How entity management strengthens corporate governance and compliance

Corporate governance, compliance, and legal teams are more pressed than ever to keep up with increasing regulatory compliance, complex administrative maintenance, and expectations for rapid transmission of digital corporate data while also focusing on reducing entity management risk.

Regulatory and other external requirements are significant. In the United States, all states require some form of information reporting, for example, annual reports. Public companies in the U.S. must monitor officer and director trading activity and SEC compliance.

Internal needs for corporate data are triggered at every phase of the corporate entity lifecycle. The management team, board of directors, audit committees, and regulators regularly request entity information. Other departments such as finance, tax, and legal need access to corporate data in the course of day-to-day business. From entity formation to dissolution, charter documents, annual meeting records, ownership, and more, accurate entity information is routinely required for most internal business processes.

Read the related article: What to look for in an entity compliance data management solution

Why entity management is now a critical governance function

General counsel, corporate secretaries, and paralegals report the one constant in their day is the need for instant, real-time access to subsidiary data and documents, wherever they are.

Many are employing entity management as a strategic response to keep costs down and manage risk in the face of intensifying compliance and regulatory pressures around the world.

At its most basic, entity management is:

1. Staying up to date on the local fiduciary, regulatory, and statutory responsibilities of a business entity and its directors, officers, managers, and partners
2. Advising the board, management, and committees on corporate governance matters
3. Actively maintaining and managing the corporate record to support all transactions, filings, reports, and audits to fulfill these responsibilities
4. Providing secure access to the corporate record to support both internal business needs and external requirements

For each and every entity, a corporate secretary typically manages 100 or more discrete and unique data points.

These data points range from the most basic, such as the name of the entity and its jurisdiction of formation, to the more specific, such as bank account information for global subsidiaries. Maintaining this information is also essential to the corporate secretary’s important advisory role.

Why accurate corporate records drive governance, compliance and risk reduction

Corporate records are a key strategic asset needed for a host of corporate activities. The records must be accurate and readily accessible to stakeholders throughout the organization, but maintaining them can be a challenge.

The corporate records reflect changes to the business, such as mergers, acquisitions, and changes to the entity’s name, legal structure, ownership, directors, and more.

Consider some of the typical information needs which must be managed.

Compliance

• Track all entity attributes, management structure, capital structure, and ownership as baseline information for effective overall management and local level business licenses.
• Know jurisdictions that all entities are qualified in and filing deadlines in order to file annual reports.
• Know compliance ownership reporting, preclearance procedures, and reporting processes.
• Understand each country’s entity requirements.

Governance

• Oversee the full corporate database to ensure adherence to required corporate secretarial procedures.
• Manage a comprehensive compliance calendar for filings due dates and required shareholder, board, and committee meetings.
• Maintain meeting minutes and resolutions to provide clear visibility into governance actions for relevant stakeholders.
• Track all corporate lifecycle activity and events and maintain documentation for reporting, audits, and future corporate actions.

Board of Directors

• Record and maintain the minutes of board and committee meetings
• Produce reports to ensure governance matters are brought to the attention of the board and management for each entity.
• Manage consent and resignation templates and documents for each entity to meet jurisdictional compliance requirements, support corporate transactions and manage risk.
• Maintain an address book for all officers, directors, etc. for meetings and other contact needs.

General Counsel

• Collaborate with executives on business strategy, risk aversion, mergers and acquisitions, prospects, and more
• High-level overviews and access to quick views and reporting
• Access to a repository of final negotiated documents

Management

• Supply ownership information for mergers, acquisitions, and other business deals, as well as for regular management review.
• Product alerts, quick reports, a customized interface, and real-time data to effectively communicate with other departments