1. 1 AEG New York, 23 -25 April 2012 Delineation of classification of head offices, holding and SPEs AEG New York, 23 -25 April 2012

2. 2 SNA 1993 and SNA 2008 SNA 1993: Holdings to be classified according to the activity of the subsidiaries; no explicit guidance on classification of head offices and SPEs SNA 2008: –Head offices: according to main activity of the subsidiaries (S.11 or S.126 (financial auxiliaries)) –Holdings: S.127 (Captive financial inst. and money lenders) –SPEs owned by residents (recognized as institutional units) and SPEs owned by non-residents: Captive financial institutions: S.127 Artificial subsidiaries (only the ones owned by non-residents): according to main activity SPEs of (non-resident) government: S.125 or S.127?

3. 3 Head offices versus holdings Head offices: “overseeing and managing of other units of the company; undertaking the strategic and organizational planning and decision taking role of the company; exercising control and manage day-to- day operations of their related units” Holdings: units that hold the assets (owning controlling levels of equity) of a group of subsidiary corporations and whose principal activity is owning the group. … do not provide any other service to the enterprises in which the equity is held, i.e. they do not administer or manage other units”

4. 4 Head offices versus holdings Question 1: What level of management control is required, in particular in cases when the company is responsible for the main business decisions for the entire group and exercises managerial control over the companies of the group? –Borderline between providing and not providing services? –Holding issuing bonds on behalf of the enterprise group, and providing part of the management services? –Should the income of a holding only relate to the assets of the subsidiaries? –Head office holding the assets of its subsidiaries?

5. 5 Head offices versus holdings Question 2: Institutional independence of holdings: “head offices and holding companies are institutional units” (ESA 2010); “holdings that simply own the assets of subsidiaries” are to be treated as captive financial institutions (SNA 2008). Question 3: How to record holdings owning a single corporation? Question 4: Are all head offices of financial subsidiaries to be classified as financial auxiliaries?

6. 6 SPEs Question 5: More precise definition and classification for SPEs needed (see e.g. decision trees developed by Eurostat, Guide on Globalization)? Question 6: More guidance needed for the delineation of S.125, S.126, and S.127? –FVCs engaged in securitization versus SPEs holding assets for securitization? –SPEs owned by non-resident governments?