Monday November 24, 2014

Tech Eases Entity Management Strain

Companies are increasingly seeking a technological infrastructure that allows access to information on international entities.

With so much business activity now taking place across geographic borders, business leaders are being forced to consider regulation on a global scale. Increasingly, transactions among global players make use of corporate entities set up in international financial centres such as the Cayman Islands, BVI, Ireland, Singapore and Hong Kong.

Anne Dolan

Anne Dolan

Organizations that use entities from multiple jurisdictions in their corporate structures or transactions need to ensure that they are ably managed and well accounted for. International standards of governance and disclosure have expanded in scope since the global financial crisis, and there is little tolerance for errors in the administration or reporting of internationally domiciled entities. Even a simple clerical miscue such as a late filing can have adverse consequences for a company, both in terms of legal resolution and reputational damage.

Technology and Legal Entity Management
The administrative and regulatory burden associated with managing corporate vehicles is often extremely demanding.  There is a tremendous volume of data that is tracked and reported on during an entity’s lifecycle from formation to dissolution. Often there are tight deadlines for filing information and documents with third party regulators or governing bodies. As a result, more organisations are turning to specialised technologies to help them track statutory information and documents in multiple jurisdictions.

Developing a system internally to track data and store documents is not always the most appropriate or cost-effective option.  Aside from the significant expense associated with developing such a system from scratch, once launched, it would also require ongoing monitoring, maintenance and development.

As clients now desire continuous information on, and access to, their network of international entities, they are more frequently looking to their service providers to establish an infrastructure that makes this possible.

In 2009, Walkers Management Services (WMS) consulted a number of its clients as to where their concerns lay with entity management, noting that organisations engaging in significant cross-border transactional activity were looking for more efficient ways in which to track data and documents. As a result, the firm designed and implemented a web-based system–the Client Portal–that allows clients continuous access from anywhere in the world to view, print and download all of their statutory data and documents for any entity in any jurisdiction that WMS serves.

The Client Portal is extended to WMS’ clients free of charge, with the aim of ensuring that they are statutorily and regulatory compliant at all times, not only in the jurisdictions in which WMS acts for them in, but globally. The fact that the Client Portal is web-based also means that users can choose to give access (on a restricted basis if necessary) to other third party service providers, such as attorneys and auditors. This not only increases efficiencies by putting information and documents at the fingertips of those who need it, but also reduces unnecessary administrative costs associated with information and document requests, which can significantly rack up over time.

As well as tracking statutory data and documents, other features WMS included in its Client Portal are the ability to generate reports to assist with regulatory filings and the mapping of intra-group relationships, directorships, shareholdings, and partnership interests. Users can opt to receive an alert as to upcoming filing deadlines across a variety of jurisdictions.

Web-based systems are also proving to be invaluable for communication with directors prior to board meetings.  From my own experience of providing company secretarial services to numerous Cayman, BVI and Delaware entities, board packs often run to several hundred pages which can prevent circulation by email or fax. Having the option of being able to download documents from a virtual boardroom has vastly improved the efficiency of co-ordinating board meetings. Directors on the move for example, no longer have to cart heavy board packs around the world or log into their email to receive papers for review. Provided they have internet access, they can log onto the virtual boardroom on the Client Portal, download a pack and then review it offline as they are travelling.

As with any online system for storing data, security and confidentiality is key. WMS opted to invest heavily in the security and infrastructure of its Client Portal, including engaging a top consultancy firm to do annual vulnerability testing. Organizations that are considering using an online system to store their data and documents should ensure that they thoroughly review its security features. Being able to control who sees what information is also critical.  For example, access to WMS’ Client Portal is tightly controlled and monitored by a small, highly experienced team of Chartered Secretaries. Permissions can be restricted on an entity or group basis, thereby making sure that the right people have access to the right information. Due to the popularity of WMS’ Client Portal, the in-house development team has been beefed up to accommodate an aggressive schedule of new feature releases and enhancements.

The task of managing an organization’s global entities often falls to a small team of paralegals, junior lawyers or in-house company secretaries. Such individuals need to have a thorough grasp of a wide range of statutory and regulatory obligations in the jurisdictions in which their organisation’s entities are domiciled, as well as be adept at dealing with the burden of regulatory reporting in their home jurisdiction. While there are a number of technological solutions available to assist organizations with their entity management, they vary tremendously in terms of sophistication, breadth and cost. The legal and regulatory environment in which multinational organisations now operate has changed dramatically over the past decade, and no doubt will continue to evolve in the years ahead.  At the centre of this process, technology will need to evolve to keep pace with those changes in an effective and cost-efficient manner.  Entity management and corporate governance have moved firmly into the digital realm, and it is management’s duty to ensure that their organisation does the same.

Anne Dolan is a chartered secretary with Walkers Management Services in the Cayman Islands.  For more information regarding Walkers’ Client Portal, please visit

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