Legal entity management is a complex system that encompasses many facets of an organization. Entity management is a collection of a business’ corporate record, which can be defined as a set of information that details anything including changes to a business and its structure, particularly in regards to mergers, acquisitions, corporate names, legal structures, owners and directors. Legal entity management as a business function includes multiple departments and job roles within an organization. This includes the legal, governance, treasury, tax, finance and compliance departments and sometimes can include the human resources department.
In short, legal entity management is the means of creating a single source of truth in order to better manage the evolution of compliance and tax regulations and the fear of the unknown regulatory changes and associated costs for all legal entities within an organization. Entity management is directly managed by the legal and tax department, which includes the general counsel, corporate secretary, a companies paralegals and all members of the tax department. Additionally, it is something that needs to be clearly communicated to the board of directors in order for them to better understand how the business is growing and progressing.
Compliance is a central facet of entity management and your organization must walk a fine line to adhere to local, state and country laws. In order to make sure that your legal entity management strategy does not break any laws, it is imperative to understand how to best remain compliant. In fact, proactive governance reduces reactive compliance. If your organization chooses to put strong entity governance at the center of their subsidiary management strategy then your organization will have a much better time dealing with regulations as you expand your operations regionally or globally. At the same time, this approach will help you reduce risk for your legal subsidiaries and this should save your organization a lot of time with financial, legal, environmental, reputational and safety matters for your modern governance approach.
Because of the complexities of entity management, many global organizations are turning to entity governance solutions to better assist with their needs instead of relying on outdated manual methods. These robust entity management software solutions are comprehensive governance platforms that:
- Improve operational efficiency and oversight across internal teams in order to better manage information
- Create a single source of truth for corporate data to monitor and ensure compliance
- Manage and mitigate risk and liability in order to protect the corporate veil
With the right technology as the core of your operations, your organization can more effectively keep on top of compliance through proactive governance. The right legal entity governance solution will allow your internal and external teams to work more efficiently and to better execute governance frameworks and workflows.