General Counsel, business lawyers, and corporate paralegals serve a vital role in corporate compliance. The exceptional growth in new legal entity formation and the increasing diversity of corporate structures challenges even the most organized corporate legal team. Legal Entity Management is a set of practices and tools that allow General Counsel and corporate legal teams to be optimally effective.
Corporate compliance starts, but does not end, with registered agent services. Legal Entity Management promotes compliance by bringing all corporate filings together in one place
Legal Entity Management also allows to automate and track, for example:
Effective Legal Entity Management treats every national, regional or local jurisdiction as needed. A corporation incorporated in Delaware and operating in California may have subsidiaries in Canada, Singapore, and Switzerland.
General Counsel, corporate lawyers, and paralegals should be able to review all the filings, licenses, and registrations from those jurisdictions in just one place and within, of course, a secure/access controlled environment.
Accurate Legal Entity Management can reduce global enterprise risk by isolating potential liabilities within discrete companies. This benefit assumes that the corporate veil remains intact. Legal Entity Management is a process to manage the legal risk associated with the organization’s corporate structure.
Legal Entity Management is a set of practices and tools to proactively identify and manage corporate risk when it is easier to handle and not simply wait for problems to show themselves.
To fend off budget and resource restrictions, legal teams need to provide demonstrable value, as efficiently as possible. Most organizations tend to view legal departments as a cost centre. Therefore, it is imperative that lawyers “Do more with less”.
Done correctly, Legal Entity Management allows General Counsel, business lawyers, and paralegals to share data, reports and analyses with management to reveal both the risks and the benefits for legal risk management.
The corporate registry must show all the group’s entities in a single view regardless of the type of legal entity or jurisdiction of incorporation. The registry should show the legal name, any trade name, next renewal date, entity type, and tax classification etc…
Legal Entity Management includes staying precisely informed of who owns how much of each entity. Some ownership data is simple: Company A owns 75% of Company C, while Company B owns 25% of Company C.
In the case of entities that have a detailed stock ledger (or the equivalent for partnerships and LLCs), entity management becomes more complicated. A full transaction history, an automated capitalization table (“Cap Table”), and org chart is needed.
Sending notices to current directors about board meetings is routine work for corporate secretaries. Legal Entity Management requires active work with data about officers and directors. For example, General Counsel, business lawyers, and corporate paralegals need to quickly answer questions like: “Who was on the board between May 1, 2009, and August 15, 2010?”. Effective Legal Entity Management means the answer is just a few clicks away without having to locate any physical files.
It is also routine to keep Articles of Incorporation, Bylaws, and other organizational documents handy. Since legal entities are an important part of risk management we need to track many other documents like Directors and Officers (D&O) insurance policies, Errors and Omissions (E&O) policies, regulatory filings, licenses and permits in our Legal Entity Management platform.
Laws, regulations, requirements and filings requirements proliferate and continually change usually without relief from current existing obligations. It is critical that the legal team respond to these changes quickly. Legal Entity Management is also about people management. It is necessary to assign tasks to colleagues in the business and in the legal group. We need to collaborate effectively to keep the organization in compliance. Before our D&O policy is up for renewal it might be necessary to:
These are all tasks of Legal Entity Management. General Counsel, business lawyers, and corporate paralegals can make a tremendously positive impact on the broader organization with effective Legal Entity Management. However, to make an impact requires an expansive view of what it means to manage legal entities and to communicate proactively with colleagues.
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