There are numerous ways and reasons why a corporation or organization has multiple subsidiaries under it. Thanks to the rapid rise of communication and technology, globalization has paved the way to making the world smaller and the reach of organizations wider by expanding operations globally.
On the other hand, subsidiaries are also created by offshore ventures, mergers, and acquisitions to take advantage of tax savings through a subsidiary. The most common example is a global corporation looking to establish domestic subsidiaries in different countries worldwide.
It is common knowledge that the more subsidiaries a corporation owns, the more complex it is for the management landscape, especially when it comes to compliance and governance. There is also a conflict potential because subsidiaries are operating behind the parent company, so when it comes to corporate management, finding the balance between the entities’ demands is key to better managing the organization.
What is Corporate Subsidiary Management?
The term Corporate subsidiary Management is a major part of entity management that focuses on the management of corporate governance of corporations and their related entities. Depending on how many subsidiaries are in a corporation, there can be similar officers, directors, and shareholders across multiple entities, including more than 100 related parties.
How to Operationalize Subsidiary Management?
The most convenient way to have an efficient subsidiary management process is by operationalizing it and using entity management software to manage and keep track of all subsidiaries. It is too cumbersome to manage it through archaic ways like physical documentation.
For example, entity management software makes it easier to appoint and re-assign the same person as a director through multiple entities. It will also enable you to create a new entity easier that reflects the same capital structure and governing bodies as with a related, existing entity.
To effectively perform corporate subsidiary management, one of the main considerations is to meet the numerous needs of subsidiaries and corporations so that everybody has access to accurate and reliable entity information.
The main benefit of having an entity management technology system in place is to coordinate many details such as officer appointments, ownership changes, registration requirements, and regulatory measures.
Here are the different tips on how you can keep your subsidiaries organized through an entity management software technology:
When you are dealing with many different corporations and subsidiaries , it will be challenging to keep track of all the compliance issues that need to be maintained. There is also the fact that the compliance world is always changing, some things that might be in place a few years ago might not even be applicable today.
It is very cumbersome to meet district jurisdictions and other regulatory demands that come with it. If you are unable to meet compliance requirements, some repercussions are time-consuming, fines, or legal action. It can also lead to a breakdown in operations which can prove detrimental to your company’s reputation.
With an entity management software system, you can create alerts and reminders to make sure that your team is aware of regulatory demands that are coming up due. With automation, you can make sure that everything is streamlined and the information is up to date to make sure that compliance efforts are complete.
Centralized Data Source
When you have corporations and subsidiaries spanning the country or worldwide, it can be a monumental task to track important entity information. By having a centralized data source that keeps all the information in one place, you can keep having a complete vision of all the holdings. This centralized data source will represent and act as the single source of truth that comes in handy when uploading or maintaining all documents that need to be updated continuously.
Most of the tools for corporate subsidiary management are cloud-based which means that all users can have access to it regardless of their location. This promotes high visibility and transparency within organizations.
An efficient corporate subsidiary management tool will enable you to have an enhanced collaboration system, especially within different subsidiaries in multiple locations. Collaboration is important to enhance the team and make sure that everybody is on the same page. You can assign different people with varying access points that will allow members to communicate with each other and facilitate information exchange.
Efficiently Control User Access and Permissions
To effectively administer corporate subsidiary management, you can give a range of access and permissions to different users depending on their responsibility level. This is helpful in governance and adhering to transparency especially when it comes to auditing trail history and maintaining important data.
This is an effective way you can promote collaboration especially if you have team members located in different geographic areas. Users who have appropriate access levels can make changes to the documents and files at any given time. This enables individuals and subsidiaries to be accountable for the data that they are providing and make sure that it is correct.
When you have data management tools that can be viewed by anyone with appropriate assigned credentials, it promotes and encourages transparency and high visibility when it comes to workflows. Because of high visibility, process owners can immediately see what tasks need to be addressed and how the flow of work is progressing which can identify lags.
Participants can also track their assigned tasks at all times, and have the ability to receive notifications when a task is overdue.
Corporate subsidiary management is an important role that companies should put serious thought and consideration into especially if you are dealing with multiple corporations, entities, and subsidiaries. Proper management will lead to better operational success, and transparency and can promote a collaborative environment throughout different entities.
For more information on corporate subsidiary management, including best practices, you can access our webinar, "Leveraging Technology to Avoid Mismanagement of Corporate Subsidiaries."