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How can multinational organisations manage subsidiary governance effectively?

16 May 2022

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Multinational organisations have complex needs when managing subsidiaries.  In addition to compliance with regulatory and legal changes, navigating differences in local law and incorporating technology-based processes remains challenging. Rogier Bronk, Head Global Entity Solutions, Americas, and Jonathan Scrocchi, Vice President, US Mid-Atlantic, offer their insights for effective legal entity management.

The benefits of effective legal entity management can go well beyond mere administrative tidiness.

Having a regional or global portfolio of strong, well-managed subsidiaries can reduce risk, provide a clear strategic overview and enhance business decisions while providing the C-suite with a 360-degree overview. Yet many organisations still face significant challenges in this respect.

The pandemic has changed the rules of administration significantly, requiring switching from paper to paperless documentation, demanding virtual meetings and practice e-archiving. However, this has not been universally adopted around the world, leaving room for unnecessary errors.

The indifference in managing this patchwork has become an obstacle – one that continues to be assigned to in-house legal departments and, sometimes, the tax and finance departments. This is testing the limits of staff in these departments, who may lack the experience or expertise to manage the increasing workload.

It doesn’t have to be this way. Rather than hinder business, effective legal entity management can provide ways to transform how organisations manage subsidiary governance.

This involves adapting to the three key pillars of effective subsidiary governance:

  • Technology
  • Service provision
  • Legal expertise

Technology for effective subsidiary governance

Technology has paved the way how legal departments maintain corporate governance standards. Before Covid-19, having the technical know-how to manage virtual meetings and run a paperless office merely added value to an organisation. Now it’s essential to survival.

In many countries, which are still partially affected by lockdowns, hybrid working is the preferred option for many employees, making it the new way and means of doing business.

While technology can reduce errors and increase efficiency, the need for constant tech updates and staff training can become expensive and time consuming.

A growing number of legal departments are looking at alternatives to manage this mountain of in-house administration. While some initially attempted to find and implement a tech solution to manage their entity portfolio, they are now looking to outsource to single-destination service providers.

However, they are reluctant to partner with a provider that offers its own technology solution. They prefer a “system-agnostic” service provider that can maintain their entity management software, but also provide its own proprietary technology.

This solves the needs of different clients – those who have their own technology in place and those who need a tech solution as part of the overall service delivery.

A single-service provider for legal entity management

It makes sense to have a single source of truth with up-to-date information that is coordinated, centralised and that provides a transparent overview regarding the status of subsidiary governance obligations per entity in all jurisdictions.

Centralisation can provide a single source of reliable information through a framework that enables control, resulting in enhanced business decisions and strategic planning, as well as giving a realistic picture of cost and risk.

When providing this specialist service in-house, it can become costly and time-consuming. The additional pitfall is that much of the legal entity management work is repetitive and can lead to staff attrition over the long term.

Legal expertise across many jurisdictions

While working in a variety of jurisdictions brings its own specific challenges, some authorities require paperwork to be physically filed with a local office requiring a local agent, adding to the difficulties in coordination that in-house teams face.

When an organisation is expanding into new markets, it will need help setting up a registered office, fulfilling paperwork obligations and with many board meetings run virtually, the authorities are forced to accept virtual meetings as well, adding to the many indifferent ways of doing business internationally.

There are many legal and regulatory requirements in various jurisdictions, but large organisations don’t always have the in-house knowledge to cope.

Why outsourcing to a global provider could be the solution to subsidiary governance transformation

In recent years, many multinational organisations have turned to outsourcing to manage their legal entity requirements. There are several benefits to using a global partner to carry out this essential work:

  • Reduced governance and compliance risk to avoid costly penalties and reputational risk
  • Instant access to local experts allows organisations to address urgent matters while still having the benefits of a coordinated service delivery
  • A centralised, coordinated approach through a single point of contact in a preferred time-zone results in clear and efficient communication lines
  • Receiving proactive updates on legislative changes ensures business entities remain in good standing
  • Transparent pricing provides clear visibility, control and predictability of legal entity maintenance costs and control the set budget
  • Simplified contractual framework allowing for easy scalability
  • Assistance with maintaining entity management systems maximises utilisation, while access to technology frees up valuable time.

Outsourcing with a single provider is time and cost effective

Historically, organisations have had to use different suppliers to outsource their technology, service provision and legal expertise functions.

As a consequence, this sometimes multiplies the administrative burden through the need of resolving more issues with a large number of outside local partners.

Organisations used to be wary of outsourcing to multiple partners for fear of losing control and seeing costs increase by having no single overall vision.

However, providing a holistic service solution, covering all jurisdictions in all countries around the world, combining human resources, legal expertise and cutting-edge technology is broadly accepted and seen as an essential step forward in entity maintenance globally.

How Intertrust Group can help with subsidiary governance

  • Intertrust Group’s team of more than 4,000 experts around the globe can assist your legal department run more smoothly, so you can focus on increasing portfolio performance and driving your organization strategically forward.
  • Our Global Entity Solutions (GES) department provides a broad menu of corporate secretarial and administrative services, and are experienced in maintaining entities portfolios in over 150 jurisdictions globally. We also give guidance on continuously changing local mandates and corporate secretarial requirements.
  • To satisfy market demand and stand out from our competitors, at Intertrust Group, we are focused on developing customized solutions using the latest technology, providing a comprehensive service menu and a robust global infrastructure. provide support to effectively streamline, standardise and facilitate your administrative workload, to fit your internal legal structure Creating a one stop solution.

Visit our website for more information and to talk to our expert team today

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