We talk a lot about the importance of good governance, of supporting robust and streamlined compliance processes, and of enabling legal operations to run smoothly within an organization – but, truth be told, none of this would be possible without entity documents. These papers are what organizations revolve around; they’re essential to operations.
Since the first incorporation, companies and organizations around the world have required documentation to prove that they are legal, they are compliant and they are able to operate. These entity documents have always needed to be stored safely and securely, lest a regulator come to the door and require immediate access to them – the ultimate censure being fines and damage to the corporate reputation. Without entity documents, the entity is just a loose grouping of people playing at being a company.
And whereas, in times gone by, those documents may have been held in a safe or in a secure corporate record file in the corner of an office, the evolution of modern governance means these entity documents are now more frequently stored electronically. This, however, and the need for secure document sharing, introduces new levels of risk, ones involving cyber attacks and hackers looking into emails for any tidbit that could cause a ruckus or make life very difficult for the entity in question.
Today, proper entity document storage has never been more important – and has never been more of a risk.
What Is An Entity Document?
When we refer to an “entity document,” what do we actually mean? In essence, we are referring to the paperwork needed to both properly launch a business and keep it operating compliantly. These can also be known as the organizational documents or constituent documents, and can include documents such as:
- The certificate of partnership, if the entity is formed as a Limited Partnership
- The certificate of organization, if the entity is a Limited Liability Company
- The Articles of Incorporation
- Any professional licenses the organization or its directors must hold to legally operate
- The organization’s by-laws
- Any governance protocols
- Any shareholder certificates, and so on
As the entity continues to operate, those entity documents will grow in number to include the minutes of board meetings and AGMs, transfer of ownership certificates, details of mergers and acquisitions, certificates of good standing, audited annual accounts and details of tax arrangements, and organizational structures. In short, the entity documents are those items essential to allow the organization to operate within the rule of law and to be able to demonstrate compliance if the regulators or auditors require proof.
Tracking these documents can prove a burden for entity managers, but it’s essential that advisors such as the general counsel and legal strategists have easy and immediate access to the most recent entity documents – important and strategic business decisions are made based on these entity documents every single day. This makes it essential that entity documents are stored in a proper and secure manner, in a way that allows the right people to access them at the right time and in the right format.
Best Practice in Storing Entity Documents
Good document management will look different for every organization, but there are some commonalities we can uncover. By adhering to best practice in entity document storage, says IC Thrive, organizations can:
- Increase collaboration and communication
- Create reliable document version control
- Increase time-cost savings
- Ease accessibility
- Increase productivity
- Ensure everyone is kept up-to-date
What do these best practices say, though? Let’s start with the basics: having a cloud-based central repository, managing version control and permissions, and enabling easy and secure sharing of entity documents.
Create a central repository
Especially when an organization is managing entities strung across various jurisdictions, entity document management becomes increasingly important. Each entity has its own documentation, which means when you get to group or parent level, there is myriad entity documentation to wade through. Creating a central repository for all of this information – one central place where stakeholders can go to access any document they need – not only helps to streamline governance and compliance, but ensures all entity documents and the corporate record are held to the same standards of security.
Store documents in the cloud
Creating that central repository in a secure, cloud-based location also solves a big issue for entity management: getting the right documents to the right people at the right time. When the entity documents are stored securely in the cloud, they can be accessed from anywhere in the world – an important factor when the CEO tends to go on golfing holidays right at sign-off time.
Manage version control
That cloud-based, central repository also ensures that the issue of version control becomes obsolete. When documents are held centrally, you help ensure that everyone accesses the latest version of events. There is no issue of multiple versions of the same document floating around the organization, and the risk of incorrect entity data being filed with regulators is mitigated. There’s also less chance of two people working on the same document at the same time.
Managing and storing documents centrally also enables permissions management. The CSO or Head of IT can ensure that only those stakeholders who are legally required to access an entity document can see it, which can – in itself – be an important compliance requirement in some jurisdictions.
Enable safe and secure document sharing
Sending sensitive material over the corporate network can pose a significant compliance issue to organizations. Any email can easily get misdirected or intercepted, and strategic and confidential corporate information can end up in the wrong hands, namely those of competitors, the media or even hackers who can hold it for ransom. This fact alone can have CSOs running from digital entity storage, as security is of paramount importance. However, there is technology that enables secure document sharing and secure meeting workflows, allowing proper entity document storage but also easy online collaboration and sharing.
How to Utilize Technology for Proper Entity Document Storage
We’ve come a long way since the first company was incorporated, and proper entity document storage and sharing today is driven by technological solutions. Modern governance is built on technology, and proper entity document storage has followed suit.
As we saw in the best practices for proper entity document storage, the cloud rules them all. Entity management software, such as Diligent Entities, helps to create a single source of truth for all entity-related information. It helps to centralize, manage and effectively structure the corporate record to improve entity governance, better ensure compliance, mitigate risk and improve decision-making.
Where Diligent goes one step further is by securely and seamlessly integrating its entity management software with its board portal and secure document-sharing systems to create a governance cloud solution. This means that not only do you have a secure central repository and a single source of truth, but that entity documents can be stored and shared securely, safely and compliantly from anywhere, to anyone with the right permissions.
Get in touch and schedule a demo to learn how Diligent’s governance cloud is built to drive your modern governance needs, and ensure proper entity document storage.