In the wake of the global pandemic, business strategies have shifted. Unsettled market conditions are forcing companies to establish efficiencies in their international operations. This has led to a spate of consolidations, mergers, reorganizations, and restructuring.
Legal and compliance teams are being tasked with finding ways to streamline and consolidate their organizations. It is a complex undertaking, especially since these teams are already struggling to stay on top of regulatory, legislative, and political developments that affect the operations of their entities around the world.
However, there are a few actions that can better position entity management operations to withstand evolving business conditions.
Let’s look at seven ways legal and compliance teams can balance operational efficiency with changing global business strategies.
1. Align strategy and priorities with business needs
Business needs are constantly changing. This is increasingly true for companies that do business internationally. Factors that can impact the business environment include:
- Market and economic conditions
- New laws and updated regulations
- Environmental conditions
- Public health considerations
- Social and political changes
Legal and compliance teams must engage in frequent communication with key stakeholders to capture business needs and requirements. To help build a strategy for each market, they should underpin these discussions with input from local management and directors.
This should be an ongoing exercise. Processes and the teams who oversee them must remain agile and pivot as needs evolve.
2. Focus on the core business
Efficiencies are gained when teams focus on high-value, critical activities. For instance, non-core internal operations may be streamlined through outsourcing, freeing teams to dedicate more time to the health and growth of the company. This also drives increased productivity, reduces internal processing costs, and expedites project delivery.
For multinational companies, outsourcing can help reduce the workload and risk involved in managing entities in foreign jurisdictions.
Indicators that outsourcing may be the right move include a lack of in-country expertise, resource constraints, or limited in-house capability to manage all aspects of global compliance.
3. Streamline and perfect internal workflows
Consistency makes for efficiency. Creating and maintaining consistent entity management procedures across the organization will ensure everyone is on the same page while eliminating confusion and rework.
Too often, bottlenecks introduce operational inefficiencies. But when procedures are consistent across the board, HQ and local teams can adapt and integrate more easily and assess performance more quickly.
For instance, working with a specialized global business provider can help consolidate compliance obligations and implement effective entity management operations. This allows organizations to cut processing costs, increase productivity, and focus employees on priority areas.
4. Practice good document control
Having the appropriate measures to keep entity data organized is another crucial part of operational efficiency.
As businesses grow and entity data increases, legal and compliance teams need clear oversight over corporate documents. They need to find and access documents quickly and be confident that they’re working with current versions. This is especially true for HQ and local resources who work across jurisdictions. For example, they need to know if the director of an entity in Germany changes, if there is a new registered agent in a certain country, if the registered address has changed, or there is an update to a UBO.
Having a consistent and well-defined document control procedure that everyone adheres to, no matter their location can help reduce errors, lower compliance risk, and keep everyone on the same page.
5. Use and update the right technologies
Technology brings many benefits to global entity management. But it’s critical that technology investments integrate seamlessly with internal systems, are accessible to global and local teams, and manage data for multiple entities in multiple jurisdictions. As such, it makes sense that these systems house all company information and documentation in one place, acting as a central repository to manage vital company data.
Indeed, a robust entity management system should deliver the following capabilities:
- Continuous, uninterrupted access to accurate, real-time entity information.
- Visibility across all entities to help reduce the risk of non-compliance.
- Act as a single source of truth for all corporate data so that teams can make quick and accurate decisions and effectively complete tasks. (When teams work across different systems and locations, information accuracy can be compromised, and document controls and data management hindered).
But having the right technology is not enough. To remain efficient, entity management systems must be regularly updated, underpinned with the support of local experts, to keep pace with ever-changing regulations.
Read more about how technology has evolved global entity management.
6. Audit periodically
It’s best practice to regularly audit entity management processes and procedures to help identify gaps and areas for improvement. However, just as important is to audit the state of all entities that the organization manages around the world. A lack of visibility into the health and standing of each entity introduces risk and potentially costly penalties.
In ever-changing regulatory environments, new requirements and rules must be diligently observed. Even small things left unchecked can snowball into more significant issues that can hinder growth or new market strategies.
Periodically running entity health checks can eliminate surprises. These audits enable teams to verify the compliance status of entities in each jurisdiction and identify and resolve issues promptly.
7. Consider reorganizing, where necessary
Business leaders increasingly rely on general counsel and their teams to support business requirements and achieve business goals. As such, counsel must work closely with corporate executives and stakeholders, to provide critical decision-making input, especially if a reorganization is under consideration.
To find efficiencies, legal and compliance teams that support GCs may find themselves being asked to identify areas and territories that may not add value to the broader business strategy, no longer align with the direction the business is taking, or aren’t performing.
To account for changing needs globally and in individual countries, teams must identify the following:
- Any dormant entities in a region
- Active entities with no long-term operational use
- Any requirements to change the type of entity in a particular jurisdiction
- If the business is entering a new market that requires the formation of a new entity
- If a merger or acquisition is taking place
- If the company is exiting a country or region, do entities need to be dissolved or liquidated?
Creating an efficient and functional business structure is a demanding process that requires a clear and long-term vision that aligns with the company's overall strategy.
How CT can support your global entity management needs
We understand the complex balancing act of meeting business needs and the increasing regulatory pressure and scrutiny entities are under.
CT’s team of dedicated global experts provides end-to-end support to ensure your ongoing compliance requirements are completed and kept up to date in any jurisdiction, giving you more control and visibility into the compliance standing of your entire portfolio.
- Transactional support (document search and retrieval, certifications, apostilles, etc.)
- Due diligence services
- Health checks and good standing certificates
- Incorporations, liquidations, and dissolutions
- Entity management
- Annual compliance, etc.
Learn more about how CT’s Global Corporate Services can help support your entity compliance needs around the world. Contact a CT representative at (855) 444-5358 (toll-free U.S.).