Regulatory Framework Affecting Multinational Companies

Treaties, Conventions, and Agreements Affecting Multinational Companies

Question:

What Are the Regulatory Framework/S Affecting the Multinational Company?

 What Are The Treaties, Conventions Or Agreements That Have Impacted On The Products Or Services That Multinational Company Provides In Australia?

Suncorp Group Limited is a Australian conglomerate with interests in insurance, finance and banking. It also operates in other countries around the world like New Zealand and the United Kingdom. It has its headquarters in Brisbane Australia in Queensland. Suncorp Bank Limited is one of the largest banks in Australia and in other countries in its operations. Secondly, Suncorp insurance group is the largest general insurance group in Australia. The company was formed after a successful merger between Metway Bank, Suncorp and Queensland Industry Development Corporation (QIDC).

By the end of the year 2015, Suncorp group limited had a total of 14,500 employees and is listed among the largest individual employer in both Australia and New Zealand. It is also listed in the Australian Securities Exchange (ASX) and has been performing relatively well despite volatility in banking and insurance industry(Avadhani, 2009). It is also a relatively young company which after it was founded in 1996 has survived mostly through joint ventures and partnerships.

• Ziggy Switkowski- chairman
• Michael Cameron – Group CEO

The group operating revenue for the year ending 2015 is A$ 16.72 billion and its operating income rose to A$ 3.48 billion for the same year. Profit rose to A$ 1.3 billion for the same year.  The company is doing exceptionally well in insurance and banking and is riding high on the ability of its customers to take more and more of its products. It has remained a market leader due to innovation and product differentiation which are unique. Expansion strategies are also core on the boards and the executive trying to get into new markets and regions.

The draft Organic Monetary and Financial Code establishes the strengthening of the private insurance regime and changes its regulation from the superintendence of banks and insurance (SBS) to that of companies, with the entry into force of which will have the name of Superintendence of companies, securities and insurance(Brown, 2017). While the minimum amount for insurance advisors, risk inspectors, claims adjusters and reinsurance intermediaries will be determined by the monetary and financial regulation policy board. The capital will be paid with cash. The monetary and financial regulation policy board may at any time increase the minimum capital requirements.

In addition, the regulations establish that the resources for the increase of paid capital will come exclusively from contributions in money that cannot arise from loans or other direct or indirect financing that have been granted by the company itself; Of the legal reserve surplus; Of accumulated profits; And the capitalization of reserve accounts, provided that they are intended for this purpose(Dunning, 2013). Also, insurance and reinsurance companies must invest their technical reserves of at least 60% of paid-in capital and legal reserve in securities of the stock and real estate market, in the segments and percentages defined by the board, through norms of a general nature, seeking an adequate combination of risks, security and profitability. These companies are prohibited from trading securities issued by entities in the private financial sector.

Suncorp Group Limited: An Overview

The fines imposed by the Superintendence, in no case, will be less than 30 unified basic salaries, nor more than 0.3% of the sales reported by the infringing entity. In order to conclude with the liquidation processes, the superintendent, in accordance with the rules issued by the board, may authorize or arrange for the assets and liabilities of entities in liquidation to be temporarily or irrevocably contributed to a trustee that the assets and liabilities arising from said entities may be jointly managed(Du?wel and Frey, 2012). The Code also establishes that the regulatory board will have the power to set wage limits in companies. Observations on the project The executive secretary of the Australian Federation of Insurance Companies , made several observations on the project sent by the executive. The businessman showed his disagreement regarding the minimum capital regime for the start of operations and raises that for insurance is $ 5 million and for reinsurance $ 8 million.

 Insurance and reinsurance companies are obliged to contract external auditors, as well as risk rating firms that must be legal entities that will be subject to the qualification standards. The shareholders, board members and administrators will be personally and financially responsible for the deficit that is determined to cover the liabilities of the entity in liquidation(Hill and Hult, n.d.).

1. Regulating the Insurance Activity
2. To interpret, apply and resolve, for administrative purposes, that related to Mutual Insurance Institutions and Societies.
3. Adopt all measures related to the creation, organization and operation of the National Insurance Institutions, after consulting the Bank of Australia .

1. Authorization to create a new Insurance Company
2. Authorization to function as an Insurance or Mutual Insurance Company.
3. Authorization of officials of the first two levels in one of these organizations.
4. Authorization of a new branch.

1. Supervise, monitor and, if applicable, punish that the operation of the Insurer and Bonding sectors adhere to the regulatory framework.
2. To preserve the financial solvency and stability of the Institutions and thus guarantee the interests of the users.

1. A) Inspection and supervision of Insurance Companies and Insurance Agents.
2. B) Solvency and Stability of Insurance Companies, solvency margin and reserves.

Nonetheless, this law maintains some monopolized insurance contracts in the hands of the Bank of Insurance, that is to say that they can only be contracted with this entity, as is the case of insurance contracts concluded by state public persons themselves (they are not monopolized The insurances contracted by the groups of civil servants of said public persons (Dunning, 2013). 

That is to say that in spite of the monopoly of the insurance activity, monopolized in the hands of the state entity important areas in the matter. It is singled out as an off-shore insurance operation, seeking as the ultimate goal of the norm the protection of insurance companies legally installed in our country.

Its directors or directors may only be individuals. Companies must also require prior authorization, under penalty of nullity, from the Superintendence of Insurance and Reinsurance to transfer the shares, specifying in such request the identity of the new holder(Jachia and Nikonov, 2012). This implies a strict control by the Superintendence of Insurance and Reinsurance of the holders of the shares of insurance and reinsurance companies, trying to control the solvency that is essential in the insurance and reinsurance activity for the interests and purposes involved.

Likewise, such companies must adopt social denominations that are clear and that leave no doubt about their nature and individuality, in the opinion of the Superintendence of Insurance and Reinsurance, being prohibited the use of denominations related to the insurance or reinsurance activity by entities not authorized to operate in insurance and reinsurance. The Superintendence of insurance and reinsurance can take corrective measures in this regard and even advise the central bank to arrange the temporary closure of the infringing entities, or their final closure prior authorization from the executive(LANG, 2016).

Suncorp's Performance and Expansion Strategies

In this sense, it should be taken into account that the balance sheets and financial statements of such companies must be periodically presented for control to the Superintendency of Insurance and Reinsurance and that the investment possibilities of the assets and reserves of the insurers and reinsurers installed In the country as to the form and type of investments that are authorized to carry out, are specially regulated in Circulars issued by the Superintendence of Insurance and Reinsurance. (Odle, 2013) .

In the case of multinationals, especially those with Australian origin, this figure and the culture of regulatory compliance and business ethics have come from the matrix to its different divisions. "In the Australian company, you are breastfeeding compliance as something intrinsic to the company,"

Insurance entities must file with the banking the model of the policies with their annexes, which are usually offered to the public in advance of the date scheduled to begin their use. Likewise, when making modifications to these models a complete copy must be sent.

The Banking deposits in an ordered manner by entity and branch and in chronological order, the models policies and annexes that are sent.

Financing of premiums and portfolio provision

Insurance companies may finance the payment of the insurance premiums they issue, subject to the following conditions provided that they do not exceed seventy percent (70%) of the total value of the premium paid by the policyholder and without exceeding the Individual limits of indebtedness provided for in (Peng, 2017). The resources with which the payment of premiums is financed must come from the patrimony and other funds that do not correspond to the technical reserves. The planned financing mechanisms cannot be applied to the premiums corresponding to the insurance contracts whose form of payment through this modality was not previously agreed.

Insurance premiums not collected in the period foreseen for payment or not financed under the terms and conditions above, must be provisioned according to the current legal regulations.

Insurance companies may transfer their insurance contracts, totally or partially, to another that exploits the corresponding branch. When the assignment is made on twenty-five percent (25%) or more of the portfolio of the same branch, it requires the prior approval of the banking superintendence.

The Ministry of trade and foreign affairs has included in the digital library of treaties the instruments celebrated by our country and its institutions during their more than two hundred years of existence. It has been decided to include existing agreements as well as those instruments that are not in force. In order to be able to satisfy the consultations on existing norms there are enormous amount of requests from researchers, historians, non-governmental organizations and other public or private institutions that are interested in the non-binding instruments and agreements. The instruments have not come into force, they have become extinct or are inter-institutional in character. Insurance premiums not collected in the period foreseen for payment or not financed under the terms and conditions above, must be provisioned according to the current legal regulations.

The Insurer guarantees the payment of the fixed and non-recoverable expenses and disbursements in which the insured has incurred in connection with the planning, preparation and execution of the event or insured event, in the event of cancellation or postponement of the same, due to any causes unforeseeable and fortuitous and beyond the control of the Insured.

Having a good insurance that supports the organization of a congress or convention is practically mandatory. The differential value is the assistance offered to participants in the event of unforeseen events such as: modification of dates, cancellations, medical care, etc. Having a correct coverage for the participants to the congress or convention can determine the savoir-faire of a good organizer, impacting on a positive image for future calls.

We study each case, taking into account the specific characteristics, and can ensure, in case of cancellation of the congress, the budget items we consider, the needs of attendees regardless of their origin, as well as atypical situations that are far from the reach of any organizer.

At the same time, it is a guarantee for the organizer of the congress or convention; Knowing that it may have a margin of maneuver, if necessary, by having a correct coverage that covers the circumstances that may affect the good development of the event.

Also, insurance and reinsurance companies must invest their technical reserves of at least 60% of paid-in capital and legal reserve in securities of the stock and real estate market, in the segments and percentages defined by the board, through norms of a general nature, seeking an adequate combination of risks, security and profitability(Sleeboom-Faulkner, 2010). These companies are prohibited from trading securities issued by entities in the private financial sector. insurance and reinsurance companies are obliged to contract external auditors, as well as risk rating firms that must be legal entities that will be subject to the qualification standards.

References

Avadhani, V. (2009). Global Business. Mumbai: Global Media.

Brown, K. (2017). Taxation and Development - A Comparative Study. Cham: Springer International Publishing.

Dunning, J. (2013). Multinationals. Routledge.

Du?wel, C. and Frey, R. (2012). Competition for internal funds within multinational banks. Frankfurt am Main: Dt. Bundesbank.

Hill, C. and Hult, G. (n.d.). Global business today.

Jachia, L. and Nikonov, V. (2012). Risk management in regulatory frameworks. New York: United Nations.

LANG, M. (2016). INTERNATIONAL ARBITRATION IN TAX MATTERS. [S.l.]: IBFD.

Muchlinski, P. (2007). Multinational Enterprises & the Law. Oxford: OUP Oxford.

Odle, M. (2013). Multinational Banks and Underdevelopment. Elsevier Science.

Onida, F. and Viesti, G. (n.d.). The Italian multinationals.

Peng, M. (2017). Global business. Australia: Cengage Learning.

Sleeboom-Faulkner, M. (2010). Frameworks of choice. Amsterdam: Amsterdam University Press.