Ensure Good Governance and Compliance with Strategic Entity Management
ComplianceMay 12, 2021

Ensure good governance and compliance with strategic entity management

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Corporate governance, compliance, and legal departments are more pressed than ever to keep up with increasing regulatory compliance, complex administrative maintenance, and expectations for rapid transmission of digital corporate data. Organizations must also reduce entity management risk.

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

There are also country-specific requirements. Many countries require companies to file audited financial statements or returns annually. The United Kingdom’s Companies House requires businesses to track their “Persons of Significant Control” and to report on specified details in their annual confirmation statement.

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.

Good entity management is a strategic function

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

You’re known by the data you keep

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 any and all 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 and produce reports to ensure that appropriate 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

How can you manage the complexity?

Corporate secretaries and corporate legal departments are increasingly using cloud-based entity management systems to manage their complex information and entity management needs and to facilitate secure data sharing.

They are able to maximize efficiency and accuracy and contain costs within their own department, and simultaneously implement organization-wide entity management policies customized to the company’s processes. Workflow automation has helped drive higher quality, more timely corporate compliance, and improved oversight without requiring additional staff. For example, role-based security settings allow corporate secretaries to delegate updates to the departments that implement them, such as tax, legal, and compliance. Outside counsel, auditors, and board members can also interact with the data on an “as needed” basis.

Additionally, as the number of tasks involved in entity management has multiplied, corporate legal departments have increasingly sought to engage outside law firms and service companies to fully manage many of these tasks using a centralized system of record to allow the corporate legal department to maintain control of the data, while allowing the outside partner to complete the more mundane tasks required for compliance.

Conclusion

Entity management has become a central function of corporate governance. General counsel is a trusted advisor to an organization; they help it meet its legal compliance obligations. They are looked upon to provide a strong sense of investment opportunities and knowledge of market conditions around the world while anticipating problems and issues down the road. To do this, general counsel needs continuous access and understanding of local jurisdictional information.

Because all other essential governance and compliance functions rely on a dynamic, accurate corporate record, best practices in entity management support central governance advisory roles of the corporate secretary and paralegal. Online tools and industry expertise help professionals to manage, access, and share corporate data at a moment’s notice. Consider evaluating your own entity management practices to target how you can benefit from current innovations and best-in-class tools.

Learn more

To learn more about how CT can help you better manage your entity management compliance needs, contact a CT representative or call 844-314-3459 (toll-free US).

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