Statistical Units in Statistical Business Registers and SNA UNECE TF on Business Registers Meeting of the Advisory Expert Group on National Accounts, September 2014

TF on Statistical Business Registers Established by the CES Bureau in November 2011 to develop a set of international guidelines for drawing statistical business registers Final report to be submitted to the CES Bureau in February 2015 .. and to the CES for endorsement in June 2015

Statistical Units Main units in SBR: enterprise, local kind-of activity unit (establishment), kind-of-activity unit, local unit and enterprise group Legal units (entities): provide the link to the administrative data sources Main units in the SNA: institutional units, enterprises and establishments No concerns for establishments Clarification about institutional units, enterprise units and the link between them, mainly in the context of MNEs

Question 1 An institutional unit is defined as an economic entity, capable in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities (SNA, para. 4.2). Two types of institutional units: households and legal or social entities (para 4.3). Legal or social entities engage in economic activities and transactions in their own right, such as corporation, NPI or government unit (para 4.6). The term corporation covers legally constituted corporations and also cooperatives, limited partnerships, notional resident units and quasi- corporations …(Chapter 4, Section B) Q1: Does an institutional unit of the second type (legal or social entities) always correspond to a legal entity? Can an institutional unit be composed of more than one legal entity?

Question 2 A legally constituted corporation is a legal entity, created for the purpose of producing goods or services for the market, that may be a source of profit or other financial gain to its owner(s); it is collectively owned by shareholders who have the authority to appoint directors responsible for its general (para 4.39). Q2: How is “for the market” defined? Is a corporation producing solely goods for another corporation of the same conglomerate producing for the market, even if it has no direct sales to a corporation outside the group? Is “for the market” the same as being a market producer (significant prices?).

Question 3 Certain cases require information on group of corporations as a whole. However, each corporation should be treated as a separate institutional unit, whether or not it forms part of a group. Each corporation remains responsible for its own production activities (para. 4.51). Q 3: From this paragraph can it be concluded that each subsidiary corporation shall be treated as a separate institutional unit, if it is producing “for the market”? November 2010

Question 4 HO, holdings and SPE’s are discussed in Ch. 4 Section B.2 of the SNA. Para. 4.61 states that a captive financial institution cannot act independently from its parent. It is only treated differently, when resident in a different economy from its parent. When resident of the same economy, it is treated as “artificial subsidiary” i.e. an integral part of the parent and its accounts are consolidated with those of the parent. (further artificial subsidiaries are explained in para 4.62-64) Q 4: In case of captive financial institutions and artificial subsidiaries the institutional parent unit consists of more than one corporation (legal units), namely the one of the parent itself and the corporation of the captive financial institution or the artificial subsidiary? November 2010

Question 5 Para 4.66 emphasizes the difference between units with ancillary activities and artificial subsidiaries. However, a unit with ancillary activities only will generally not be considered an institutional unit. Q5: If a corporation is undertaking only ancillary activities for its group, and the corporation is resident in the same economy as the units which it serves, will it also be treated as a unit which does not satisfy the conditions of being an institutional unit? November 2010

Question 6 SNA defines the enterprise as the view of an institutional unit as a producer of goods and services (para 5.1) . An enterprise is an economic transactor, with autonomy in financial and economic decisions and responsible for allocation of resources for the production of goods and services (para. 77 of ISIC Rev.4) Q 6: If an enterprise is just a specific view of an institutional unit, the enterprise must also fulfil the conditions of an institutional unit and can consist of more than one corporation? November 2010

Question 7 Q 7: The term enterprise in the SNA seems not to be restricted to “market” or “profit” units. Therefore the term is also used in case of non-profit and government institutions? November 2010