ComplianceOctober 04, 2019

Mastering entity data compliance: Entity management


In the previous entries in this series, we've taken a deep dive into the first three steps in the entity compliance workflow: entity formation, regulatory business license compliance and annual report requirements. In this article, we'll examine the fourth step in the entity data compliance workflow: entity management.

Sound entity management practices help minimize the risk of costly errors occurring, while also creating the necessary conditions for an entity to operate smoothly during its lifecycle.

It’s ideal to establish these best practices when an entity is formed but these steps can also be implemented for an existing entity. Data must be extracted from governing documents in order to comply with jurisdictional regulations. This data also guides the larger decision-making process around how the entity is run and operated in each jurisdiction, and which individuals or entities are granted the power to make decisions on behalf of the new entity.

Mastering Entity Data Compliance: Entity Management
Mastering Entity Data Compliance
Entity Management

The role of entity management

Entity management continues to grow in importance for compliance and governance professionals, given that the aims of both fields rest squarely on maintaining accurate and dynamic corporate records. It has become a strategic function within modern organizations that helps support not only compliance and governance but also collaboration.

Entity management, when practiced effectively, helps organizations do the following:

  • Remain compliant with statutory and regulatory requirements across one or more jurisdictions
  • Ensure smooth and timely transactions by furnishing entity data in a timely fashion
  • Maintain good standing by minimizing the risks of errors or penalties and ensuring a business retains the ability to operate

The elements of effective entity management

There are several key elements to maintaining sound entity management principles: accuracy, organization, accessibility and security, documentation and reporting and maintenance. Let's take a closer look into how each of these elements work.

  • Accuracy – Corporate secretaries, on average, must manage more than 100 discrete data points for each new entity. These data points range from something as basic as the entity's name, to more specific and detailed data points, such as bank account data for international subsidiaries.
  • Organization – When practicing sound entity management, it's important to create a system or storage repository for governing documents (or "minute books") of the entity and any data needed to answer questions about the entity. It's also advisable to create a calendar system for compliance filing and meeting dates.
  • Accessibility and security – Audit committees, boards, management, regulators and other parties will need frequent data access for day-to-day operations. Sound entity management requires providing easy access to current and consistent information within corporate records to support internal and external requests—and doing so according to an organization’s security protocols.
  • Documentation and reporting – Maintaining accurate and comprehensive records should be an organizational priority. This means documenting corporate actions via unanimous written consents or Board of Director meetings. The election of officers and directors should be appropriately documented. Organizational charts and a stock ledger (to track issuance of equities and ownership changes) should also be created. Financial account information should also be scrupulously tracked and reported.
  • Maintenance – Organizations following entity management best practices should also develop a process by which data can be continually updated in a centralized repository. That system must contain safeguards that protect against data duplication or mishandling.

Taming the data beast

Managing data in modern organizations is no small task, given the scope of the job and the ever-changing nature of information and corporate and regulatory requirements. Rigorously accurate corporate records are a mandate, yet keeping everything fully up-to-date is often a time-consuming challenge.

Many organizations look to entity managed services solutions to help maximize efficiency and accuracy, lower costs and help enhance the internal legal department's role as a governance advisor.

The right solution can transform an internal team from "data inputters" to full-fledged "data managers" by providing four key things:

  • Resources and expertise enabling real-time entity data updates
  • Support that easily integrates with existing workflows and adapts to evolving needs
  • Document management
  • Data on demand, ranging from organizational charts to customized reports

It's important to remember that corporate records are key strategic assets. In order to provide full value, they must be both accurate and accessible to all stakeholders within an organization.

Real-time management of entity data helps ensure that these mandates are met. By putting the proper framework in place, organizational leaders can rest assured that key corporate data is fully accurate and readily accessible.

In conclusion

Entity regulatory compliance is a complex subject and one that is always evolving. Full mastery of compliance data management, across the entire lifecycle, necessitates having a keen understanding of all four steps within the entity compliance workflow.

To learn more about how CT can help you navigate your entity management needs, contact a CT Service Representative or call (844) 400-9804.

View the Mastering Entity Data Compliance (Infographic).