Legal entity management: the case for global outsourcing
Legal entity management: the case for global outsourcing
As in-house corporate secretarial, legal and compliance functions are called upon to take ownership for managing group legal entities on a global scale, interest in alternative sourcing models is growing exponentially. Andy Casey, Head of Corporate Secretarial Services at Konexo, examines this recent transformation.
It seems unthinkable now that just a few short years ago, large multinational organizations would try to coordinate compliance and governance activities across all of their international entities without centralized structure or formal help – leaving much of the burden to internal teams juggling other responsibilities.
But that’s changing rapidly now as regulatory requirements continue to intensify. Not only are organizations trying to cope with differing demands between international jurisdictions, transparency-led legislation is increasing too, and group directors now have growing personal accountability for what goes on across the business. Highly publicized court cases and fines for late filings, linked to some of the biggest names in banking and beyond, have prompted a major rethink in how businesses fulfil entity compliance and governance obligations around the world.
The geographical spread, scale of operation and increasing complexity of group structures means that, even where in-house corporate secretarial, legal or compliance teams are well established, they are struggling to effectively manage their legal entities. The situation is compounded by the mandate from head office to deliver ‘more with less’.
On top of regulatory pressures to tighten compliance and reporting practices, and the need for more sophisticated governance processes to cope with increasingly complex group configurations, tax teams need more clarity and visibility of group structures. Shareholders and regulatory bodies are demanding greater transparency too, as are the group directors on whose shoulders all of this rests.
It’s easy to see why outsourcing is rising up the agenda as a solution to global entity governance, using specialist service providers with appropriate expertise and capacity.
Company secretarial outsourcing: a transforming market
Organizations have dabbled with partial outsourcing of the corporate secretarial function before – engaging local law firms, accountancy practices and/or compliance service providers to help with various aspects of their workload where resources or specific skills have been lacking. But, all too often, a lack of overarching strategy and control has left head offices trying to coordinate a multitude of different suppliers and agreements, without a clear overview of costs and compliance.
In the meantime, the corporate secretarial function has expanded to such an extent that organizations must now find a more effective and efficient means of managing their own people’s time.
Getting expert, coordinated help with global entity management is a very useful place to start. What in-house functions need, ideally, is to bring all aspects of legal entity management under a single, large-scale service provider with global reach. Once they have identified a partner they can trust, they can run a much more efficient and focused internal team – one that retains central ownership of, and accountability for, all activity, but which can concentrate its efforts on more strategic work.
Some global organizations are well advanced in this area, not only outsourcing global entity management, but also relying on service providers like Konexo to provide support with induction and training for directors in addition to a range of transactional and board governance support.
Choosing the right outsourcing partner
Konexo’s proposition appeals greatly to multinationals, irrespective of their industry sector. The fact that we are a division of a global law practice with an extensive footprint, with corporate secretarial coverage in over 100 jurisdictions, is enormously beneficial to them. Few other external service providers can match our market reach, not to mention our independence from accounting/tax services.
Our corporate secretarial professionals and in-country corporate lawyers collaborate closely as one team. There is a single point of accountability and coordination in the UK, while in-country experts do work on the ground; people with in-depth knowledge of the local law and of evolving regulatory requirements. This tried-and-tested model goes down well with clients, who benefit from improved management information, and cost predictability through fixed annual pricing.
It’s a model that’s growing quickly in popularity. Today we provide outsourced corporate secretarial services to hundreds of multinationals and serve the broadest and most diverse client base in the market. We have the biggest dedicated corporate secretarial services team in the UK, staffed with over 60 corporate secretaries, project managers and both governance and language professionals.
People-led outsourcing, supported by the latest technology
Technology plays an important part in all of this, too. From legal entity databases for collating corporate information, to workflow management tools and MI reporting, to automated document production and e-signatures, there is a broad spectrum of solutions that can help transform international legal entity management. Our corporate secretarial team is at the forefront of these new developments, able to bring the latest technology to bear wherever it will add discernible value for our clients.
Indeed, one of the great attractions of alternative sourcing models is the reassurance that the people responsible for legal, regulatory and compliance obligations are operating at the sharp end, fielding the latest market knowledge, practices, technologies and tools. In a fast-changing global business and regulatory climate, that counts for a lot.