Technology: entity management systems
Even with the utmost care and attention, subsidiary governance frameworks can still be undermined by human error. This risk is only increasing as regulatory complexity increases worldwide, however, appropriate utilisation of entity management systems (EMS) can help mitigate this.
This added visibility and the ability to see and track changes, will ultimately allow for a more joined-up approach and improve the day-to-day maintenance of subsidiary governance.
Choosing and setting up an entity management system
When choosing an entity management system, it is important to remember that not all management systems are made equal. It is easy to make the mistake of thinking that one EMS is much the same as another, but the truth is very different.
Some entity management systems are not made for managing a portfolio of international entities. For example, a locally produced system will likely be tailored to maintain entities in that single jurisdiction – it will not have the flexibility of tracking variety of different obligations in other jurisdictions. There are very few systems that are really global or advanced enough to be considered global, but on the other hand, some of them may be too complex if what you are looking for is basic functionality. In this case the lesson is to ensure that the EMS you choose is viable across multiple geographies and jurisdictions in which you operate while being user friendly and easy to use.
Another factor to consider is that simplicity does not come off the shelf. That is to say, the ability to track, monitor and update corporate documentation across multiple entities and jurisdictions is highly complex and it will require considerable experience and dexterity to ensure that the information is represented in an intuitive, easily manipulable way. The reality is that simplicity is tailored and is always an efficient marriage of EMS and workflow.
Whether you are a general counsel or a member of the company secretarial team, you cannot afford to treat subsidiary governance as an ancillary service. There is an increasing recognition that governance needs to be brought front and centre as a corporate concern and handled by a specialist. Luckily technology is keeping pace, contributing to the evolution of governance.
Entity management systems are, ultimately, only as good as the processes that underpin them.
The workflow needs to ensure that all formats and documentation are consistent across the entire portfolio so that the system is interoperable. It is a frequent source of error to have different document formats for different entities and can lead to even bigger problems later on.
Ideally the workflow itself should also be globally managed. It may seem like a simpler option to have each jurisdiction’s documentation managed by a local team, but this is likely to lead to an EMS which has errors and inconsistencies.
It is a myth that you can have a global EMS without a global framework for workflow to manage the actual processes that underpin it.
Case study: integrating historic documents to an EMS
Citco GSGS helped one multinational client (MNC) resolve a historical document backlog. This MNC had recently implemented advanced subsidiary management software and wanted historical documents to be maintained therein, but scanned legacy documents pertaining to foreign subsidiaries had to be organised. To make the process of cataloguing these documents even more complicated, most were in foreign languages. However, Citco GSGS met this challenge because of its global presence, rigorous processes and expertise in working with multiple languages and document types, as well as its experience with the major entity management systems.
The project was completed within a very short timeframe after the client gave Citco GSGS access to the extensive collection of unsorted documents in foreign languages; these were sorted, named according to global English naming conventions and posted to appropriate document holders next to a specific subsidiary. Citco GSGS also delivered the sorted documents to a back-up drive.
By Vytautas Stasionis
Client Integration Manager