10 Steps to Evaluate Your Entity Management Needs

Lauren Mcmenemy

Compliance and governance are ever-changing especially when it comes to figuring out how to evaluate your entity management needs. Global and local regulators alike are in a state of constant review of needs, checking that the regulation they set is fit for purpose and without any loopholes for the unscrupulous to exploit.

Why, then, should your organization rest on its laurels and assume a governance policy, once set, will do you forever? When was the last time you evaluated your entity management needs? Any approach to entity management should be subject to regular reviews, if only to ensure that you’re capturing current reporting requirements and keeping an accurate and full corporate record.

10 Steps to Evaluate Entity Management Needs

If you haven’t recently re-evaluated your entity management needs, these 10 steps should help you to capture a picture of the current state of things – and help to highlight any current challenges or gaps you may have in your governance strategy so that you can start to tackle them before they become major problems.

1. Do you have visibility of the group structure – where entities are located, and how they interact?

As your organization grows, and especially as you move into new markets and jurisdictions, your entity management needs will become more complex. This is why it’s imperative to visualize your group structure – it will help to highlight exactly where your organization has entities located and how those entities interact with each other. Are there shared directors? Is that compliant with the regulations in both jurisdictions? And, importantly, does your local board need to be totally separate from the parent board, or can they share duties? The group structure – how entities have been set up, as well as their location, personnel and decision-making abilities – must all be evaluated to understand entity management needs.

2. What regulations and reporting duties are you bound to?

Likewise, that visualization of the entire group structure will highlight exactly where entities are located, which will shine light on the regulations the entity is bound to and what its reporting duties are. Entity management software can help to streamline the reporting side of things through compliance calendars and automatic electronic filing, which can, in turn, help to eliminate the risk of human error or overlooked deadlines, so it’s worth assessing reporting duties as part of this exercise.

3. How manual are your processes?

Is your governance and compliance process still reliant on spreadsheet trackers? Do you still have filing cabinets full of important contracts and licenses that aren’t stored anywhere else? If your governance and compliances processes are still heavily reliant on paper, you’re operating with the risk of human error introducing inaccuracies, losing important documentation or just generally throwing a spanner in the works. It’s important to go through the entire process to see what’s still manual, and what could move online or even be automated.

4. Do you have policies guiding governance, compliance and risk management?

All this talk of processes implies you have a GRC – governance, risk and compliance – policy already. If you don’t, that’s your most pressing need. Evaluate the entire chain of governance and compliance; understand how risk management works in your organization; be clear on what your obligations are under the law of each jurisdiction in which you operate; and who’s responsible for these obligations internally. Then, make sure you document all of this in a GRC process, and consider how to make that process as streamlined and efficient as possible.

5. How good is your record-keeping?

As part of that evaluation and creation of policies, pay particular attention to the way your organization keeps records. This step plays into most of what’s come before, and acts as a neat halfway point in your evaluation. Do you keep records of literally everything? Do you only record what you’re legally required to? Or are you missing vast swathes of records from the last few years – and what would you do if an auditor or regulator needed to see that missing piece? The state of your record-keeping will reveal a lot about your entity management needs – including if an overhaul is needed, or just a gentle tweak.

6. How do you track signatories and powers of attorney?

Let’s say your record-keeping practices follow the best advice and all records are kept safe and secure. Great work! Now, what happens if a director is put on gardening leave because they’ve quit to go to a competitor? Or if a signatory is suddenly absent due to a medical emergency, but you really need to get these contracts signed this week? If you’re working from entity management software that’s securely integrated with the rest of your governance portals, then you’ll be able to quickly identify who the next in line is with power of attorney, or you’ll be able to efficiently update details of the new signatories in one place knowing the new information will be pushed out to all the places it needs to land. Understanding how your organization tracks details like who has signing power or which stakeholders are responsible for which entities can add huge efficiencies to your processes.

7. How do you communicate internally?

What does communication have to do with entity management? A lot, actually. Stakeholders must communicate with each other to reach decisions. Records must be shared to be signed-off. Impending deadlines must be made known. This isn’t about the intranet – this is about how your internal stakeholders speak with and share documents with each other. Those communications processes not only must be transparent, but they must also be secure and safe from cyber threats. Are your communications fit for your entity management needs?

8. How do you share documents with stakeholders?

Speaking of sharing documents… Most of the corporate record consists of essential, confidential company information – information you don’t want to get into the wrong hands. So, are you emailing financial records from your Hotmail account? Or are you sharing documents using the latest in cloud-based secure access and storage? While modern governance assumes you’ll be working online, it does need to have best practices in cybersecurity baked in.

9. How secure is your corporate record?

That is why cybersecurity must be included in your evaluation of entity management needs. It’s not just about sharing documents by email – there’s also the question of how the various systems you use are able to integrate and talk to each other. Every integration is a potential doorway for hackers to access your corporate record, so cybersecurity cannot be an afterthought when assessing entity management needs.

10. Do you have space to be strategic about entity management, or are you more reactive?

Finally, the big question: What does your day-to-day look like? No, seriously – as an entity manager, do you find yourself constantly reacting to requests to the point this evaluation of entity management needs keeps being put on the back burner? If the answer is yes, then you’re working in a state of reactive compliance, not proactive governance. Introducing efficiencies to your process – perhaps through using entity management software, or just streamlining some workflows – can help give you the time and space to take a look at the bigger picture. This will then help you to be more strategic about your entity management, instead of jumping because Director X needs that document right this minute, thank you very much.

Entity management software eases the burden of governance and compliance

Answering these questions will help to shed light on the current state of your entity management, and how you can reform your processes to align with modern governance practices. And when it comes to modern governance, all roads lead to entity management software.

This software – including the Diligent Entities platform – establishes a single source of truth for your entity management, which, in turn, helps to streamline governance and compliance throughout the organization. By centralizing, better managing and effectively structuring the corporate record, organizations can improve entity management and increase compliance, mitigate risk and improve decision-making.

A secure, cloud-based central repository to store entity data helps to get the right information to the right people at the right time, and in the right format. No more missed filings or lost powers of attorney, and an all-around better approach to entity management fit for the new era of compliance.

Yet entity management is just one part of the full governance picture; you need to ensure your various governance platforms, such as your board portal and secure messaging service, can seamlessly integrate to create a secure governance cloud. The final step to evaluating your entity management needs, then, is to drive better collaboration across the organization – ensuring your most critical entity and subsidiary information is securely conveyed to those who need it – by taking a holistic view of governance.

Get in touch and schedule a demo to see how Diligent Entities could be the answer to your entity management evaluation, and bring your approach to entity management into the 21st century.

Related Insights
Lauren McMenemy

Experienced journalist Lauren McMenemy has been writing about compliance and governance for several years, and has covered finance, professional services, healthcare, technology, energy and entertainment.