The responsibilities and requirements of entity management have grown in the last few decades, from something that could safely be handled through manual, hands-on processes – with records stored in towers of three-ring binders and filing cabinets in the compliance team’s office – to become a cross-border, business-critical function.
Saying “business critical” is not overly dramatic, either. Missed deadlines and failure to file can lead to significant fines, unwelcome in-depth audits and external scrutiny. It can stop you from doing business in one or all jurisdictions. Today’s shareholders are more demanding, and a loss of good standing can impact investor confidence and ultimately the share price if your company is publicly listed. In some jurisdictions, failures of compliance can even lead to jail time for directors.
It’s into this breach that an entity management database system will step. Entity management, especially global subsidiary management, is a fine art requiring strong organizational skills, keeping track of multiple compliance deadlines and a head for knowledge management. An entity management database system helps to keep track of all the moving parts, installing a single source of truth and allowing full transparency across all of a business’s entities.
What Is an Entity Management Database System?
So what does this magical entity management database system actually do? It helps you to easily manage entity data by creating that all-important single source of truth for all entity-related information. This can include basic information, including company type, addresses, accounting dates, and board and committee members, through to more complex and private factors, including ownership information – such as share capital, share classes, fraction shares, shareholders – and statutory filing details.
Robust entity management database systems help you to achieve compliance, mitigate risk and demonstrate good governance across all entities, international subsidiaries and the whole organization. An entity management database system can turn your compliance function from a reactive team that’s always trying to catch up, into a proactive function that can think more strategically about governance.
An entity management database system not only provides a way to streamline your legal operations, but it’s also a place to store all entity documentation. It’s somewhere to track filing dates in a compliance calendar and from which to send all electronic filings to the appropriate government or regulatory bodies. It helps to visualize ownership structures through entity diagramming, and it helps support strong, strategic governance through board management and clear, open communication.
In essence, an entity management database system drives the modern compliance and governance function.
Who Uses an Entity Management Database System?
The company secretary maintains the company’s statutory books, including registers of directors, shareholders and assets; maintains minutes of general meetings and board meetings; files annual returns with regulatory bodies; informs regulatory bodies of significant changes in structure or management; establishes and maintains the company’s registered office; and ensures the security of the company’s legal documents, as well as detailing its policy for filing and retention of documentation, among other duties. All of this can be done through an entity management database system.
Legal Operations Manager
Any legal operations manager is an essential partner to the compliance and governance function. There’s no one thing they are responsible for; rather, they help the legal department to run smoothly and efficiently, often through harnessing technology to streamline operations. They look at optimizing workflows and contract management; dealing better with vendors and outside counsel; developing strong data and legal analytics tracking; and assessing how to better align across departments and functions. Legal operations will often harness technology to enable this work, and an entity management database system helps them to manage the contract lifecycle and to track data.
The Board is not a group of faceless individuals who decree from on high; rather, they have the essential and important job of ensuring the company is strategically in the right place and operating at optimum efficiency. The four essentials for building a stronger board of directors, according to McKinsey, are to:
- Broaden the scope – to go beyond the fiduciary to engage more deeply on strategy, M&A, technology and brands
- Deepen commitment – to invest more energy and ensure time is well spent
- Clarify responsibilities – to find the right mix of experience and know-how and to have clear roles for each board member
- Create trust – to balance a collaborative style with challenging conversations
While they may not be hands-on or on the frontlines, the board does still use an entity management database system. These systems can help the board to be more efficient and effective, to be clear on what’s asked of them, and to ensure they have access to all data and documentation to enable strategic challenges.
Like the company secretary, the compliance team is responsible for ensuring all regulatory requirements are taken care of at the right time, in the right place and with the right people. In Accenture’s recent Compliance Risk Study, 31% of people polled said that data quality issues were key barriers hindering their organization from delivering on its compliance mandate. By using an entity management database system, the compliance function can ensure clean and up-to-date data at all times, as well as harnessing that technology to keep track of the state of entity compliance and setting up a compliance calendar to ensure no filing is ever accidentally missed.
The risk officer’s role is given away in its name: This is the person who needs to identify and track the risks inherent in the organization. When dealing with entity management – and especially when talking about global subsidiary management – you are dealing with increased risk.
- Maintain a risk register
- Track the process of remediation of control weaknesses
- Perform risk assessments and monitor risks
- Identify emerging risks
- Coordinate the collection of data and analyze data to update the risk profile
- Maintain policies and procedures
- Manage the library of risk documentation
An entity management database system can streamline the risk officer’s role by enabling cloud-based access and a central repository for all documentation. It allows the risk officer to easily identify any potential compliance risks and to flag these for monitoring. The secure and transparent communications inherent in an entity management database system help enable the risk officer to perform their role.
Using Technology for Your Entity Management Database System
So you see that an entity management database system is business-critical in today’s complex regulatory environment, and the only way to ensure strong and robust compliance and governance is through harnessing technology for your entity management database system.
Entity management platforms such as Diligent’s offer secure and affordable solutions to entity management that are simple to use and easy to access. Our entity management database system is cloud-based and secure, meaning the legal operations and compliance teams can perform their important duties secure in the knowledge that essential business information remains safe and locked away from prying eyes. The cloud-based nature of the entity management database system enables clear and open communications, meaning those who need to access the information can do so from wherever they are, whenever they need it.
Schedule a demo to see how Diligent can help your business-critical compliance and governance functions harness the power of entity management database systems.