contact.

 

Wealth Management

SIMPLIFYING THE RETIREMENT FUND DEATH CLAIMS PROCESS

By Dolana Conco, Regional Executive at Alexander Forbes

 

Losing a loved one is one of the most difficult experiences a person can go through, and during this difficult time, you don’t want your loved ones to have to worry about finances.

Your family will receive a share of your retirement savings and a life insurance pay-out if you die while being a member of a retirement fund. The trustees of the fund have a legal responsibility to make sure that death benefits from the fund are paid to those who are financially dependent on you.

If your death benefit is through a policy that is separate to the fund, then the trustees will not be involved and this benefit will be paid out according to the nomination of beneficiaries’ form that you’ve completed with that specific insurer, or else your employer will decide.

 

What retirement fund members need to do

  1. Keep your ‘Who needs financial support when I die?’ form up to date

This form is so much more important than anyone thinks – even though it is not a last will and testament. The trustees must, by law, find all the people who are financially dependent on you, as well as those whom you love and would want to leave a portion of your death benefit to when you die. Those who depend on you for financial survival are called your dependants. Examples are your spouse or life partner, children (of any age), parents, people you need to pay maintenance to or anyone else in your life who depends on you financially.

If no one is financially dependent on you in any way, you can choose someone else as a beneficiary (family, friend, or even a charity). If you choose to give your death benefit to a charity when you die, the money will first be paid to your estate and then paid over to the charity of your choice. If this form is not up to date, it could take the trustees much longer to identify who should receive a share of your death benefit from the fund.

 

  1. Submit the correct documents

The most common reason for delays in paying an insured death claim is that there are missing, incomplete or incorrect documents submitted with the claim. Your employer can assist with what is needed and can check that the form has been completed fully and correctly before submission. In general, the following information is needed:

  • a certified copy of the death certificate
  • the identity document or passport of the deceased member
  • a copy of a pension-backed housing loan (if applicable)
  • proof of the extent of any financial dependency of the beneficiaries

What your retirement fund needs to do

The trustees of your fund have a legal duty when you die to distribute your death benefit from and through the fund. The trustees must find all dependants and nominees to decide how to share the retirement savings and life insurance pay-out fairly. To make a fair decision, the trustees will consider the following factors, among others:

  1. Age of the beneficiaries
  2. Relationship to the deceased
  3. How financially dependent they were on the deceased
  4. Their financial affairs
  5. Their future earning potential and prospects
  6. The total amount of the retirement saving to be distributed

The trustees can choose to give a beneficiary no pay-out, as the law doesn’t say that every beneficiary must get some money. However, they must consider the needs of each beneficiary and the amount available for distribution.

If there’s information that the trustees may not have considered when they made their decision and the draft resolution has already been prepared, your family needs to contact the trustees urgently. The fund’s administrators will pay the death claim once they get a response from all beneficiaries, or if no response has been received within 30 days of sending the draft resolution document.

There are various reasons for delays in paying a death claim from or through the fund, including the employer not completing the claim form in full, missing or incorrect documents, investigations for the trustee resolution taking longer than expected, outstanding tax issues and beneficiaries not providing their bank account details.

Make sure your family knows what can go wrong and what to do to make the process run smoothly – it all plays a part in leaving a legacy that you can be proud of.

 

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THE COMPLETE GUIDE TO TRANSFERRING SHARES FROM ONE DEMAT ACCOUNT TO ANOTHER

A Demat Account functions like a savings bank account with the obvious difference in the fact it stores stocks instead of money. To be similar to a savings account also implies that a Demat Account can be used to transfer shares from one Demat Account to another Demat or trading account.

Shares are generally transferred from one Demat Account to another for the purpose of changing depositories. However, there can also be other reasons for transferring shares such as merging the investments in different Demat Accounts in a single Demat Account.

Whatever the reason, in order to understand how to transfer shares from Demat Account, it is important to first understand what is Demat Account.

What Is Demat Account?

The most simplified way of answering what is Demat Account is to understand it as a digital platform where investors can store all their shares and other forms of investment in an electronic form. Demat is a short form for dematerialization which refers to the process of converting physical share certificates into the electronic form. A Demat Account can only be opened with the help of a Depository Participant or DP and a depository. A DP is an agent or broker who acts as an intermediary between the depository and investor. A depository is a financial institution in which investors open their Demat Account. Read more about what is Demat Account to understand it in more thorough details.

It is necessary to know about Demat Accounts before attempting other things like transferring shares, etc.

 

How To Transfer Shares From Demat Account

After the meaning of what is Demat Account is cleared, it is time to understand how to transfer shares from Demat Account to another Demat Account. There are two types of transfer:

  • Intra-depository transfer: In this type of transfer, shares are transferred from one Demat Account to another in the same depository.
  • Inter-depository transfer: In inter-depository transfer, shares are conveyed from one Demat Account to another account which is in a different depository.

The two ways in which shares can be transferred are the manual procedure or online procedure.

 

Manual Transfer Of Shares

For the manual transfer of shares, investors are required to ask for delivery instruction slip or DIS from their brokers or DPs. DIS is not just an important but also an integral part of the manual transfer of shares. It contains some mandatory fields which have to be filled to process the transfer of shares.

1.    Beneficiary Owner ID (BO ID)

Beneficiary owner ID (BO ID) refers to a 16-digit ID number of a broker. An investor has to mention in DIS the IDs of both the current broker and the broker to which the shares will be transferred.

2.    International Securities Identification Number (ISIN)

International Securities Identification Number or as it is commonly known ISIN is a unique ID number appropriated to each share of an investor which he holds in a Demat Account. In order for the transfer to take place, ISIN has to be provided to designate which particular shares are to be transferred.

3.    Inter or Intra

This is the distinctive part of DIS where an investor has to choose whether to make an intra-depository or inter-depository transfer. In the case of intra-depository transfer, the column denoted as ‘off-market transfer’ has to be selected. Whereas, in the case of inter-depository transfer, the column designated ‘inter-depository’ has to be selected. An investor should be extra careful while filling this part of DIS.

4.    Signature

Little needs to be said about this part of DIS. Just like any other important document, DIS too needs to be signed. Once an investor has signed DIS, it should be submitted to the broker.

A broker may charge a small fee for the transfer of shares. It usually takes 3-5 business days for the shares to be transferred.

 

Online Transfer of Shares

Central Depository Services Limited (CDSL) has made the online transfer of shares a very easy process. All that an investor has to do is to follow these simple steps.

  1. The ‘Register Online’ option at the CDSL website has to be selected.
  2. There would appear an option called EASIEST which then has to be selected.
  3. A form would generate which accordingly has to be filled.
  4. Once the form fill-up is complete, a print out of the same has to be taken out. This print out is to be submitted to the account holder’s Depository Participant.
  5. The DP will verify the document and once the verification process is completed, a password will be generated.

Using this password, an investor can log in and transfer shares on his own.

Thus, the two ways in which shares can be transferred from one Demat Account to another is not at all complex and can be easily achieved through both manual and online procedure. With a proper understanding of what is Demat Account and how the transfer of shares takes place, an investor can effectively send the shares to another account either on his own or through the help of a DP.

 

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