With a growing number of complex business structures, management of those business entities has never been more needed. Yet, this results in an entity management system that matches the complexity that comes with these structures. You may find that your business has expanded with multiple entities for a number of reasons, be it to reach business goals, or that the regulations you must meet have become increasingly burdensome and convoluted.
Reputation management and cybersecurity in the face of cyberthreats has made the need for communication and data to be secure. Finally, an efficient entity management system that meets best practices can save time, avoid mistakes, and cut costs where you ultimately don’t need to be spending money—ultimately improving your chances of reaching your business goals. With that said, here are five entity management best practices that you may want to consider for your business strategy.
1. Centralize Compliance, Regulatory Filings, and Record-Keeping
Having a decentralized record-keeping system for your regulatory filings and compliance is both a headache and a disaster waiting to happen. By not having all of these important records in one cloud-based location and easily accessible, your business risks missing important regulatory filing deadlines, ignoring compliance, and allowing disorganization to slow your business growth. In many cases, a lack of a centralized entity management system can threaten the life of your business.
By centralizing all of this information, including regulatory filing and record-keeping, you can promote the health of your business while also making sure that your employees, directors, and shareholders have the tools and information that they need to execute business functions efficiently.
2. Support Directors in Their Responsibilities
In order to perform their job duties as effectively as possible, your business directors must possess the appropriate skills and expertise. Yet, entities that cross jurisdictional lines often become difficult to navigate from a directorial perspective, especially when these entities operate under different standards.
Directors need to be able to exercise duties or care, independent judgment, and avoidance of conflicts of interest. Doing so requires having oversight of entities and an easy overview of whether they are in compliance with regulations governing director independence and restrictions on the number of directorships. Additionally, directors benefit from having ongoing training about their responsibilities, potential conflicts of interest, and governance tasks. An entity management system is needed for secure communication between directors and employees in order to fulfill their ongoing responsibilities.
3. Create a Subsidiary Governance Framework
It can be difficult to build an efficient governance system without having a framework in place. Some businesses have hundreds and thousands of subsidiaries, making it nearly impossible to organize and access information manually. In these cases, having a system in place where information can be accessed by any user, regardless of location.
An efficient system for this function must start at the top.Key stakeholders must get on board and buy into the system to get the ball rolling. Goals must be set and presented and documentation must be obtained and communicated to the organization’s stakeholders and employees.
4. Leverage Technology for Compliance
Technology brings order to what are often chaotic and complex processes involved in subsidiary management. Before you choose which entity management system is right for you, make sure that you assess your problems and figure out how these problems can be addressed with technology.
In general, you want a system that will evolve with the market and scale with your business, as well as the specific business data that is entered into the platform.
Remember that key stakeholders should be involved in this process. Make a clear list of your must-haves and nice-to-haves and use this list to ensure that vendors understand how you plan to use technology to meet your goals and your business needs.
5. Empower the Corporate Secretary
The corporate secretary plays a central role in strategic functions of a business in today’s world, beyond the traditional recordkeeping role. Now, corporate secretaries are considered custodians of corporate governance and assist directors by providing ongoing training and support and offering tools needed for them to fulfill their job duties. Other types of responsibilities that corporate secretaries may fulfill include:
- Stakeholder communication
- Reporting and follow-up
- Board development
- Meeting agendas
- Maintaining governance
As such, organizations that support and empower corporate secretaries can stay ahead of the curve and the competition.
Remember that businesses and the market that they operate in are ever-evolving. In order to stay ahead of the competition and pull ahead in the long run, understanding and implementing entity management best practices is a must. At Athennian, our team is trusted by countless businesses that want a one end-to-end solution for their subsidiary and entity management goals.
If you are looking to upgrade to a cloud-based entity management system or would like more information about the product we offer, the team at Athennian is here to help! Please don’t hesitate to request a demo with an entity management expert today.