Company secretaries and those responsible for entity management within an organization – those fearless folks looking after governance, compliance and legal operations across the world or the city – really do have a lot on their plates. Not only must they make sure the organization remains compliant and gets all its filings in on time to remain in good standing, but they must also field all of those enquiries from across the business asking to see this contract or that license or any old report right this minute. And that means spending time digging out documentation from whatever passes for the corporate record’s storage point.
It’s for these reasons that often entity management can be a very reactive beast. It’s difficult to get time to think about the future, to take a more strategic and proactive approach to entity management, when you’re so bogged down in the day to day. But by only thinking about current entity needs, those in charge are missing a trick. They’re losing the opportunity to think more strategically, to help build the business, and to bring in new and emerging technologies that could help to streamline operations and make their lives much easier.
In this article, we’ll look at just three reasons – there are many, many more – why you shouldn’t just think about your current entity needs; an eye on the future is essential to modern governance.
Don’t Put a Limit on Growth Potential For Your Entities
The current structure of an organization is just that: the current structure. It’s what’s needed right now. Sometimes, it’s not even fit for that purpose – organizations have a habit of growing and adding bits on without thinking about whether that new entity is really set up in the best interests of the wider group.
By only focusing on the here and now, you’re limiting your organization’s growth potential – and by this, we don’t just mean the potential that comes from new markets. Take a strategic assessment of your current entity needs, for sure, but then take action. Consider any consolidation that might make your entity management needs more streamlined and less time-consuming – do you really need a separate entity for every market and every product line? – and then consider your overall company structure through entity diagramming.
This essential entity diagramming step can highlight any gaps in the market, any potential places for growth that the organization can then work toward, but without the evaluation step first, then any growth will continue to be unwieldy in terms of entity management. Don’t put bad on top of bad to create more bad; evaluate and consolidate your entity management on a regular basis to ensure your group structure is in a fit state to jump at growth potential – such as an unforeseen M&A opportunity – as soon as it arises.
Regulation Is in a State of Constant Flux
These regular evaluations can also help keep you in compliance with local regulations, because global regulation is constantly moving. Wherever your entity is located, there will be regulations with which it must comply – it could be as simple as filing your organization’s annual accounts every year, or it may be as complex as giving personal details of directors or monthly filings that cover any part of your business.
Globally, regulators are erring toward more transparency. The Organization for Economic Cooperation and Development (OECD)’s Base Erosion and Profit Shifting (BEPS) project seeks to inject transparency into international business and close down those tax loopholes that allowed multinational corporations to shift their profits around the world to avoid big tax bills, and it doesn’t just impact large businesses – more than 130 countries are now evaluating their tax laws to comply with the spirit of BEPS. Then there’s the U.S.’s Foreign Account Transaction Compliance Act (FATCA), which requires foreign countries to supply the details of the bank account of any U.S. citizen living in their country.
BEPS and FATCA are just two of the global regulations causing a lot of movement in company laws in recent years. These movements have repercussions at very local levels, but they’re also not going to be the last regulations to put the business world in a spin. Your current entity needs – from the way an entity or group is structured down to the way you interact with local regulators – could very well change in the coming years, so building in some flexibility to cope is a good idea for entity management.
Technology – and Cyber Threats – Evolve
And speaking of flexibility to cope, we come to the section on technology and cybersecurity. Developments in technology in recent years have made entity management a lot easier and a lot more streamlined, and allowed a much more strategic approach on the part of entity managers and company secretaries, but we’re not done yet. Technology never stands still, and out there right now will be someone about to invent something that will turn the industry on its head (again).
Also out there right now are hackers trying to figure out how to get at your corporate record and exploit any weaknesses in your systems. That’s not said to scare or alarm – it’s just the way the world is right now, and cybersecurity must be top of mind for any legal operations team working with technology. The world of cyber threats, like the world of technology, is constantly moving, and what works now for your entity management may not work tomorrow. It is a case for the board, given the threat to the whole business. This is why it’s so important to work with a technology partner that is a true partner – someone who can keep an eye on those future entity management software needs for you, and help you to keep your own entity needs evolving with the world.
Work with a Technology Partner That’s Also Got an Eye on the Future
There’s a lot to deal with day to day for entity managers, yes, but there’s also a lot for them to deal with tomorrow. Your current entity needs may be fit for today’s purpose, but how flexible are they? How tech-driven are they? Will they be able to respond swiftly to changes in regulation? Are they secure and robust enough to deal with cybersecurity threats?
Today’s best entity management software is built with the flexibility to deal with tomorrow. It’s robust enough to handle the cyber bombardment and tough enough to withstand the needs of a growing organization.
Diligent Entities goes one step further than the run-of-the-mill software, though – it integrates seamlessly with a board portal and secure file-sharing system to create a secure governance cloud. The seamless integration ensures no manual transferring of data or documents, mitigating the risk of human error, and ensures the right people can access the right documents at the right time, wherever they are in the world.
Get in touch and schedule a demo to see how Diligent Entities can help you think beyond your current entity needs, and start building a modern governance process that’s ready to handle the future, too.