The complexity of global corporate structures, combined with growing regulatory challenges, make a compelling case for digital transformation in the legal function.
In-house legal teams are getting serious about technology—though many are falling short of full digital transformation, according to CSC’s General Counsel Global Barometer 2023.
Faced with the growing complexity of managing multiple global entities, two-thirds of our respondents (66%) said they wanted to implement new technology in 2023. At the same time, 41% of respondents said that, while digital transformation is a priority, they were still at an early stage.
A small but significant number said they struggle to keep up with the complexity and rapid evolution of technology. That’s a concern, because with tighter international regulation and organizations’ own global ambitions, the need for digital repositories of information and connected reporting tools is becoming critical. We know from our own experience that many global companies have yet to make significant progress in this area.
The growing complexity of global entity compliance
It’s not unusual to find multinational corporations with hundreds or even thousands of global entities to monitor. The challenges of tracking them all will only increase as organizations move into new jurisdictions—and 41% of our respondents said they plan to do that over the coming months. They face an increasingly complex web of local, regional, and global regulations. In some countries, it can take five minutes of online form filling to incorporate a company—in others, weeks of bureaucratic wrangling.
Local regulations often overlap with international law. Compliance with rules included in the Foreign Account Tax Compliance Act (FATCA), the Corporate Transparency Act (CTA), and Common Reporting Standard (CRS) is only becoming more demanding, and jurisdictions are under continual pressure to show progress on tax evasion and avoidance.
The penalties for non-compliance can be severe. As well as potentially huge fines, they can include disruption of business and reputation damage. That’s why it’s crucial that critical entity information can be easily and efficiently tracked—and many organizations are coming to realize that automation is the solution.
Why technology should be used to streamline global entity management
Faced with these risks, multinationals have to get entity management right. They have two main choices. They can employ large numbers of people to gather, process, and present data, or they can invest in technology to do the same job more efficiently and effectively.
At first glance, that doesn’t appear to be a difficult decision—and as we’ve seen, many organizations are planning technology upgrades. But what about the rest? And why—in some cases—is the crucial importance of subsidiary management technology only now beginning to register?
Partly, it’s because the internal legal team—and within that, the company secretary function—is often seen as a cost center by the rest of the business, and a rather basic one at that. Historically, there has been a reluctance to invest in a department that has been erroneously characterized as a document filing function.
In addition, businesses may lack in-house expertise around selecting, maintaining, and making the most of necessary digital tools. Legal teams, who are tasked with ever-expanding responsibilities to keep an organization functioning, often lack the time to look deeply into the available options.
One way around that is to engage an outsource partner such as CSC, which has a team dedicated to staying up to date on the latest jurisdiction and compliance requirements combined with industry-leading entity management technology, CSC Entity ManagementSM. An outsource partner like CSC will help you automate data gathering, storing, and reporting processes as part of a rounded entity management solution.
The benefits of automating entity management
Entity management technology doesn’t reinvent the wheel. But it does make essential information on corporate structure, governance, and compliance easy to access. It allows general counsels and in-house legal teams to instantly access information on the legal state of every entity in any size corporate structure and take critical compliance actions.
Digitalization of entity management is now a question of when rather than if because the stakes are simply too high for multinationals to rely on inefficient and error-prone manual processes. As organizations expand, automation of entity management becomes critical to the efficient and compliant operation of the business as a whole.
For the full story, download the General Counsel Global Barometer 2023. Or contact us to learn more about how CSC Entity Management can benefit your organization.
Why CSC?
CSC offers a global solution for subsidiary governance, fund strategies, and capital markets transactions, with tools to help fund managers navigate the ever-changing compliance and regulatory environment they face.
CSC is the trusted partner of choice for more than 90% of the Fortune 500®, more than 90% of the 100 Best Global Brands®, and more than 70% of the PEI 300. We are the world’s leading provider of global business administration and compliance solutions, specialized administration services to alternative asset managers across a range of fund strategies, transactions involving capital markets participants in both public and private markets, domain name system management and digital brand and fraud protection, and corporate tax software solutions. Founded in 1899 and headquartered in Wilmington, Delaware, USA, CSC prides itself on being privately held and professionally managed for more than 120 years. CSC has office locations and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia Pacific, and the Middle East. We are a global company capable of doing business wherever our clients are—and we accomplish that by employing experts in every business we serve. We are the business behind business®. Learn more at cscglobal.com.