DDI_WLD_2011_DB_v02_M_WBDG
2010-11-05
NADA
DDI Document - Version 02 - (04/21/21)
This version is identical to DDI_WLD_2011_DB_v01_M_WBDG but country field has been updated to capture all the countries covered by survey.
Doing Business 2011
DB 2010
WLD_2011_DB_v01_M
International Finance Corporation (IFC)
World Bank
NADA
Doing Business Project
Version 2010
The Doing Business Project provides objective measures of business regulations and their enforcement across 183 economies and selected cities at the subnational and regional level.
The Doing Business Project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle.
By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages countries to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each country.
In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the country or region and with the 183 economies that Doing Business has ranked.
The first Doing Business report, published in 2003, covered 5 indicator sets in 133 economies. The 2010 report covered 10 indicator sets in 183 economies. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world.
Afghanistan
Angola
Albania
United Arab Emirates
Argentina
Armenia
Antigua and Barbuda
Australia
Austria
Azerbaijan
Burundi
Belgium
Benin
Burkina Faso
Bulgaria
Bahrain
Bahamas, The
Bosnia and Herzegovina
Bolivia
Brazil
Brunei Darussalam
Bhutan
Botswana
Central African Republic
Canada
Switzerland
Chile
China
Côte d'Ivoire
Cameroon
Colombia
Comoros
Cabo Verde
Costa Rica
Cyprus
Czech Republic
Germany
Djibouti
Dominica
Denmark
Dominican Republic
Algeria
Ecuador
Spain
Estonia
Ethiopia
Finland
Fiji
France
Micronesia, Fed. Sts.
Gabon
United Kingdom
Georgia
Ghana
Guinea
Gambia, The
Guinea-Bissau
Equatorial Guinea
Greece
Grenada
Guatemala
Guyana
Honduras
Croatia
Haiti
Indonesia
India
Ireland
Iraq
Iceland
Israel
Italy
Jamaica
Jordan
Japan
Kazakhstan
Kenya
Kyrgyz Republic
Cambodia
Kiribati
St. Kitts and Nevis
Kosovo
Kuwait
Lao PDR
Lebanon
Liberia
St. Lucia
Sri Lanka
Lesotho
Lithuania
Luxembourg
Latvia
Morocco
Moldova
Madagascar
Maldives
Mexico
Marshall Islands
North Macedonia
Mali
Montenegro
Mongolia
Mozambique
Mauritania
Mauritius
Malawi
Malaysia
Namibia
Niger
Nigeria
Nicaragua
Netherlands
Norway
Nepal
New Zealand
Oman
Pakistan
Panama
Peru
Philippines
Palau
Papua New Guinea
Poland
Puerto Rico
Portugal
Paraguay
Qatar
Romania
Russian Federation
Rwanda
Saudi Arabia
Sudan
Senegal
Singapore
Solomon Islands
Sierra Leone
El Salvador
Serbia
Sao Tome and Principe
Suriname
Slovak Republic
Slovenia
Sweden
Eswatini
Seychelles
Syrian Arab Republic
Chad
Togo
Thailand
Tajikistan
Timor-Leste
Tonga
Trinidad and Tobago
Tunisia
Turkey
Taiwan, China
Tanzania
Uganda
Ukraine
Uruguay
United States
Uzbekistan
St. Vincent & Grenadines
Venezuela, RB
Vietnam
Vanuatu
West Bank and Gaza
Samoa
Yemen, Rep.
South Africa
Zambia
Zimbabwe
The 2010 report covered 10 indicator sets in 183 economies.
Face-to-face [f2f]
WLD_2010_DB_v01_M
1464
48
Economy
Economy
Economy
Economy
Economy
1464
Afghanistan
Albania
Algeria
Angola
Antigua and Barbuda
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahamas, the
Bahrain
Bangladesh
Belarus
Belgium
Belize
Benin
Bhutan
Bolivia
Bosnia and Herzegovina
Botswana
Brazil
Brunei Darussalam
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Central African Republic
Chad
Chile
China
Colombia
Comoros
Congo, Dem. Rep.
Congo, Rep.
Costa Rica
Croatia
Cyprus
Czech Republic
Côte d'Ivoire
Denmark
Djibouti
Dominica
Dominican Republic
Ecuador
Egypt, Arab Rep.
El Salvador
Equatorial Guinea
Eritrea
Estonia
Ethiopia
Fiji
Finland
France
Gabon
Gambia, the
Georgia
Germany
Ghana
Greece
Grenada
Guatemala
Guinea
Guinea-Bissau
Guyana
Haiti
Honduras
Hong Kong SAR, China
Hungary
Iceland
India
Indonesia
Iran, Islamic Rep.
Iraq
Ireland
Israel
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Kiribati
Korea, Rep.
Kosovo
Kuwait
Kyrgyz Republic
Lao PDR
Latvia
Lebanon
Lesotho
Liberia
Lithuania
Luxembourg
Macedonia, FYR
Madagascar
Malawi
Malaysia
Maldives
Mali
Marshall Islands
Mauritania
Mauritius
Mexico
Micronesia, Fed. Sts.
Moldova
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nepal
Netherlands
New Zealand
Nicaragua
Niger
Nigeria
Norway
Oman
Pakistan
Palau
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Qatar
Romania
Russian Federation
Rwanda
Samoa
Saudi Arabia
Senegal
Serbia
Seychelles
Sierra Leone
Singapore
Slovak Republic
Slovenia
Solomon Islands
South Africa
Spain
Sri Lanka
St. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines
Sudan
Suriname
Swaziland
Sweden
Switzerland
Syrian Arab Republic
São Tomé and Principe
Taiwan, China
Tajikistan
Tanzania
Thailand
Timor-Leste
Togo
Tonga
Trinidad and Tobago
Tunisia
Turkey
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Uzbekistan
Vanuatu
Venezuela, R.B.
Vietnam
West Bank and Gaza
Yemen, Rep.
Zambia
Zimbabwe
Survey year
Survey year
Survey year
Survey year
Survey year
1464
2004
2005
2006
2007
2008
2009
2010
2011
Ease of Doing Business Rank
Ease of Doing Business Rank
Ease of Doing Business Rank
Ease of Doing Business Rank
Ease of Doing Business Rank
366
1098
1
183
Starting a Business - Rank
Starting a Business - Rank
Starting a Business - Rank
Starting a Business - Rank
Starting a Business - Rank
366
1098
1
183
Doing Business records all procedures that are officially required for an entrepreneur to start up and formally operate an industrial or commercial business. These include obtaining all necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities. The ranking on the ease of starting a business is the simple average of the percentile rankings on its component indicators.
After a study of laws, regulations and publicly available information on business entry, a detailed list of procedures is developed, along with the time and cost of complying with each procedure under normal circumstances and the paid-in minimum capital requirements. Subsequently, local incorporation lawyers and government officials complete and verify the data.
Information is also collected on the sequence in which procedures are to be completed and whether procedures may be carried out simultaneously. It is assumed that any required information is readily available and that all agencies involved in the start-up process function without corruption. If answers by local experts differ, inquiries continue until the data are reconciled.
To make the data comparable across economies, several assumptions about the business and the procedures are used.
Assumptions about the business
The business:
- Is a limited liability company. If there is more than one type of limited liability company in the economy, the limited liability form most popular among domestic firms is chosen. Information on the most popular form is obtained from incorporation lawyers or the statistical office.
- Operates in the economy’s largest business city.
- Is 100% domestically owned and has 5 owners, none of whom is a legal entity.
- Has start-up capital of 10 times income per capita at the end of 2009, paid in cash.
- Performs general industrial or commercial activities, such as the production or sale to the public of products or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.
- Leases the commercial plant and offices and is not a proprietor of real estate.
- Does not qualify for investment incentives or any special benefits.
- Has at least 10 and up to 50 employees 1 month after the commencement of operations, all of them nationals.
- Has a turnover of at least 100 times income per capita.
- Has a company deed 10 pages long.
Starting a Business - Procedures (number)
Starting a Business - Procedures (number)
Starting a Business - Procedures (number)
Starting a Business - Procedures (number)
Starting a Business - Procedures (number)
1382
82
28
A procedure is defined as any interaction of the company founders with external parties (for example, government agencies, lawyers, auditors or notaries). Interactions between company founders or company officers and employees are not counted as procedures. Procedures that must be completed in the same building but in different offices are counted as separate procedures. If founders have to visit the same office several times for different sequential procedures, each is counted separately. The founders are assumed to complete all procedures themselves, without middlemen, facilitators, accountants or lawyers, unless the use of such a third party is mandated by law. If the services of professionals are required, procedures conducted by such professionals on behalf of the company are counted separately. Each electronic procedure is counted separately. If 2 procedures can be completed through the same website but require separate filings, they are counted as 2 procedures.
Both pre- and postincorporation procedures that are officially required for an entrepreneur to formally operate a business are recorded (table).
Procedures required for official correspondence or transactions with public agencies are also included. For example, if a company seal or stamp is required on official documents, such as tax declarations, obtaining the seal or stamp is counted. Similarly, if a company must open a bank account before registering for sales tax or value added tax, this transaction is included as a procedure. Shortcuts are counted only if they fulfill 4 criteria: they are legal, they are available to the general public, they are used by the majority of companies, and avoiding them causes substantial delays.
Only procedures required of all businesses are covered. Industry-specific procedures are excluded. For example, procedures to comply with environmental regulations are included only when they apply to all businesses conducting general commercial or industrial activities. Procedures that the company undergoes to connect to electricity, water, gas and waste disposal services are not included.
Starting a Business - Time (days)
Starting a Business - Time (days)
Starting a Business - Time (days)
Starting a Business - Time (days)
Starting a Business - Time (days)
1382
82
694
Time is recorded in calendar days. The measure captures the median duration that incorporation lawyers indicate is necessary to complete a procedure with minimum follow-up with government agencies and no extra payments. It is assumed that the minimum time required for each procedure is 1 day. Although procedures may take place simultaneously, they cannot start on the same day (that is, simultaneous procedures start on consecutive days). A procedure is considered completed once the company has received the final document, such as the company registration certificate or tax number. If a procedure can be accelerated for an additional cost, the fastest procedure is chosen. It is assumed that the entrepreneur does not waste time and commits to completing each remaining procedure without delay. The time that the entrepreneur spends on gathering information is ignored. It is assumed that the entrepreneur is aware of all entry regulations and their sequence from the beginning but has had no prior contact with any of the officials.
Starting a Business - Cost (% of income per capita)
Starting a Business - Cost (% of income per capita)
Starting a Business - Cost (% of income per capita)
Starting a Business - Cost (% of income per capita)
Starting a Business - Cost (% of income per capita)
1382
82
6375.5
Cost is recorded as a percentage of the economy’s income per capita. It includes all official fees and fees for legal or professional services if such services are required by law. Fees for purchasing and legalizing company books are included if these transactions are required by law. The company law, the commercial code and specific regulations and fee schedules are used as sources for calculating costs. In the absence of fee schedules, a government officer’s estimate is taken as an official source. In the absence of a government officer’s estimate, estimates of incorporation lawyers are used. If several incorporation lawyers provide different estimates, the median reported value is applied. In all cases the cost excludes bribes.
Starting a Business - Min. capital (% of income per capita)
Starting a Business - Min. capital (% of income per capita)
Starting a Business - Min. capital (% of income per capita)
Starting a Business - Min. capital (% of income per capita)
Starting a Business - Min. capital (% of income per capita)
1382
82
5111.9
The paid-in minimum capital requirement reflects the amount that the entrepreneur needs to deposit in a bank or with a notary before registration and up to 3 months following incorporation and is recorded as a percentage of the economy’s income per capita. The amount is typically specified in the commercial code or the company law. Many economies have a minimum capital requirement but allow businesses to pay only a part of it before registration, with the rest to be paid after the first year of operation. In Italy in June 2009 the minimum capital requirement for limited liability companies was €10,000, of which at least €2,500 was payable before registration. The paid-in minimum capital recorded for Italy is therefore €2,500, or 10.1% of income per capita. In Mexico the minimum capital requirement was 50,000 pesos, of which one-fifth needed to be paid before registration. The paidin minimum capital recorded for Mexico is therefore 10,000 pesos, or 9.2% of income per capita.
Dealing with Construction Permits - Rank
Dealing with Construction Permits - Rank
Dealing with Construction Permits - Rank
Dealing with Construction Permits - Rank
Dealing with Construction Permits - Rank
366
1098
1
183
Doing Business records all procedures required for a business in the construction industry to build a standardized warehouse. These procedures include submitting all relevant project-specific documents (for example, building plans and site maps) to the authorities; obtaining all necessary clearances, licenses, permits and certificates; completing all required notifications; and receiving all necessary inspections. Doing Business also records procedures for obtaining connections for electricity, water, sewerage and a fixed land line. Procedures necessary to register the property so that it can be used as collateral or transferred to another entity are also counted. The survey divides the process of building a warehouse into distinct procedures and calculates the time and cost of completing each procedure in practice under normal circumstances. The ranking on the ease of dealing with construction permits is the simple average of the percentile rankings on its component indicators.
Information is collected from experts in construction licensing, including architects, construction lawyers, construction firms, utility service providers and public officials who deal with building regulations, including approvals and inspections. To make the data comparable across economies, several assumptions about the business, the warehouse project and the utility connections are used.
Assumptions about the construction company
The business (BuildCo):
- Is a limited liability company.
- Operates in the economy’s largest business city.
- Is 100% domestically and privately owned.
- Has 5 owners, none of whom is a legal entity.
- Is fully licensed and insured to carry out construction projects, such as building warehouses.
- Has 60 builders and other employees, all of them nationals with the technical expertise and professional experience necessary to obtain construction permits and approvals.
- Has at least 1 employee who is a licensed architect and registered with the local association of architects.
- Has paid all taxes and taken out all necessary insurance applicable to its general business activity (for example, accidental insurance for construction workers and third-person liability).
- Owns the land on which the warehouse is built.
- Assumptions about the warehouse
The warehouse:
- Will be used for general storage activities, such as storage of books or stationery. The warehouse will not be used for any goods requiring special conditions, such as food, chemicals or pharmaceuticals.
- Has 2 stories, both above ground, with a total surface of approximately 1,300.6 square meters (14,000 square feet). Each floor is 3 meters (9 feet, 10 inches) high.
- Has road access and is located in the periurban area of the economy’s largest business city (that is, on the fringes of the city but still within its official limits).
- Is not located in a special economic or industrial zone. The zoning requirements for warehouses are met by building in an area where similar warehouses can be found.
- Is located on a land plot of 929 square meters (10,000 square feet) that is 100% owned by BuildCo and is accurately registered in the cadastre and land registry.
- Is a new construction (there was no previous construction on the land).
- Has complete architectural and technical plans prepared by a licensed architect.
- Will include all technical equipment required to make the warehouse fully operational.
- Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).
Assumptions about the utility connections
The electricity connection:
- Is 10 meters (32 feet, 10 inches) from the main electricity network.
- Is a medium-tension, 3-phase, 4-wire Y, 140-kilovolt-ampere (kVA) connection. Three-phase service is available in the construction area.
- Will be delivered by an overhead service, unless overhead service is not available in the periurban area.
- Consists of a simple hookup unless installation of a private substation (transformer) or extension of network is required.
- Requires the installation of only one electricity meter.
- BuildCo is assumed to have a licensed electrician on its team to complete the internal wiring for the warehouse.
The water and sewerage connection:
- Is 10 meters (32 feet, 10 inches) from the existing water source and sewer tap.
- Does not require water for fire protection reasons; a fire extinguishing system (dry system) will be used instead. If a wet fire protection system is required by law, it is assumed that the water demand specified below also covers the water needed for fire protection.
- Has an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day.
- Has a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.
- Will have a constant level of water demand and wastewater flow throughout the year. The telephone connection:
- Is 10 meters (32 feet, 10 inches) from the main telephone network.
- Is a fixed land line.
Dealing with Construction Permits - Procedures (number)
Dealing with Construction Permits - Procedures (number)
Dealing with Construction Permits - Procedures (number)
Dealing with Construction Permits - Procedures (number)
Dealing with Construction Permits - Procedures (number)
1075
389
6
64
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
28
30
31
32
33
34
36
37
38
49
53
63
64
999999
no practice
Sysmiss
A procedure is any interaction of the company’s employees or managers with external parties, including government agencies, notaries, the land registry, the cadastre, utility companies, public and private inspectors and technical experts apart from in-house architects and engineers. Interactions between company employees, such as development of the warehouse plans and inspections conducted by employees, are not counted as procedures. Procedures that the company undergoes to connect to electricity, water, sewerage and telephone services are included. All procedures that are legally or in practice required for building a warehouse are counted, even if they may be avoided in exceptional cases.
Dealing with Construction Permits - Time (days)
Dealing with Construction Permits - Time (days)
Dealing with Construction Permits - Time (days)
Dealing with Construction Permits - Time (days)
Dealing with Construction Permits - Time (days)
1075
389
25
1179
25
34
38
40
43
50
51
55
56
57
62
64
65
66
67
69
73
74
75
76
77
81
84
85
87
88
89
91
93
94
95
97
98
100
102
104
105
106
107
113
114
116
117
118
119
120
121
122
125
127
128
131
132
133
134
135
137
138
139
142
143
144
146
149
150
151
152
154
155
156
158
160
161
162
163
164
165
167
168
169
171
172
173
174
177
178
179
180
182
183
184
185
186
187
188
189
191
192
194
195
197
198
199
201
203
204
205
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
223
226
227
228
229
230
231
233
234
235
236
239
240
242
243
248
249
252
254
255
257
259
260
261
265
268
271
272
274
275
277
278
279
283
285
286
287
291
292
294
296
308
311
315
316
320
321
322
327
328
331
332
334
336
337
338
340
345
346
349
350
361
374
381
390
395
398
402
410
411
420
424
431
467
482
498
535
538
540
592
601
628
629
653
670
671
677
709
778
1012
1179
999999
no practice
Sysmiss
Time is recorded in calendar days. The measure captures the median duration that local experts indicate is necessary to complete a procedure in practice. It is assumed that the minimum time required for each procedure is 1 day. Although procedures may take place simultaneously, they cannot start on the same day (that is, simultaneous procedures start on consecutive days). If a procedure can be accelerated legally for an additional cost, the fastest procedure is chosen. It is assumed that BuildCo does not waste time and commits to completing each remaining procedure without delay. The time that BuildCo spends on gathering information is ignored. It is assumed that BuildCo is aware of all building requirements and their sequence from the beginning.
Dealing with Construction Permits - Cost (% of income per capita)
Dealing with Construction Permits - Cost (% of income per capita)
Dealing with Construction Permits - Cost (% of income per capita)
Dealing with Construction Permits - Cost (% of income per capita)
Dealing with Construction Permits - Cost (% of income per capita)
1075
389
0.6
282212.1
0.6
0.8
0.9
4.6
4.8
4.9
5
5.1
5.2
5.3
5.4
5.5
5.6
5.9
6.1
6.6
6.7
6.9
7
7.1
7.3
7.4
7.9
8.4
8.7
9.2
9.4
9.5
9.8
10
10.3
10.4
10.6
10.7
10.8
11
11.1
11.2
11.3
11.5
11.7
11.8
12.1
12.4
12.7
12.8
12.9
13.1
13.2
13.3
13.4
13.6
13.8
14.4
14.6
14.7
14.9
15
15.1
15.2
16.2
16.4
16.7
16.9
17.1
17.3
17.6
17.8
18
18.5
18.6
18.7
19
19.1
19.2
19.3
19.4
19.5
19.6
19.7
19.9
20
20.1
20.3
20.6
20.7
20.8
21
21.1
21.2
21.3
21.6
21.9
22.2
22.5
22.9
23.1
23.2
23.6
23.8
24.2
24.5
24.7
24.8
24.9
25
25.3
25.8
25.9
26.3
26.4
26.9
27.2
27.5
27.6
27.8
28.1
28.9
29
29.3
29.5
29.9
30.2
30.3
30.4
30.7
31
31.1
31.9
32.2
32.3
32.5
32.8
33.5
33.7
34.3
34.5
34.9
35.1
35.5
35.8
35.9
36
36.3
36.4
36.8
37.3
37.5
37.6
37.7
38
39.4
39.6
39.9
40.6
40.8
41
41.4
41.7
42.9
43.3
43.8
44
44.2
44.4
44.8
44.9
45
45.1
45.9
46.1
46.2
46.3
46.4
46.5
46.6
46.7
46.8
47
47.4
48
49.6
49.7
49.8
49.9
50.2
50.4
50.5
50.6
50.7
50.9
51.2
51.3
52.1
52.7
52.9
53.2
53.5
53.6
53.8
53.9
54
54.2
54.6
55.1
57.2
57.8
58.7
58.8
58.9
59.2
59.3
59.4
60.2
60.3
60.9
61.2
61.3
61.7
61.8
62.2
63.1
63.5
63.7
63.8
63.9
64
64.1
64.2
64.3
64.6
65.1
65.2
66.6
67.7
67.8
68.1
68.2
68.8
68.9
69
69.1
69.3
70.2
70.4
70.5
70.9
71.3
71.4
71.5
71.6
71.9
72
72.6
72.9
73.7
73.9
74.3
76
77.5
77.8
77.9
78.3
78.7
79.2
79.8
79.9
80.6
80.9
81
81.3
81.8
82.8
84.5
85.1
85.4
87.1
87.9
88.5
88.9
89.3
90.9
91.2
91.8
92.8
93.8
94.8
95.1
95.4
95.7
96.2
97
97.6
97.7
97.8
99.1
99.6
100
100.7
100.8
100.9
101
101.3
102.4
103.3
103.5
103.7
103.8
104
104.5
104.9
105.1
105.7
106.2
106.3
106.5
106.6
107
107.2
107.3
107.4
107.6
108
108.7
109.1
109.4
109.9
110
112.1
112.2
112.8
113
113.1
113.8
113.9
114.2
115.4
115.5
115.7
116.3
117
118.2
118.3
119.1
119.6
119.7
119.8
120.5
120.9
121.6
121.8
121.9
122.3
122.7
123.3
123.7
124.1
124.2
124.3
124.7
126.7
128.1
128.4
130.1
130.5
130.8
131
131.1
131.2
131.3
131.6
131.7
132.5
132.8
133.1
133.9
134
134.2
135.1
135.5
135.6
136.4
136.6
136.9
137.2
138.2
138.5
138.9
139.7
139.9
142.2
142.3
142.9
143
144.1
144.3
144.4
145.1
147
147.1
147.3
149
149.8
151.3
152
152.1
152.4
153
153.9
154.2
154.6
157.2
157.5
158
158.4
159.4
160
160.3
161.2
161.7
164.5
165
166.2
166.3
166.9
167.8
169.9
170.2
170.4
170.9
171.4
171.7
172.1
172.2
172.8
173.3
173.4
174.6
175.1
175.5
176.3
177.1
179
179.3
181.8
182.4
183.3
183.6
184
188.3
192.1
192.2
193.5
194.8
194.9
195.6
196.3
197.9
199.6
200.3
202.4
203.4
205
206.4
208
208.3
208.6
209.4
209.8
210.1
210.5
211.7
212.9
213.2
215
215.2
218.1
218.8
220.7
221.3
222
227
227.6
227.7
227.8
228.3
229.3
230
230.6
230.9
231.4
232.9
233
234.1
237.7
239
239.9
240.1
241.1
241.6
242
243
243.3
243.8
244.2
246.2
246.7
247.7
247.8
248.1
248.4
249.3
249.6
250
251.5
252
253.7
254.4
255.5
255.8
258.1
258.3
259.5
260.5
263.7
264.5
265.7
269.3
269.6
272.7
273.5
274.4
275.2
276.4
278.9
284.7
288.3
288.8
292.5
293.7
295.8
297.4
298.3
298.9
301
303.6
304.7
308.3
309.4
309.8
311.1
311.9
313.3
313.5
314.9
316.6
317.7
319.4
320.5
322.3
322.6
324
326
328.5
331.6
334.7
336.4
338.9
339.9
342.2
343.3
344.7
351.6
353.6
355.7
356.7
357.4
357.7
363.2
363.7
365.9
367.3
368.5
369
369.9
371.6
373.2
373.6
376.7
378.7
381.3
382.3
383.3
386.1
388.2
388.4
388.9
391.7
392
394
396.3
397.9
398.8
398.9
400.8
402.8
405.9
409
412.5
415.5
416.8
419
419.6
421
421.6
422.1
427.1
431.7
435
436.5
438.4
439
442.3
446.5
448.2
449.5
452.2
456.1
459
461
463.1
463.2
464.6
465.1
469.1
469.3
469.5
471
471.1
473.9
474.9
475
476.8
477.3
480.4
488.4
493.4
493.6
499
499.9
500.4
504.1
505
506.3
506.5
506.8
514.2
518
519.5
522.6
523.3
523.4
525.3
528.7
530.3
536.2
537.3
540.3
544.9
550.8
551.3
553.3
556.1
558.1
562
563.1
564.7
565.1
565.5
568.4
569.5
570.5
570.7
570.8
573.4
575.7
576.1
578.1
579.2
580
581.4
582.9
583.3
591.7
597.5
597.7
599.4
602.4
603.6
607.1
617.3
618.9
628.9
629.3
630.7
631.4
632
634.1
639.1
645.1
650.8
653.4
654.9
658.3
662.5
665.4
666.9
668
675.2
684.5
687.5
688.4
693.4
694.3
697
697.1
698.4
705
709.9
710.4
716.3
717.5
718.3
719.3
721.2
739.8
740.5
747.9
751
758.7
762.2
764.8
767.1
773.8
778.5
778.7
786.3
788.4
788.5
790.3
790.7
791.3
805.3
815.9
817.1
817.8
818.5
822.1
825.9
831.1
831.2
833.9
840.2
843.5
844.8
846.3
849
850.9
856.5
857.9
858.7
866
871.8
875.4
880
882
892.1
896.5
898.6
915
916.2
922.1
922.7
927.2
930.3
931.1
941.4
945.7
955.1
976.4
983.4
984.8
986.4
996.1
998.3
1002.5
1011.1
1017.3
1017.7
1017.8
1023.4
1030.1
1031.9
1035.3
1038
1043.2
1051.1
1056.5
1074.9
1075
1086
1094.4
1099
1109.7
1110.6
1113
1121.7
1137.2
1140.9
1150
1154.3
1165.2
1178.4
1180.8
1183.3
1202.9
1206.6
1211.4
1215
1235.5
1235.8
1240.2
1241.9
1254.6
1277.9
1278.8
1281.6
1285.3
1287.8
1290.7
1291
1291.9
1311.1
1311.3
1316.7
1323.2
1335.2
1349.6
1362.4
1362.8
1366.3
1388.2
1390.5
1399.9
1400.1
1430.8
1442.9
1458.8
1486.5
1498.3
1510.5
1519.6
1540.9
1544.1
1578.8
1601.4
1604.8
1614
1615.1
1651.8
1663.8
1676
1676.4
1737.6
1738.3
1741.1
1746.5
1819.5
1821.4
1823.4
1862.8
1907.5
1929
2001
2020
2070.6
2087
2101
2143.7
2145.6
2177.7
2192.2
2197.4
2204.7
2233.9
2273.8
2276.5
2316.8
2352.3
2355
2365.5
2369.1
2394.9
2440.6
2445.9
2454.2
2588.5
2601.6
2607
2628.8
2664.9
2692.2
2694
2713.1
2717.8
2756.3
2762.3
2793.8
2820.8
2822.5
2850.6
2853.8
2919.3
2958.6
2985.6
3060.1
3086
3131.5
3197.4
3211
3281.3
3300.7
3569.8
3996.2
3997.4
4141
4167.8
4208.8
4505.8
4520.2
4711.9
4877.5
4934.3
5314.1
5578.5
5757
5757.4
6310.8
6383.4
6571.3
6684.4
6887.6
7047.6
7072.3
7158.2
7546.1
8020.6
8262
9372.6
9692.6
10702.1
11355.3
11720.7
12123
12877.6
13679.4
13770.3
14782.6
14918.9
20443.5
21230.8
22080.2
28295.9
29574.4
60988.7
65845.6
76820
282212.1
999999
no practice
Sysmiss
Cost is recorded as a percentage of the economy’s income per capita. Only official costs are recorded. All the fees associated with completing the procedures to legally build a warehouse are recorded, including those associated with obtaining land use approvals and preconstruction design clearances; receiving inspections before, during and after construction; getting utility connections; and registering the warehouse property. Nonrecurring taxes required for the completion of the warehouse project also are recorded. The building code, information from local experts and specific regulations and fee schedules are used as sources for costs. If several local partners provide different estimates, the median reported value is used.
Registering Property - Rank
Registering Property - Rank
Registering Property - Rank
Registering Property - Rank
Registering Property - Rank
366
1098
1
183
Doing Business records the full sequence of procedures necessary for a business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer’s name so that the buyer can use the property for expanding its business, use the property as collateral in taking new loans or, if necessary, sell the property to another business. The process starts with obtaining the necessary documents, such as a copy of the seller’s title if necessary, and conducting due diligence if required. The transaction is considered complete when it is opposable to third parties and when the buyer can use the property, use it as collateral for a bank loan or resell it. The ranking on the ease of registering property is the simple average of the percentile rankings on its component indicators.
Every procedure required by law or necessary in practice is included, whether it is the responsibility of the seller or the buyer or must be completed by a third party on their behalf. Local property lawyers, notaries and property registries provide information on procedures as well as the time and cost to complete each of them.
To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.
Assumptions about the parties
The parties (buyer and seller):
- Are limited liability companies.
- Are located in the periurban area of the economy’s largest business city.
- Are 100% domestically and privately owned.
- Have 50 employees each, all of whom are nationals.
- Perform general commercial activities.
- Assumptions about the property
The property:
- Has a value of 50 times income per capita. The sale price equals the value.
- Is fully owned by the seller.
- Has no mortgages attached and has been under the same ownership for the past 10 years.
- Is registered in the land registry or cadastre, or both, and is free of title disputes.
- Is located in a periurban commercial zone, and no rezoning is required.
- Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A 2-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition and complies with all safety standards, building codes and other legal requirements. The property of land and building will be transferred in its entirety.
- Will not be subject to renovations or additional building following the purchase.
- Has no trees, natural water sources, natural reserves or historical monuments of any kind.
- Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.
- Has no occupants (legal or illegal), and no other party holds a legal interest in it.
Registering Property - Procedures (number)
Registering Property - Procedures (number)
Registering Property - Procedures (number)
Registering Property - Procedures (number)
Registering Property - Procedures (number)
1196
268
1
18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
18
999999
no practice
Sysmiss
A procedure is defined as any interaction of the buyer or the seller, their agents (if an agent is legally or in practice required) or the property with external parties, including government agencies, inspectors, notaries and lawyers. Interactions between company officers and employees are not considered. All procedures that are legally or in practice required for registering property are recorded, even if they may be avoided in exceptional cases. It is assumed that the buyer follows the fastest legal option available and used by the majority of property owners. Although the buyer may use lawyers or other professionals where necessary in the registration process, it is assumed that it does not employ an outside facilitator in the registration process unless legally or in practice required to do so.
Registering Property - Time (days)
Registering Property - Time (days)
Registering Property - Time (days)
Registering Property - Time (days)
Registering Property - Time (days)
1196
268
1
956
1
2
3
4
5
6
7
8
9
11
12
14
15
16
17
18
19
20
21
22
23
24
25
26
27
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
54
55
56
57
58
59
60
61
62
63
64
66
67
68
69
70
71
72
73
74
75
76
77
78
79
81
82
83
84
86
88
91
92
93
94
98
101
103
104
107
108
111
113
117
120
122
123
124
128
132
134
135
136
137
144
145
147
152
162
169
174
182
183
184
186
188
193
194
197
204
210
211
231
235
236
245
250
252
274
295
297
315
331
334
371
391
397
399
405
425
513
683
956
999999
no practice
Sysmiss
Time is recorded in calendar days. The measure captures the median duration that property lawyers, notaries or registry officials indicate is necessary to complete a procedure. It is assumed that the minimum time required for each procedure is 1 day. Although procedures may take place simultaneously, they cannot start on the same day. It is assumed that the buyer does not waste time and commits to completing each remaining procedure without delay. If a procedure can be accelerated for an additional cost, the fastest legal procedure available and used by the majority of property owners is chosen. If procedures can be undertaken simultaneously, it is assumed that they are. It is assumed that the parties involved are aware of all regulations and their sequence from the beginning. Time spent on gathering information is not considered.
Registering Property - Cost (% of property value)
Registering Property - Cost (% of property value)
Registering Property - Cost (% of property value)
Registering Property - Cost (% of property value)
Registering Property - Cost (% of property value)
1196
268
30.8
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
5
5.1
5.2
5.3
5.4
5.5
5.6
5.8
5.9
6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
8
8.2
8.3
8.5
8.7
8.8
8.9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
10
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
11
11.1
11.2
11.3
11.4
11.5
11.6
11.8
11.9
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
13
13.1
13.2
13.3
13.4
13.5
13.6
13.7
13.8
13.9
14
14.2
14.7
14.8
14.9
15.1
15.3
15.6
15.7
15.9
16
16.9
17
17.2
17.3
17.8
18.1
18.2
18.5
18.6
18.7
18.9
19.1
19.2
19.3
19.4
19.5
19.6
20
20.3
20.6
20.8
20.9
21.1
21.2
21.4
21.5
22.2
22.4
22.6
22.9
24.7
24.8
25
25.1
26.9
27.1
27.9
28
28.1
30.8
999999
no practice
Sysmiss
Cost is recorded as a percentage of the property value, assumed to be equivalent to 50 times income per capita. Only official costs required by law are recorded, including fees, transfer taxes, stamp duties and any other payment to the property registry, notaries, public agencies or lawyers. Other taxes, such as capital gains tax or value added tax, are excluded from the cost measure. Both costs borne by the buyer and those borne by the seller are included. If cost estimates differ among sources, the median reported value is used.
Getting Credit - Rank
Getting Credit - Rank
Getting Credit - Rank
Getting Credit - Rank
Getting Credit - Rank
366
1098
1
183
Doing Business measures the legal rights of borrowers and lenders with respect to secured transactions through one set of indicators and the sharing of credit information through another. The first set of indicators describes how well collateral and bankruptcy laws facilitate lending. The second set measures the coverage, scope and accessibility of credit information available through public credit registries and private credit bureaus. The ranking on the ease of getting credit is the simple average of the percentile rankings on its component indicators.
The data on the legal rights of borrowers and lenders are gathered through a survey of financial lawyers and verified through analysis of laws and regulations as well as public sources of information on collateral and bankruptcy laws. The data on credit information sharing are built in 2 stages. First, banking supervision authorities and public information sources are surveyed to confirm the presence of a public credit registry or private credit bureau. Second, when applicable, a detailed survey on the public credit registry’s or private credit bureau’s structure, laws and associated rules is administered to the entity itself. Survey responses are verified through several rounds of follow-up communication with respondents as well as by contacting third parties and consulting public sources. The survey data are confirmed through teleconference calls or on-site visits in all economies.
Getting Credit - Strength of legal rights index (0-10)
Getting Credit - Strength of legal rights index (0-10)
Getting Credit - Strength of legal rights index (0-10)
Getting Credit - Strength of legal rights index (0-10)
Getting Credit - Strength of legal rights index (0-10)
1236
228
10
1
2
3
4
5
6
7
8
9
10
Sysmiss
The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. Two case scenarios, case A and case B, are used to determine the scope of the secured transactions system, involving a secured borrower, the company ABC, and a secured lender, BizBank. In certain economies the legal framework on secured transactions means that only case A or case B can apply (not both). Both cases examine the same set of legal restrictions on the use of movable collateral.
Several assumptions about the secured borrower and lender are used:
- ABC is a domestic, limited liability company.
- ABC has its headquarters and only base of operations in the economy’s largest business city.
- To fund its business expansion plans, ABC obtains a loan from BizBank for an amount up to 10 times income per capita in local currency.
- Both ABC and BizBank are 100% domestically owned.
The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its accounts receivable or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies in which the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).
In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.
The strength of legal rights index includes 8 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law. A score of 1 is assigned for each of the following features of the laws:
- Any business may use movable assets as collateral while keeping possession of the assets, and any financial institution may accept such assets as collateral.
- The law allows a business to grant a nonpossessory security right in a single category of movable assets (such as accounts receivable or inventory), without requiring a specific description of the collateral.
- The law allows a business to grant a nonpossessory security right in substantially all its movable assets, without requiring a specific description of the collateral.
- A security right may extend to future or after-acquired assets and may extend automatically to the products, proceeds or replacements of the original assets.
- A general description of debts and obligations is permitted in the collateral agreements and in registration documents: all types of debts and obligations can be secured between the parties, and the collateral agreement can include a maximum amount for which the assets are encumbered.
- A collateral registry or registration institution is in operation, unified geographically and by asset type, with an electronic database indexed by debtors’ names.
- Secured creditors are paid first (for example, before general tax claims and employee claims) when a debtor defaults outside an insolvency procedure.
- Secured creditors are paid first (for example, before general tax claims and employee claims) when a business is liquidated.
- Secured creditors are not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure.
- The law allows parties to agree in a collateral agreement that the lender may enforce its security right out of court.
The index ranges from 0 to 10, with higher scores indicating that collateral and bankruptcy laws are better designed to expand access to credit.
Getting Credit - Depth of credit information index (0-6)
Getting Credit - Depth of credit information index (0-6)
Getting Credit - Depth of credit information index (0-6)
Getting Credit - Depth of credit information index (0-6)
Getting Credit - Depth of credit information index (0-6)
1235
229
6
1
2
3
4
5
6
Sysmiss
The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through either a public credit registry or a private credit bureau. A score of 1 is assigned for each of the following 6 features of the public credit registry or private credit bureau (or both):
- Both positive credit information (for example, outstanding loan amounts and pattern of on-time repayments) and negative information (for example, late payments, number and amount of defaults and bankruptcies) are distributed.
- Data on both firms and individuals are distributed.
- Data from retailers and utility companies as well as financial institutions are distributed.
- More than 2 years of historical data are distributed. Credit registries and bureaus that erase data on defaults as soon as they are repaid obtain a score of 0 for this indicator.
- Data on loan amounts below 1% of income per capita are distributed. Note that a credit registry or bureau must have a minimum coverage of 1% of the adult population to score a 1 on this indicator.
- By law, borrowers have the right to access their data in the largest credit registry or bureau in the economy.
The index ranges from 0 to 6, with higher values indicating the availability of more credit information, from either a public credit registry or a private credit bureau, to facilitate lending decisions. If the credit registry or bureau is not operational or has a coverage of less than 0.1% of the adult population, the score on the depth of credit information index is 0.
In Lithuania, for example, both a public credit registry and a private credit bureau operate. Both distribute positive and negative information (a score of 1). Both distribute data on firms and individuals (a score of 1). Although the public credit registry does not distribute data from retailers or utilities, the private credit bureau does do so (a score of 1). Although the private credit bureau does not distribute more than 2 years of historical data, the public credit registry does do so (a score of 1). Although the public credit registry has a threshold of 50,000 litai, the private credit bureau distributes data on loans of any value (a score of 1). Borrowers have the right to access their data in both the public credit registry and the private credit bureau (a score of 1). Summing across the indicators gives Lithuania a total score of 6.
Getting Credit - Public registry coverage (% of adults)
Getting Credit - Public registry coverage (% of adults)
Getting Credit - Public registry coverage (% of adults)
Getting Credit - Public registry coverage (% of adults)
Getting Credit - Public registry coverage (% of adults)
1196
268
81.3
The public credit registry coverage indicator reports the number of individuals and firms listed in a public credit registry with information on their borrowing history from the past 5 years. The number is expressed as a percentage of the adult population (the population age 15 and above in 2009 according to the World Bank’s World Development Indicators). A public credit registry is defined as a database managed by the public sector, usually by the central bank or the superintendent of banks, that collects information on the creditworthiness of borrowers (individuals or firms) in the financial system and facilitates the exchange of credit information among banks and financial institutions. If no public registry operates, the coverage value is 0.
Getting Credit - Private bureau coverage (% of adults)
Getting Credit - Private bureau coverage (% of adults)
Getting Credit - Private bureau coverage (% of adults)
Getting Credit - Private bureau coverage (% of adults)
Getting Credit - Private bureau coverage (% of adults)
1189
275
100
The private credit bureau coverage indicator reports the number of individuals and firms listed by a private credit bureau with information on their borrowing history from the past 5 years. The number is expressed as a percentage of the adult population (the population age 15 and above in 2009 according to the World Bank’s World Development Indicators). A private credit bureau is defined as a private firm or nonprofit organization that maintains a database on the creditworthiness of borrowers (individuals or firms) in the financial system and facilitates the exchange of credit information among banks and financial institutions. Credit investigative bureaus and credit reporting firms that do not directly facilitate information exchange among banks and other financial institutions are not considered. If no private bureau operates, the coverage value is 0.
Protecting Investors - Rank
Protecting Investors - Rank
Protecting Investors - Rank
Protecting Investors - Rank
Protecting Investors - Rank
366
1098
1
183
Doing Business measures the strength of minority shareholder protections against directors’ misuse of corporate assets for personal gain. The indicators distinguish 3 dimensions of investor protections: transparency of related-party transactions (extent of disclosure index), liability for self-dealing (extent of director liability index) and shareholders’ ability to sue officers and directors for misconduct (ease of shareholder suits index). The data come from a survey of corporate and securities lawyers and are based on securities regulations, company laws and court rules of evidence. The ranking on the strength of investor protection index is the simple average of the percentile rankings on its component indicators.
To make the data comparable across economies, several assumptions about the business and the transaction are used.
Assumptions about the business
The business (Buyer):
- Is a publicly traded corporation listed on the economy’s most important stock exchange. If the number of publicly traded companies listed on that exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple shareholders.
- Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not specifically required by law.
- Is a food manufacturer.
- Has its own distribution network.
Assumption about the transaction
- Mr. James is Buyer’s controlling shareholder and a member of Buyer’s board of directors. He owns 60% of Buyer and elected 2 directors to Buyer’s 5-member board.
- Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.
- Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.
- The proposed transaction is part of the company’s ordinary course of business and is not outside the authority of the company.
- Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made (that is, the transaction is not fraudulent).
- The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction.
Protecting Investors - Extent of disclosure index (0-10)
Protecting Investors - Extent of disclosure index (0-10)
Protecting Investors - Extent of disclosure index (0-10)
Protecting Investors - Extent of disclosure index (0-10)
Protecting Investors - Extent of disclosure index (0-10)
1081
383
10
1
2
3
4
5
6
7
8
9
10
Sysmiss
The extent of disclosure index has 5 components:
- What corporate body can provide legally sufficient approval for the transaction. A score of 0 is assigned if it is the CEO or the managing director alone; 1 if the board of directors or shareholders must vote and Mr. James is permitted to vote; 2 if the board of directors must vote and Mr. James is not permitted to vote; 3 if shareholders must vote and Mr. James is not permitted to vote.
- Whether immediate disclosure of the transaction to the public, the regulator or the shareholders is required. A score of 0 is assigned if no disclosure is required; 1 if disclosure on the terms of the transaction is required but not on Mr. James’s conflict of interest; 2 if disclosure on both the terms and Mr. James’s conflict of interest is required.
- Whether disclosure in the annual report is required. A score of 0 is assigned if no disclosure on the transaction is required; 1 if disclosure on the terms of the transaction is required but not on Mr. James’s conflict of interest; 2 if disclosure on both the terms and Mr. James’s conflict of interest is required.
- Whether disclosure by Mr. James to the board of directors is required. A score of 0 is assigned if no disclosure is required; 1 if a general disclosure of the existence of a conflict of interest is required without any specifics; 2 if full disclosure of all material facts relating to Mr. James’s interest in the Buyer-Seller transaction is required.
- Whether it is required that an external body, for example, an external auditor, review the transaction before it takes place. A score of 0 is assigned if no; 1 if yes.
The index ranges from 0 to 10, with higher values indicating greater disclosure. In Poland, for example, the board of directors must approve the transaction and Mr. James is not allowed to vote (a score of 2). Buyer is required to disclose immediately all information affecting the stock price, including the conflict of interest (a score of 2). In its annual report Buyer must also disclose the terms of the transaction and Mr. James’s ownership in Buyer and Seller (a score of 2). Before the transaction Mr. James must disclose his conflict of interest to the other directors, but he is not required to provide specific information about it (a score of 1). Poland does not require an external body to review the transaction (a score of 0). Adding these numbers gives Poland a score of 7 on the extent of disclosure index.
Protecting Investors - Extent of director liability index (0-10)
Protecting Investors - Extent of director liability index (0-10)
Protecting Investors - Extent of director liability index (0-10)
Protecting Investors - Extent of director liability index (0-10)
Protecting Investors - Extent of director liability index (0-10)
1081
383
9
1
2
3
4
5
6
7
8
9
Sysmiss
The extent of director liability index has 7 components:
- Whether a shareholder plaintiff is able to hold Mr. James liable for damage the Buyer-Seller transaction causes to the company. A score of 0 is assigned if Mr. James cannot be held liable or can be held liable only for fraud or bad faith; 1 if Mr. James can be held liable only if he influenced the approval of the transaction or was negligent; 2 if Mr. James can be held liable when the transaction is unfair or prejudicial to the other shareholders.
- Whether a shareholder plaintiff is able to hold the approving body (the CEO or board of directors) liable for the damage the transaction causes to the company. A score of 0 is assigned if the approving body cannot be held liable or can be held liable only for fraud or bad faith; 1 if the approving body can be held liable for negligence; 2 if the approving body can be held liable when the transaction is unfair or prejudicial to the other shareholders.
- Whether a court can void the transaction upon a successful claim by a shareholder plaintiff. A score of 0 is assigned if rescission is unavailable or is available only in case of fraud or bad faith; 1 if rescission is available when the transaction is oppressive or prejudicial to the other shareholders; 2 if rescission is available when the transaction is unfair or entails a conflict of interest.
- Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff. A score of 0 is assigned if no; 1 if yes.
- Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff. A score of 0 is assigned if no; 1 if yes.
- Whether both fines and imprisonment can be applied against Mr. James. A score of 0 is assigned if no; 1 if yes.
- Whether shareholder plaintiffs are able to sue directly or derivatively for the damage the transaction causes to the company. A score of 0 is assigned if suits are unavailable or are available only for shareholders holding more than 10% of the company’s share capital; 1 if direct or derivative suits are available for shareholders holding 10% or less of share capital.
The index ranges from 0 to 10, with higher values indicating greater liability of directors. Assuming that the prejudicial transaction was duly approved and disclosed, in order to hold Mr. James liable in Panama, for example, a plaintiff must prove that Mr. James influenced the approving body or acted negligently (a score of 1). To hold the other directors liable, a plaintiff must prove that they acted negligently (a score of 1). The prejudicial transaction cannot be voided (a score of 0). If Mr. James is found liable, he must pay damages (a score of 1) but he is not required to disgorge his profits (a score of 0). Mr. James cannot be fined and imprisoned (a score of 0). Direct or derivative suits are available for shareholders holding 10% or less of share capital (a score of 1). Adding these numbers gives Panama a score of 4 on the extent of director liability index.
Protecting Investors - Ease of shareholder suits index (0-10)
Protecting Investors - Ease of shareholder suits index (0-10)
Protecting Investors - Ease of shareholder suits index (0-10)
Protecting Investors - Ease of shareholder suits index (0-10)
Protecting Investors - Ease of shareholder suits index (0-10)
1081
383
10
1
2
3
4
5
6
7
8
9
10
Sysmiss
The ease of shareholder suits index has 6 components:
- What range of documents is available to the shareholder plaintiff from the defendant and witnesses during trial. A score of 1 is assigned for each of the following types of documents available: information that the defendant has indicated he intends to rely on for his defense; information that directly proves specific facts in the plaintiff ’s claim; any information relevant to the subject matter of the claim; and any information that may lead to the discovery of relevant information.
- Whether the plaintiff can directly examine the defendant and witnesses during trial. A score of 0 is assigned if no; 1 if yes, with prior approval of the questions by the judge; 2 if yes, without prior approval.
- Whether the plaintiff can obtain categories of relevant documents from the defendant without identifying each document specifically. A score of 0 is assigned if no; 1 if yes.
- Whether shareholders owning 10% or less of the company’s share capital can request that a government inspector investigate the Buyer-Seller transaction without filing suit in court. A score of 0 is assigned if no; 1 if yes.
- Whether shareholders owning 10% or less of the company’s share capital have the right to inspect the transaction documents before filing suit. A score of 0 is assigned if no; 1 if yes.
- Whether the standard of proof for civil suits is lower than that for a criminal case. A score of 0 is assigned if no; 1 if yes.
The index ranges from 0 to 10, with higher values indicating greater powers of shareholders to challenge the transaction. In Greece, for example, the plaintiff can access documents that the defendant intends to rely on for his defense and that directly prove facts in the plaintiff ’s claim (a score of 2). The plaintiff can examine the defendant and witnesses during trial, though only with prior approval of the questions by the court (a score of 1). The plaintiff must specifically identify the documents being sought (for example, the Buyer-Seller purchase agreement of July 15, 2006) and cannot just request categories (for example, all documents related to the transaction) (a score of 0). A shareholder holding 5% of Buyer’s shares can request that a government inspector review suspected mismanagement by Mr. James and the CEO without filing suit in court (a score of 1). Any shareholder can inspect the transaction documents before deciding whether to sue (a score of 1). The standard of proof for civil suits is the same as that for a criminal case (a score of 0). Adding these numbers gives Greece a score of 5 on the ease of shareholder suits index.
Protecting Investors - Strength of investor protection index (0-10)
Protecting Investors - Strength of investor protection index (0-10)
Protecting Investors - Strength of investor protection index (0-10)
Protecting Investors - Strength of investor protection index (0-10)
Protecting Investors - Strength of investor protection index (0-10)
1081
383
1
9.7
The strength of investor protection index is the average of the extent of disclosure index, the extent of director liability index and the ease of shareholder suits index. The index ranges from 0 to 10, with higher values indicating more investor protection.
Paying Taxes - Rank
Paying Taxes - Rank
Paying Taxes - Rank
Paying Taxes - Rank
Paying Taxes - Rank
366
1098
1
183
Doing Business records the taxes and mandatory contributions that a mediumsize company must pay in a given year as well as measures of the administrative burden of paying taxes and contributions. The project was developed and implemented in cooperation with PricewaterhouseCoopers. Taxes and contributions measured include the profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes and any other small taxes or fees. The ranking on the ease of paying taxes is the simple average of the percentile rankings on its component indicators.
Doing Business measures all taxes and contributions that are government mandated (at any level—federal, state or local) and that apply to the standardized business and have an impact in its financial statements. In doing so, Doing Business goes beyond the traditional definition of a tax. As defined for the purposes of government national accounts, taxes include only compulsory, unrequited payments to general government. Doing Business departs from this definition because it measures imposed charges that affect business accounts, not government accounts. The main differences relate to labor contributions. The Doing Business measure includes government-mandated contributions paid by the employer to a requited private pension fund or workers’ insurance fund. The indicator includes, for example, Australia’s compulsory superannuation guarantee and workers’ compensation insurance. For the purpose of calculating the total tax rate (defined below), only taxes borne are included. For example, value added taxes are generally excluded (provided they are not irrecoverable) because they do not affect the accounting profits of the business—that is, they are not reflected in the income statement. They are, however, included for the purpose of the compliance measures (time and payments), as they add to the burden of complying with the tax system.
Doing Business uses a case scenario to measure the taxes and contributions paid by a standardized business and the complexity of an economy’s tax compliance system. This case scenario uses a set of financial statements and assumptions about transactions made over the year. In each economy tax experts from a number of different firms (in many economies these include PricewaterhouseCoopers) compute the taxes and mandatory contributions due in their jurisdiction based on the standardized case study facts. Information is also compiled on the frequency of filing and payments as well as time taken to comply with tax laws in an economy. To make the data comparable across economies, several assumptions about the business and the taxes and contributions are used.
Assumptions about the business
The business:
- Is a limited liability, taxable company. If there is more than one type of limited liability company in the economy, the limited liability form most popular among domestic firms is chosen. The most popular form is reported by incorporation lawyers or the statistical office.
- Started operations on January 1, 2008. At that time the company purchased all the assets shown in its balance sheet and hired all its workers.
- Operates in the economy’s largest business city.
- Is 100% domestically owned and has 5 owners, all of whom are natural persons.
- At the end of 2008, has a start-up capital of 102 times income per capita.
- Performs general industrial or commercial activities. Specifically, it produces ceramic flowerpots and sells them at retail. It does not participate in foreign trade (no import or export) and does not handle products subject to a special tax regime, for example, liquor or tobacco.
- At the beginning of 2009, owns 2 plots of land, 1 building, machinery, office equipment, computers and 1 truck and leases 1 truck.
- Does not qualify for investment incentives or any benefits apart from those related to the age or size of the company.
- Has 60 employees—4 managers, 8 assistants and 48 workers. All are nationals, and 1 manager is also an owner. The company pays for additional medical insurance for employees (not mandated by any law) as an additional benefit. In addition, in some economies reimbursable business travel and client entertainment expenses are considered fringe benefits. When applicable, it is assumed that the company pays the fringe benefit tax on this expense or that the benefit becomes taxable income for the employee. The case study assumes no additional salary additions for meals, transportation, education or others. Therefore, even when such benefits are frequent, they are not added to or removed from the taxable gross salaries to arrive at the labor tax or contribution calculation.
- Has a turnover of 1,050 times income per capita.
- Makes a loss in the first year of operation.
- Has a gross margin (pretax) of 20% (that is, sales are 120% of the cost of goods sold).
- Distributes 50% of its net profits as dividends to the owners at the end of the second year.
- Sells one of its plots of land at a profit at the beginning of the second year.
- Has annual fuel costs for its trucks equal to twice income per capita.
- Is subject to a series of detailed assumptions on expenses and transactions to further standardize the case. All financial statement variables are proportional to 2005 income per capita. For example, the owner who is also a manager spends 10% of income per capita on traveling for the company (20% of this owner’s expenses are purely private, 20% are for entertaining customers and 60% for business travel).
Assumptions about the taxes and contributions
All the taxes and contributions recorded are those paid in the second year of operation (calendar year 2009). A tax or contribution is considered distinct if it has a different name or is collected by a different agency. Taxes and contributions with the same name and agency, but charged at different rates depending on the business, are counted as the same tax or contribution.
The number of times the company pays taxes and contributions in a year is the number of different taxes or contributions multiplied by the frequency of payment (or withholding) for each tax. The frequency of payment includes advance payments (or withholding) as well as regular payments (or withholding).
Paying Taxes - Payments (number per year)
Paying Taxes - Payments (number per year)
Paying Taxes - Payments (number per year)
Paying Taxes - Payments (number per year)
Paying Taxes - Payments (number per year)
1081
383
2
147
The tax payments indicator reflects the total number of taxes and contributions paid, the method of payment, the frequency of payment, the frequency of filing and the number of agencies involved for this standardized case study company during the second year of operation (table 14.8). It includes consumption taxes paid by the company, such as sales tax or value added tax. These taxes are traditionally collected from the consumer on behalf of the tax agencies. Although they do not affect the income statements of the company, they add to the administrative burden of complying with the tax system and so are included in the tax payments measure.
The number of payments takes into account electronic filing. Where full electronic filing and payment is allowed and it is used by the majority of medium-size businesses, the tax is counted as paid once a year even if filings and payments are more frequent. For payments made through third parties, such as tax on interest paid by a financial institution or fuel tax paid by a fuel distributor, only one payment is included even if payments are more frequent.
Where 2 or more taxes or contributions are filed for and paid jointly using the same form, each of these joint payments is counted once. For example, if mandatory health insurance contributions and mandatory pension contributions are filed for and paid together, only one of these contributions would be included in the number of payments.
Paying Taxes - Time (hours per year)
Paying Taxes - Time (hours per year)
Paying Taxes - Time (hours per year)
Paying Taxes - Time (hours per year)
Paying Taxes - Time (hours per year)
1081
383
2600
Time is recorded in hours per year. The indicator measures the time taken to prepare, file and pay 3 major types of taxes and contributions: the corporate income tax, value added or sales tax and labor taxes, including payroll taxes and social contributions. Preparation time includes the time to collect all information necessary to compute the tax payable and to calculate the amount payable. If separate accounting books must be kept for tax purposes—or separate calculations made—the time associated with these processes is included. This extra time is included only if the regular accounting work is not enough to fulfill the tax accounting requirements. Filing time includes the time to complete all necessary tax return forms and file the relevant returns at the tax authority. Payment time considers the hours needed to make the payment online or at the tax authorities. Where taxes and contributions are paid in person, the time includes delays while waiting.
Paying Taxes - Profit tax (%)
Paying Taxes - Profit tax (%)
Paying Taxes - Profit tax (%)
Paying Taxes - Profit tax (%)
Paying Taxes - Profit tax (%)
183
1281
176.8
Paying Taxes - Labor tax and contributions (%)
Paying Taxes - Labor tax and contributions (%)
Paying Taxes - Labor tax and contributions (%)
Paying Taxes - Labor tax and contributions (%)
Paying Taxes - Labor tax and contributions (%)
183
1281
51.7
Paying Taxes - Other taxes (%)
Paying Taxes - Other taxes (%)
Paying Taxes - Other taxes (%)
Paying Taxes - Other taxes (%)
Paying Taxes - Other taxes (%)
183
1281
272.8
Paying Taxes - Total tax rate (% profit)v
Paying Taxes - Total tax rate (% profit)v
Paying Taxes - Total tax rate (% profit)v
Paying Taxes - Total tax rate (% profit)v
Paying Taxes - Total tax rate (% profit)v
1081
383
0.2
339.7
The total tax rate measures the amount of taxes and mandatory contributions borne by the business in the second year of operation, expressed as a share of commercial profit. Doing Business 2011 reports the total tax rate for calendar year 2009. The total amount of taxes borne is the sum of all the different taxes and contributions payable after accounting for allowable deductions and exemptions. The taxes withheld (such as personal income tax) or collected by the company and remitted to the tax authorities (such as value added tax, sales tax or goods and service tax) but not borne by the company are excluded. The taxes included can be divided into 5 categories: profit or corporate income tax, social contributions and labor taxes paid by the employer (in respect of which all mandatory contributions are included, even if paid to a private entity such as a requited pension fund), property taxes, turnover taxes and other taxes (such as municipal fees and vehicle and fuel taxes).
The total tax rate is designed to provide a comprehensive measure of the cost of all the taxes a business bears. It differs from the statutory tax rate, which merely provides the factor to be applied to the tax base. In computing the total tax rate, the actual tax payable is divided by commercial profit. Data for Sweden illustrate.
Commercial profit is essentially net profit before all taxes borne. It differs from the conventional profit before tax, reported in financial statements. In computing profit before tax, many of the taxes borne by a firm are deductible. In computing commercial profit, these taxes are not deductible. Commercial profit therefore presents a clear picture of the actual profit of a business before any of the taxes it bears in the course of the fiscal year.
Commercial profit is computed as sales minus cost of goods sold, minus gross salaries, minus administrative expenses, minus other expenses, minus provisions, plus capital gains (from the property sale) minus interest expense, plus interest income and minus commercial depreciation. To compute the commercial depreciation, a straight-line depreciation method is applied, with the following rates: 0% for the land, 5% for the building, 10% for the machinery, 33% for the computers, 20% for the office equipment, 20% for the truck and 10% for business development expenses. Commercial profit amounts to 59.4 times income per capita.
The methodology for calculating the total tax rate is broadly consistent with the Total Tax Contribution framework developed by PricewaterhouseCoopers and the calculation within this framework for taxes borne. But while the work undertaken by PricewaterhouseCoopers is usually based on data received from the largest companies in the economy, Doing Business focuses on a case study for standardized medium-size company.
The methodology for the paying taxes indicators has further benefited from discussion with members of the International Tax Dialogue, which led to a refinement of the questions on the time to pay taxes indicator in the survey instrument and the collection of pilot data on the labor tax wedge for further research.
Trading Across Borders - Rank
Trading Across Borders - Rank
Trading Across Borders - Rank
Trading Across Borders - Rank
Trading Across Borders - Rank
366
1098
1
183
Doing Business compiles procedural requirements for exporting and importing a standardized cargo of goods by ocean transport. Documents associated with every official precedure are counted—from the contractual agreement between the 2 parties to the delivery of goods—along with the time and cost necessary for completion. For exporting goods, procedures range from packing the goods at the warehouse to their departure from the port of exit. For importing goods, procedures range from the vessel’s arrival at the port of entry to the cargo’s delivery at the warehouse. The time and cost for ocean transport are not included. Payment is made by letter of credit, and the time, cost and documents required for the issuance or advising of a letter of credit are taken into account. The ranking on the ease of trading across borders is the simple average of the percentile rankings on its component indicators.
Local freight forwarders, shipping lines, customs brokers, port officials and banks provide information on required documents and cost as well as the time to complete each procedure. To make the data comparable across economies, several assumptions about the business and the traded goods are used.
Assumption about the business
The business:
- Has at least 60 employees.
- Is located in the economy’s largest business city.
- Is a private, limited liability company. It does not operate in an export processing zone or an industrial estate with special export or import privileges.
- Is domestically owned with no foreign ownership.
- Exports more than 10% of its sales.
- Assumption about the trade goods
The traded product travels in a drycargo, 20-foot, full container load. It weighs 10 tons and is valued at $20,000. The product:
- Is not hazardous nor does it include military items.
- Does not require refrigeration or any other special environment.
- Does not require any special phytosanitary or environmental safety standards other than accepted international standards.
- Is one of the economy’s leading export or import products.
Trading Across Borders - Documents to export (number)
Trading Across Borders - Documents to export (number)
Trading Across Borders - Documents to export (number)
Trading Across Borders - Documents to export (number)
Trading Across Borders - Documents to export (number)
1081
383
2
14
2
3
4
5
6
7
8
9
10
11
12
13
14
Sysmiss
All documents required per shipment to export and import the goods are recorded. It is assumed that the contract has already been agreed upon and signed by both parties. Documents required for clearance by government ministries, customs authorities, port and container terminal authorities, health and technical control agencies and banks are taken into account. Since payment is by letter of credit, all documents required by banks for the issuance or securing of a letter of credit are also taken into account. Documents that are renewed annually and that do not require renewal per shipment (for example, an annual tax clearance certificate) are not included.
Trading Across Borders - Time to export (days)
Trading Across Borders - Time to export (days)
Trading Across Borders - Time to export (days)
Trading Across Borders - Time to export (days)
Trading Across Borders - Time to export (days)
1081
383
5
102
The time for exporting and importing is recorded in calendar days. The time calculation for a procedure starts from the moment it is initiated and runs until it is completed. If a procedure can be accelerated for an additional cost and is available to all trading companies, the fastest legal procedure is chosen. Fast-track procedures applying to firms located in an export processing zone are not taken into account because they are not available to all trading companies. Ocean transport time is not included. It is assumed that neither the exporter nor the importer wastes time and that each commits to completing each remaining procedure without delay. Procedures that can be completed in parallel are measured as simultaneous. The waiting time between procedures—for example, during unloading of the cargo—is included in the measure.
Trading Across Borders - Cost to export (US$ per container)
Trading Across Borders - Cost to export (US$ per container)
Trading Across Borders - Cost to export (US$ per container)
Trading Across Borders - Cost to export (US$ per container)
Trading Across Borders - Cost to export (US$ per container)
1081
383
335
5902
Cost measures the fees levied on a 20- foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included. These include costs for documents, administrative fees for customs clearance and technical control, customs broker fees, terminal handling charges and inland transport. The cost does not include customs tariffs and duties or costs related to ocean transport. Only official costs are recorded.
Trading Across Borders - Documents to import (number)
Trading Across Borders - Documents to import (number)
Trading Across Borders - Documents to import (number)
Trading Across Borders - Documents to import (number)
Trading Across Borders - Documents to import (number)
1081
383
1
20
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sysmiss
All documents required per shipment to export and import the goods are recorded. It is assumed that the contract has already been agreed upon and signed by both parties. Documents required for clearance by government ministries, customs authorities, port and container terminal authorities, health and technical control agencies and banks are taken into account. Since payment is by letter of credit, all documents required by banks for the issuance or securing of a letter of credit are also taken into account. Documents that are renewed annually and that do not require renewal per shipment (for example, an annual tax clearance certificate) are not included.
Trading Across Borders - Time to import (days)
Trading Across Borders - Time to import (days)
Trading Across Borders - Time to import (days)
Trading Across Borders - Time to import (days)
Trading Across Borders - Time to import (days)
1081
383
4
104
The time for exporting and importing is recorded in calendar days. The time calculation for a procedure starts from the moment it is initiated and runs until it is completed. If a procedure can be accelerated for an additional cost and is available to all trading companies, the fastest legal procedure is chosen. Fast-track procedures applying to firms located in an export processing zone are not taken into account because they are not available to all trading companies. Ocean transport time is not included. It is assumed that neither the exporter nor the importer wastes time and that each commits to completing each remaining procedure without delay. Procedures that can be completed in parallel are measured as simultaneous. The waiting time between procedures-for example, during unloading of the cargo-is included in the measure.
Trading Across Borders - Cost to import (US$ per container)
Trading Across Borders - Cost to import (US$ per container)
Trading Across Borders - Cost to import (US$ per container)
Trading Across Borders - Cost to import (US$ per container)
Trading Across Borders - Cost to import (US$ per container)
1081
383
317
8150
Cost measures the fees levied on a 20- foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included. These include costs for documents, administrative fees for customs clearance and technical control, customs broker fees, terminal handling charges and inland transport. The cost does not include customs tariffs and duties or costs related to ocean transport. Only official costs are recorded.
Enforcing Contracts - Rank
Enforcing Contracts - Rank
Enforcing Contracts - Rank
Enforcing Contracts - Rank
Enforcing Contracts - Rank
366
1098
1
183
ndicators on enforcing contracts measure the efficiency of the judicial system in resolving a commercial dispute. The data are built by following the stepby- step evolution of a commercial sale dispute before local courts. The data are collected through study of the codes of civil procedure and other court regulations as well as surveys completed by local litigation lawyers and by judges. The ranking on the ease of enforcing contracts is the simple average of the percentile rankings on its component indicators.
Assumptions about the case
- The value of the claim equals 200% of the economy’s income per capita.
- The dispute concerns a lawful transaction between 2 businesses (Seller and Buyer), located in the economy’s largest business city.
- Seller sells goods worth 200% of the economy’s income per capita to Buyer. After Seller delivers the goods to Buyer, Buyer refuses to pay for the goods on the grounds that the delivered goods were not of adequate quality.
- Seller (the plaintiff) sues Buyer (the defendant) to recover the amount under the sales agreement (that is, 200% of the economy’s income per capita). Buyer opposes Seller’s claim, saying that the quality of the goods is not adequate. The claim is disputed on the merits.
- A court in the economy’s largest business city with jurisdiction over commercial cases worth 200% of income per capita decides the dispute.
- Seller attaches Buyer’s movable assets (for example, office equipment and vehicles) before obtaining a judgment because - - Seller fears that Buyer may become insolvent.
- An expert opinion is given on the quality of the delivered goods. If it is standard practice in the economy for each party to call its own expert witness, the parties each call one expert witness. If it is standard practice for the judge to appoint an independent expert, the judge does so. In this case the judge does not allow opposing expert testimony.
- The judgment is 100% in favor of Seller: the judge decides that the goods are of adequate quality and that Buyer must pay the agreed price.
- Buyer does not appeal the judgment. The judgment becomes final.
- Seller takes all required steps for prompt enforcement of the judgment. The money is successfully collected through a public sale of Buyer’s movable assets (for example, office equipment and vehicles).
Enforcing Contracts - Procedures (number)
Enforcing Contracts - Procedures (number)
Enforcing Contracts - Procedures (number)
Enforcing Contracts - Procedures (number)
Enforcing Contracts - Procedures (number)
1381
83
20
58
The list of procedural steps compiled for each economy traces the chronology of a commercial dispute before the relevant court. A procedure is defined as any interaction, required by law or commonly used in practice, between the parties or between them and the judge or court officer. This includes steps to file and serve the case, steps for trial and judgment and steps necessary to enforce the judgment.
The survey allows respondents to record procedures that exist in civil law but not common law jurisdictions and vice versa. For example, in civil law countries the judge can appoint an independent expert, while in common law countries each party submits a list of expert witnesses to the court. To indicate overall efficiency, 1 procedure is subtracted from the total number for economies that have specialized commercial courts, and 1 procedure for economies that allow electronic filing of court cases. Some procedural steps that take place simultaneously with or are included in other procedural steps are not counted in the total number of procedures.
Enforcing Contracts - Time (days)
Enforcing Contracts - Time (days)
Enforcing Contracts - Time (days)
Enforcing Contracts - Time (days)
Enforcing Contracts - Time (days)
1381
83
120
1800
Time is recorded in calendar days, counted from the moment the plaintiff decides to file the lawsuit in court until payment. This includes both the days when actions take place and the waiting periods between. The average duration of different stages of dispute resolution is recorded: the completion of service of process (time to file and serve the case), the issuance of judgment (time for the trial and obtaining the judgment) and the moment of payment (time for enforcement of judgment).
Enforcing Contracts - Cost (% of claim)
Enforcing Contracts - Cost (% of claim)
Enforcing Contracts - Cost (% of claim)
Enforcing Contracts - Cost (% of claim)
Enforcing Contracts - Cost (% of claim)
1381
83
0.1
163.2
Cost is recorded as a percentage of the claim, assumed to be equivalent to 200% of income per capita. No bribes are recorded. Three types of costs are recorded: court costs, enforcement costs and average attorney fees.
Court costs include all court costs and expert fees that Seller (plaintiff) must advance to the court, regardless of the final cost to Seller. Expert fees, if required by law or commonly used in practice, are included in court costs. Enforcement costs are all costs that Seller (plaintiff) must advance to enforce the judgment through a public sale of Buyer’s movable assets, regardless of the final cost to Seller. Average attorney fees are the fees that Seller (plaintiff) must advance to a local attorney to represent Seller in the standardized case.
Closing a Business - Rank
Closing a Business - Rank
Closing a Business - Rank
Closing a Business - Rank
Closing a Business - Rank
366
1098
1
183
Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic entities. The data are derived from survey responses by local insolvency practitioners and verified through a study of laws and regulations as well as public information on bankruptcy systems. The ranking on the ease of closing a business is based on the recovery rate.
To make the data comparable across economies, several assumptions about the business and the case are used.
Assumption about the business
The business:
- Is a limited liability company.
- Operates in the economy’s largest business city.
- Is 100% domestically owned, with the founder, who is also the chairman of the supervisory board, owning 51% (no other shareholder holds more than 5% of shares).
- Has downtown real estate, where it runs a hotel, as its major asset. The hotel is valued at 100 times income per capita or $200,000, whichever is larger.
- Has a professional general manager.
- Has 201 employees and 50 suppliers, each of which is owed money for the last delivery.
- Has a 10-year loan agreement with a domestic bank secured by a universal business charge (for example, a floating charge) in economies where such collateral is recognized or by the hotel property. If the laws of the economy do not specifically provide for a universal business charge but contracts commonly use some other provision to that effect, this provision is specified in the loan agreement.
- Has observed the payment schedule and all other conditions of the loan up to now.
- Has a mortgage, with the value of the mortgage principal being exactly equal to the market value of the hotel.
Assumption about the case
The business is experiencing liquidity problems. The company’s loss in 2009 reduced its net worth to a negative figure. It is January 1, 2010. There is no cash to pay the bank interest or principal in full, due the next day, January 2. The business will therefore default on its loan. Management believes that losses will be incurred in 2010 and 2011 as well.
The amount outstanding under the loan agreement is exactly equal to the market value of the hotel business and represents 74% of the company’s total debt. The other 26% of its debt is held by unsecured creditors (suppliers, employees, tax authorities).
The company has too many creditors to negotiate an informal out-ofcourt workout. The following options are available: a judicial procedure aimed at the rehabilitation or reorganization of the company to permit its continued operation; a judicial procedure aimed at the liquidation or winding-up of the company; or a debt enforcement or foreclosure procedure against the company, enforced either in court (or through another government authority) or out of court (for example, by appointing a receiver).
Assumptions about the parties
The bank wants to recover as much as possible of its loan, as quickly and cheaply as possible. The unsecured creditors will do everything permitted under the applicable laws to avoid a piecemeal sale of the assets. The majority shareholder wants to keep the company operating and under its control. Management wants to keep the company operating and preserve their jobs. All the parties are local entities or citizens; no foreign parties are involved.
Closing a Business - Recovery rate (cents on the dollar)
Closing a Business - Recovery rate (cents on the dollar)
Closing a Business - Recovery rate (cents on the dollar)
Closing a Business - Recovery rate (cents on the dollar)
Closing a Business - Recovery rate (cents on the dollar)
1381
83
94.4
The recovery rate is recorded as cents on the dollar recouped by creditors through reorganization, liquidation or debt enforcement (foreclosure) proceedings. The calculation takes into account the outcome: whether the business emerges from the proceedings as a going concern or the assets are sold piecemeal. Then the costs of the proceedings are deducted (1 cent for each percentage point of the value of the debtor’s estate). Finally, the value lost as a result of the time the money remains tied up in insolvency proceedings is taken into account, including the loss of value due to depreciation of the hotel furniture. Consistent with international accounting practice, the annual depreciation rate for furniture is taken to be 20%. The furniture is assumed to account for a quarter of the total value of assets. The recovery rate is the present value of the remaining proceeds, based on end-2009 lending rates from the International Monetary Fund’s International Financial Statistics, supplemented with data from central banks and the Economist Intelligence Unit.
Closing a Business - Time (years)
Closing a Business - Time (years)
Closing a Business - Time (years)
Closing a Business - Time (years)
Closing a Business - Time (years)
1200
264
0.4
10
0.4
0.6
0.8
0.9
1
1.1
1.2
1.3
1.5
1.7
1.8
1.9
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3
3.1
3.2
3.3
3.5
3.6
3.7
3.8
3.9
4
4.1
4.2
4.3
4.5
4.6
4.8
5
5.1
5.2
5.3
5.5
5.6
5.7
5.8
6
6.2
6.5
6.7
7
8
8.5
9.2
10
999999
no practice
Sysmiss
If an economy has had fewer than 5 cases a year over the past 5 years involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure), the economy receives a “no practice” ranking. This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for “no practice” economies is zero.
Time for creditors to recover their credit is recorded in calendar years (table). The period of time measured by Doing Business is from the company’s default until the payment of some or all of the money owed to the bank. Potential delay tactics by the parties, such as the filing of dilatory appeals or requests for extension, are taken into consideration.
Closing a Business - Cost (% of estate)
Closing a Business - Cost (% of estate)
Closing a Business - Cost (% of estate)
Closing a Business - Cost (% of estate)
Closing a Business - Cost (% of estate)
1200
264
1
76
1
4
5
6
7
8
9
10
11
12
13
15
17
18
20
22
23
25
28
29
30
34
36
38
42
43
76
999999
no practice
Sysmiss
If an economy has had fewer than 5 cases a year over the past 5 years involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure), the economy receives a “no practice” ranking. This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for “no practice” economies is zero.
The cost of the proceedings is recorded as a percentage of the value of the debtor’s estate. The cost is calculated on the basis of survey responses and includes court fees and government levies; fees of insolvency administrators, auctioneers, assessors and lawyers; and all other fees and costs. Respondents provide cost estimates from among the following options: less than 2%, 2–5%, 5–8%, 8–11%, 11–18%, 18–25%, 25–33%, 33–50%, 50–75% and more than 75% of the value of the estate.