Entity Management: create free space while controlling the workforce – Company law / commercial law

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With the global pandemic, the world has once again reminded us how unpredictable it truly is. Advocates General (GC) and in-house legal teams found themselves at the forefront of this uncertainty, as usual.

Businesses want their brightest legal minds to play a more strategic role in business, and recent events have proven that they can guide and refine business action at all levels. CMs have for some time tried to bring more complex legal issues, such as litigation, in-house. But all of this often plays out against a backdrop of tight budgets and skills shortages.

So how can CMs of cross-border businesses meet this challenge while containing costs, to create more headroom for the most pressing challenges while tightly controlling the actual number of heads?

The answer for many lies in how they choose to tackle the challenge of managing entities, as the pre-pandemic concerns of GCs have not simply dissipated.

Cross-border regulatory complexity. The never-ending flow of stricter rules and stricter enforcement. Pressure on companies to be more transparent, responsible and concerned about society. The growing threat of fines, reputational damage or worse. These considerations still give GCs sleepless nights.

The temperature is rising

The pressure to be more transparent is increasing everywhere, and with greater transparency comes greater complexity, as the administrative burden of reporting falls on multinational organizations more than ever. Rules of economic substance are beginning to emerge in jurisdictions that were once considered “tax havens”. EU-born Ultimate Beneficial Ownership Registers (UBOs) are now spreading worldwide, with local versions frequently including their own complications. The US Corporate Transparency Act – the biggest change to US anti-money laundering regulations in 20 years – will also come into force soon. Meanwhile, regulators around the world are getting sharper teeth.

Spreading the I’s and crossing the T’s on the legal and regulatory status of each subsidiary in each jurisdiction – and doing it in depth, in real time – is a huge workload for any in-house legal team. Inevitably, this drains energy and creativity that could be devoted to more strategic and complex subjects.

Bridging the skills gap

In-house legal teams simply lack local knowledge in a large enough number of jurisdictions to confidently navigate each legal and regulatory landscape, as well as its conflicts and idiosyncrasies. And effective entity management is not just a matter of legal compliance, either. Complex accounting, tax and HR threads can lead many legal teams far beyond their comfort zone.

When companies attempt to bridge the skills gap with a patchwork of local service providers, they often struggle to refine all of those competing voices and perspectives into the transparency, certainty and trust that senior management needs. Meanwhile, dealing with duplications, overlaps and inconsistencies – all inevitable under the circumstances – drains management resources and increases costs.

Regardless of the approach taken, CMs of cross-border companies often know that their lawyers are already spending too much time on so-called “routine” entity management activities. Worse yet, the value they add doesn’t pay off – their boards still don’t really have the level of tax and corporate governance risk insurance they need.

Instant efficiency bump

Outsourcing cross-border entity management processes to a global entity management specialist can solve these complications all at once. A holistic approach to local compliance provides the urgently needed efficiency gain by simultaneously addressing the three critical dimensions of the problem and solving the puzzle holistically, by combining:

  • an insider’s understanding of the particularities of each jurisdiction
  • a real-time grip on the powerful and restless forces of global and supranational regulatory change
  • a set of multidisciplinary skills that brings together legal, accounting, tax and HR expertise.

Using a specialist resource with a multi-jurisdictional reach means you can get the framework right off the bat – whether it’s a business start-up or a one-off event like an acquisition or closure. – then ensure the ongoing management of the entity and regulatory compliance in a timely, consistent and cost effective manner.

In-house legal talent is freed up at the center and at the margins, allowing the business to better tackle complex issues from within, as well as tackling strategic challenges such as the in-house of high-cost legal services such as complex litigation.

By replacing a patchwork of small vendors with cohesive central management of local expert teams, a single global vendor can deliver the holy grail of legal and regulatory compliance: consistency, reliability, punctuality, transparency and oversight. increased; all at a lower total cost; delivered to a number of jurisdictions.

A platform for progress

The entity management problem may seem like an inevitable consequence of the typical business growth model; a small number of large bases are established in places familiar to the “culture of origin”, but they must drag behind them a long and difficult-to-control queue of small offices in complex jurisdictions. Then there are the accounting, tax and HR challenges, all woven into the complex and unique web of regulation and compliance of businesses in each jurisdiction.

It is not surprising that the management of cross-border entities is often seen as a very raw and persistent source of systemic management uncertainty. But it doesn’t have to be like that.

Support from a global strategic partner simplifies and alleviates entity management and compliance challenges, virtually isolating them from the overall business risk algorithm, permanently solving stubborn skills shortages and freeing up internal expertise costly to deal with more urgent matters. The result is a stable platform of legal and regulatory compliance from which every business challenge becomes more manageable.

Talk to us

TMF Group is a leader in the management of global entities, with a presence in 85 jurisdictions and 9,100 experts located around the world. No matter where you do business, our professionals speak the local language, have local knowledge, know the local business culture, and can help you resolve any compliance issues.

TMF Group also offers a full range of accounting and tax services, as well as human resources and payroll, to help you keep your entity in good standing throughout its life cycle, from incorporation to dissolution. This makes the TMF Group the ideal one-stop-shop for any organization operating and developing internationally.

Need help or more information? Apply today.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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