Be sure to include a compliance health check for all global entities. A global entity health check verifies the compliance status of your entities within each of the jurisdictions they do business. This proactive global entity management practice protects your timelines for implementing new initiatives. It’s a lot easier to bring your entities back into compliance now and pre-empt the negative and costly consequences down the line.
What’s at stake?
Compliance. A global entity health check is an entity management best practice that eliminates surprises, like unexpected fees and puts time on your side.
- Non-compliant entities delay important timelines. Imagine, after weeks of structuring an M&A deal, you learn at the closing table that one of the affected entities is not in good standing. The closing must be delayed until this one entity is brought back into compliance. Don’t expect the speed of U.S. jurisdictions. In some countries, reinstating an entity can take weeks.
A health check is a critical first step for good global entity management and any business changes planned for the new year. You can ensure a clear path to execute transactions for both your US and international entities, including M&As, shareholder structure changes, and selling or dissolving an entity in a timely manner.
- Missed filings incur fees, penalties and reputational damage. Each international jurisdiction has a specific set of compliance requirements and calendar of deadlines. In addition to tax filings, you must be aware of requirements for corporate governance approvals such as financial statement approvals and even changes to the board of directors.
A global entity health check will give you an accurate calendar of events with required deadlines, and alert you to any issues that may jeopardize the entity’s ability to do business.
A plan to help achieve compliance
The first step in a global entity health check is to compile information to identify improvement opportunities. It is a best practice that your business regularly conducts health checks to help ensure the continual maintenance of the business’ entity compliance. Following is a sample of a global entity management checklist. Your entities may have more requirements, depending on the countries they operate in or the nature of the business.