When companies consider going global, the corporate teams realize they need additional resources to assist with the expansion. Thanks to modern technology, organizations have access to a vast range of tools that can make entering and operating across jurisdictions easier.
In planning for expansion, internal counsel and legal ops need to visualize the organizational needs during every stage of corporate development. Below we go into more detail about the stages of global development, the challenges faced by global organizations and how the technology can help streamline their expansion.
Planning for Global Expansion
As businesses expand their global footprint, they create new legal entities in various jurisdictions. No matter the geography or jurisdiction, every entity goes through the same basic stages. The teams have to address each of these stages to ensure compliance and good standing of their legal entities, provide for efficiency and minimize costs.
Formation
Forming a legal entity in a foreign jurisdiction is often complicated through diverse requirements. Even finding all applicable regulations and timelines for establishing the local infrastructure may require significant efforts and involving an outside counsel.
Preparing all the necessary documentation, appointing directors, opening the bank account, providing for licenses and IP rights and making all necessary filings involve multiple data touch points. In many jurisdictions, the process can be even more complicated by requirements for document apostille, restrictions on foreign ownership of local businesses or other specific circumstances.
Maintenance
After an entity is formed in a new jurisdiction, the teams have to put regular efforts into maintaining the entity in good standing. This requires addressing multiple aspects of compliance, including insurance, filings and various other processes. The legal team needs to be aware and keep track of all applicable requirements and take necessary steps to ensure compliance.
Dissolution
When a business entity comes to the end of its lifecycle, the teams need to take all necessary steps to dissolve the company. Similar to the process of formation, dissolving an entity involves multiple stages, including checking and correcting for any compliance issues, notifying all stakeholders, closing the bank account and making necessary filings.
In some jurisdictions, approval from the government is required before someone can dissolve a company. The compliance team needs to leverage multiple data points related to entity management to address all these requirements to ensure a seamless dissolution process.
Challenges in Global Operations
Although the processes for entity formation, maintenance and dissolution may look standard or even straightforward based on the description, there are multiple caveats involved. If overlooked, such requirements can lead to increased costs, inefficiencies, non-compliance, heavy fines and even compulsory winding up of a company.
When businesses do not have an effective entity management system in place, addressing the existing challenges places a heavy toll on the whole organization beyond just the legal team, involving tax, finance, outside counsel and even C-Suite management and directors. Below are just a few examples of how an absence of a single source of truth about an organization can become a blocker on the way to it global expansion.
Lack of Visibility
When organizations scale their business, lack of visibility may lead to multiple negative consequences. If key persons in a company don't have a comprehensive view of the whole organization, it can lead to delays, inefficient or wrong decisions, and lost deals.
Lack of Accessible and Accurate Entity Data
In the absence of a single source of truth about an organization, the teams lack accessible and accurate data for entity formation, maintenance and dissolution, as well as for transactional and contract work. Many legal ops and internal counsel professionals find themselves on a "scavenger hunt" for entity data which leads to delays and mistakes as well as late or incorrect filings.
Inefficient Collaboration
When teams operate across geographies and time zones, a single source of truth for corporate data becomes ever so critical. When subsidiary information lives in someone's inbox or desktop, the data become inaccessible, making interaction slow or even impossible.
Cybersecurity
Today, all organizations need to ensure the cybersecurity of their entities to combat cybercrime, prevent data loss and comply with global privacy regulations, including GDRP and CCPA.
When businesses share access to their entity data with their employees or third parties, they need finer control over how the users interact with data, leveraging access rights and permissions. Exchanging information by email or keeping it in spreadsheets are no longer safe and can lead to data breach and non-compliance.
How Global Companies Benefit from Entity Management Software?
Many businesses seeking global expansion already realize that moving to modern entity management software is instrumental in ensuring the development of their organizational structure, governance and compliance and risk management.
While every organization may have its own trigger point for switching to modern technology, all companies leveraging entity management software acknowledge significant benefits for their global operation after they complete the transition.
In particular, businesses working with Athennian software mention the following benefits of modernizing their entity management with automation:
- org charting capabilities providing a birds-eye view of the whole organization, ownership connections, historical relationship between the entities and multiple levels of detail,
- improved deal readiness and streamlined KYC due to better visibility and instant data availability,
- improved collaboration across the organization, including internal and external teams, through having a common platform for all global entities,
- leveraging a single source of truth for all critical business data on a secure cloud available from anywhere on any device,
- offering multiple levels of access to data to various users.
Importantly, many practitioners have noticed the significance of having a solution that would match the needs of organizations at every stage and moment of its development.
Businesses working with Athennian note the extensive and constantly evolving functionality catering to global organizations as they expand and look for additional capabilities for automation.
Learn More with Athennian
Global organizations share similar challenges while having their unique needs and angles where entity management software can become a game changer for expansion and operations across jurisdictions.
During the webinar run by the Athennian team, Caroline Keller, a Legal Operations Manager with Republic investment platform, shares the unique perspective of leveraging entity management software for a global company operating in North and South America, Europe, the UK and the ATAM region. In a 40-minute webinar available via recording, Caroline describes various tools and solutions the company had for its entity management, their limitations and how migrating to Athennian was instrumental for global growth and operation.
The webinar sheds light on nuances of global entity formation, maintenance and dissolution in a global environment. The participants discuss the challenges faced by global organizations and the benefits offered by entity management software. Additionally, Caroline Keller shares practical insights on how to quantify ROI on entity management software and answers specific questions related to introducing and leveraging automation tools in a global company like Republic.
For more information on how to streamline your global operations with automation, you can watch our latest webinar, "From Chaos to Compliance:
Streamlining Global Operations with Entity Management Software."
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