THE BENEFITS OF USING THE RIGHT ENTITY MANAGEMENT SYSTEM

Anu: Hello, everyone and thanks for your patience. Welcome to today's webinar, "The Benefits of Using the Right Entity Management System." My name is Anu Shah, and I will be your moderator. Joining us today are David Jefferis and John LaPalomento.

David is a senior sales engineer for Compliance and Governance Services at CSC. With CSC for over 11 years, he has significant experience providing training, implementation, and consultation services to clients of CSC's Entity Management. He also provides consultative services to clients who evaluate CSC's suite of Matter Management solution. David's technology background includes internet and data center, web posting product management experience.

John is a product manager on the CSC Global Subsidiary Management team. He has been with CSC for over seven years, previously as a sales team leader and product engineer with CSC Matter Management Solution. John works at GSM prospect to present an accurate and clear scope of services including demonstrating CSC Entity Management and remains in contact with them as the overall relationship manager. And with that, let's welcome, David and John.

David: All right, Anu. Thank you so much. John and I are both very excited to be here today.

John: Yeah, David. That's for sure. We look forward to sharing information regarding entity management, of course, CSC solutions. But first will be starting with a conceptual discussion of entity management. I mean, exactly what we meant. Looking at today's agenda. We'll be starting with, as mentioned, what is entity management? Not just from a technological standpoint but generally as a discipline that so many entities adopt, or some of the organization adopt for the management of their entity data, documents, and so on.

We'll talking about why Entity Management as that discipline matters to your organization and of course the benefits that you receive naturally when managing your entities in an organized fashion. We're going to take and look at the subsidiary lifecycle from formation to disillusion and everything in between. We'll be talking about some of the common pitfalls that organizations face when not managing entities to the maximum benefit. We'll be exploring entity management systems and the advantages that you'll see when adopting such practices.

And we will be looking at the suite of services that CSC offers to assist with the management of your entities, touching on domestically our registered agent annual reporting services, global services outside of the United States as defined through our global subsidiary management suite of services. And of course, maybe the pièce de résistance here today, the technology proprietarily developed by CSC, CSC's Entity Management Solution. We'll be finishing with David giving an expert demonstration of our technology and of course we want to save plenty of time for Q&A at the end of the discussion. And by all means, we encourage you to utilize the Q&A widgets throughout when a question hits you and we'll touch on things as we move.

With that being said, let's go ahead and move to our first slide of content. And again, a quick discussion of what is entity management. For today's purpose, we're defining entity management, again, as a practice or as a discipline that organizations take on. Specifically managing and keeping all of your company vitals in an order of some kind. Oftentimes this includes the management of international needs, but very specifically this could drill down to the federal, state, and local level when it comes to corporate governance and the filings associated.

We're talking about a central repository of information, managing data and documents. Oftentimes, data from a technological standpoint, data in a database driven format for ease of reporting and management, documents in a searchable format that gives centralization and allows for a complete picture, a holistic view of all of your entity information. And very importantly, it's providing secure access to these records. So it's not simply organizing them but then protecting them. Both from a disaster recovery standpoint and also from a security of course in the world we live in today, it's so important that you are securely hosting this information however, possible.

David: Absolutely. And I think our focus will also talk about the fact the entity management as a discipline is not just for the legal department, although the legal, inside folks typically are responsible for the bulk of that work. But really it crosses other parts of the organization tax, finance, and treasury. And we'll talk about how a strong entity management platform can really create that collaboration across multiple parts of the organization.

So, John has talked about entity management as a discipline, so to speak. But let's talk about why organizations have multiple subsidiaries. And so, we work with clients that have in some cases one, or two, or three companies to those that have dozens or hundreds. In the extreme cases, we work with some larger organizations that in some cases have thousands of entities that they manage within their structure. And so, really, what we're talking about here is why organizations have multiple subsidiaries.

And there are several reasons described on the slide that you should be seeing. And really, I think the main reason it's really all about liability, it's making sure that if an entity is facing some sort of litigation, that there's not kind of a domino effect that can take down the entire organization. So, really separating liability by design by having multiple companies.

Another critical consideration in terms of why organizations create multiple subsidiaries is that there are different tax consequences for different entity structures or entity types. For example, it's much easier to file taxes for a single member LLC versus let's say a for-profit corporation. And in other cases if you're talking about entities that are in regulated industries like insurance for example, there are often obligations to set up entities to hold specific licenses and things of that nature. So, with that is a bit of a backdrop, why does this all matter? So, moving on in the presentation.

And so, one of the reasons this matters is that regulation and complexity is increasing. And so, in our presentation today, we'll talk not only about the need to manage entities here in the States but also we'll talk about some of the challenges of managing entities globally as well. And that's where my colleague John really has quite a bit of expertise.

One of the comments that I heard from a prospect that I spoke with not too long ago, who had recently joined the new organization. Her comment . . . and this is an organization that didn't have an entity solution in place. Her comment was, I don't know that this organization has ever faced inaudible or sort of her remark about the fact that if that were to happen, it would be rather challenging for that organization and get their arms around their critical data and documents. And so, like my colleague John, talked about having a strong central repository for this information can really, really be critical.

John: Very good. Talking a bit about, quite frankly, this is why this is difficult. Why it's a moving target to manage entities is because entities have a lifecycle to them. If entities were static, if once you formed a company it never changed and it was there forever, it would be so easy to use an Excel spreadsheet, add the jurisdiction, add the formation date and add the jurisdictional ID, and just roll forth. But it's not the case. There's moving targets constantly and the bottom line is that entities do have a life cycle.

Of course, starting with the formation of the entity and right at that inception of the entity, there's so much data and so much documentation that is generating from your initial formation documents, your articles, and your bylaws that really do have to be stored in a fashion of some kind to make them accessible for you and your team. Of course, the initial slates of officers and directors, initial capital, and so on. It's important to have something of organization to gather that data.

But of course, as time moves on, as there's a natural progression of officer and director changes, re-elections to the board and shareholder resolutions, the annual reports that are not only filed every year but giving you some oversight into when those filings come due and managing that type of information.

Other type of moving data such as doing business as names, trade names, things that may even have a requirement for renewal from time to time, such as business part of intellectual property considerations. There's so many moving targets, and there's so much ebb and flow to the data and documentation around each individual entity. And when you aggregate that by the number of entities that you as an organization are managing, it can be a challenging task. And that's really where entity management of some kind will bring all of this information into focus.

David: Yeah, absolutely. And so, John, one of the reasons I'm excited, well I'm always excited to share time with you but one of the reasons that I'm really excited that you're on our presentation today is your expertise in global services. And so, can you speak to some of the challenges and some of the things that are maybe a little bit different about global companies versus managing entities here in the U.S.?

John: Absolutely. And my assumption is that the majority of today's audience, you're probably based here in the U.S., we certainly welcome those international callers into the discussion. A common pitfall that I see are American organizations managing companies outside of the United States as if they're a Delaware LLC. Not only is not practical but it's not possible. Global entities, entities outside the United States have such substantially different requirements. Fact of the matter is, we're fairly relaxed from a corporate governance stance here in the United States.

Delaware where we call home is a great example of these. You can get that company formed in a matter of minutes with absolute anonymity for a couple of hundred dollars and file your franchise tax once a year. I don't want to oversimplify it, we're very proud of the services that we offer here in Delaware, but the services outside the United States and the needs for entities outside the United States are substantially deeper. They really go beyond your annual report filing. There's needs for requirements for annual meetings, oftentimes requirements for local directors to be in country or to establish residency for greater than, if we talk about India greater than 180 days a year. So there's requirements that far exceed what we do here in the United States and what you're required to do here in the United States.

The other big part of it is that the consequences can be much more challenging. Not to paint an overly grim picture. But local directors or directors of the company can face personal liability. In some cases criminal liability and financial, certainly financial liability for the missteps of an entity overseas. So, having a strong foundation in place for the management of these entities is of paramount importance.

David: Wonderful. So, in speaking with a lot of prospects who are evaluating CSC's Entity Management technology, more often than not we find that organizations do not have an entity management system in place. So, the slide that we're seeing here talks about really some of the challenges that those organizations face. A critical challenges that there is just no central repository. There's no sort of one place to go if you need the document to know the current or historical sites of directors and officers, being able to get a clear picture of a graphical structure like a graphical org chart. We find that organizations typically have information in multiple spreadsheets. Documents on various shared drives. They're using programs like Visio or PowerPoint to manually build org charts. And it becomes really challenging for those organizations to compile and have insight into that information.

Another critical challenge that you're seeing on this slide is the idea of, you're having to update everything manually where, again, the person most likely in the legal department is responsible for staying on top of all of these core data elements and there's no system or automation helping them stay on top of the changes that, again, my colleague John talked about how fluid this situation can be with qualifications, and withdrawals, and formations. And again, without a platform all the updates that you're making to that data are manual. It's easy to have data entry problems or to have things that just sort of fall behind in terms of keeping track with the pace of the changes in your organization.

Another challenge that you sometimes run into with organizations that don't have a platform is, that the legal department can become a bit of a bottleneck whereas other parts of the organization like tax, or finance, or Treasury needs to access entity vitals. They don't have a place to go to get that data so they're coming to the legal department as kind of that bottleneck unfortunately for having access to that type of information.

The other thing that we want to talk a little bit about is the common pitfalls of having maybe the wrong entity management system. And so, here are some of the things that we've heard over the years in terms of speaking with organizations that have a system in place that just isn't meeting their needs. And one thing that we hear quite often is that the organization has bought a system that is quite powerful but it's not intuitive. It's very challenging, not only for power users that are in there responsible for making updates in the system but also for more casual users that are just logging in every so often it might need to locate a document, or compliance event, or a slate of active directors for example. And what often happens is that there's just a lack of adoption across the organization because it's just too difficult in the system starts to immediately lose value if less and less individuals are collaboratively working within the solution.

Another challenge is something that I spoke to a moment ago, in terms of how to make manual updates. And the reality is there are a lot of entity platforms on the market that are just static databases. Where again, the expectation is that the administrative users have to enter every single piece of information. But still a bit better than having a spreadsheet because there's some reporting that would be built into that type of the database. But again, too much work on the shoulders of the administrative users not having any sort of automatic flow of information into the solution.

Another problem would be reporting becomes difficult in a lot of these systems where even if you do have a means of creating reports it might be rather daunting to sort of figure out how to actually put those types of reports together.

And then another thing to consider, we talked about this or we refer to it here as an exit strategy. You know, your needs as an organization may change, they may evolve and the system that you select might not end up being the right system in the future. And so, one of the questions really to ask is you maybe look to implement a system for the first time. What would happen if we were to change direction at some point in the future? Are we able to get our data back? Can we get our documents back? And what does that process look like? And unfortunately, we've worked with some organizations that partner with vendors that make it very challenging to get their information back. It's sort of like the Hotel California where you can check in anytime you want but you can never leave and that's obviously a situation that you want to try to avoid.

John: So, while David walked us through some of the pitfalls and challenges around and not having an entity system or the wrong system. Let's take a look at some of the advantages of having a system in place of some kind to manage your entity data, and the benefits that you'll see as an organization. I would suspect that many of you probably have some things in place but when you really bring it together and have the right system in place, you're certainly going to see centralization, having a single source of truth.

We love this phrase around here. Of course, CSC systems are going to provide you that single source of truth across a platform that encompasses much more than just entity management. We really take a holistic of approach to a single source of truth. But a strong entity management system is going to be exactly that one place, one database, one document repository, one organization structure for your inter-department information.

Automation, David touched on it. If somebody at your organization is tasked with rolling up your sleeves and getting your hands dirty with all of your data, it becomes cumbersome. The best systems are going to allow for automation. The work that is happening in country or in state here in the United States, should be able to automatically flow into your system. Of course, this is going to increase productivity of your staff. They are going to focus on revenue generating activities hopefully, rather than the cumbersome project of sorting through data and uploading documents.

And also, we're going to add efficiencies. When you call on CSC or a proper Entity Management Solution, you're going to work with us in a capacity that is going to allow for data to automatically flow into the system for other types of projects not just those regular run-of-the-mill types of filings in management.

A strong entity management system is going to facilitate collaboration. A comprehensive entity management really is interdepartmental. And of course, while there's probably lots of legal folks on the phone today, your tax departments, other departments certainly can utilize this your C level managers are going to have the ability to have oversight across all of your data and all of the documents as you wish, as you wish it to be. So, truly from a collaborative platform, you're going to have access to a tool with a proper entity management system that will facilitate.

From a reporting standpoint, David, touched on reporting. There are many systems and many pieces of technology out there that talk about reporting, but it's not a strength. A proper entity management solution really is going to be hinged upon your ability to report against all of your data, through all of your documents. Or maybe a more limited view for specific users or employees. And it's a tremendous advantage to have support with your reporting. So, you're not simply staring at technology and not sure how to use it. Being able to reach out to a team who can facilitate and even help build reports is crucial.

Security, it goes without saying, everybody on this call has security on your mind or at least I hope you do. Whether it's the security requirements that you just intrinsically have to have in place to protect your entities, or it's legal requirements especially with some of the changes that we're seeing now with European countries and around the world, frankly, we see these requirements being beefed up.

The last thing you want to do is be on the front page of the newspaper for a bad reason. And if the security breach is that reason, you'll have to stay away from that. You need an entity management system in place that is failsafe when it comes to the protection and storage of your data.

David: And John, if I can just come back to automation and I think you described it very well. But to put it in plain English, I'm looking for a system to do things for me. I wanted to tell me when are my annual filings coming due both domestically and globally? Have I missed a filing? I want to be able to click a button and see a graphical org chart. I want to be able to plug in a word or phrase and find a key underlying source document that references that piece of information. And so absent a system, those things are nearly impossible and really again, a good strong entity management system makes those things all very, very possible.

So, with that I think, what we're going to do now is maybe define CSC's suite of entity management services. And we've kind of broken this down into three areas. And I think, John, all touched on the first one which is registered agent services.

And so, I've probably used this analogy before on webinars but this is sort of the foundation of the house. This is where CSC has offered a service for over a century in terms of representing organizations as a registered agent. What's critical in this regard, as it relates to the entity management technology that we'll see in just a bit in the demonstration, is that when CSC is acting as a registered agent for an organization, as a simple result of that relationship, core information for their companies will flow automatically into our solution.

Specifically the names of those companies, where they're formed, qualified, dates of registration, charter IDs, there's a compliance counter that automatically creates insight and can create alerts in terms of when the annual filings are coming due. We have a feature that we call the corporate tracker that can provide automatic alerts if a filing is missed in the status of the company changes at the Secretary of State level and so we really hone in on this because it becomes a really a powerful foundation of information that organizations can build upon. So when it comes time to track directors and officers, and track ownership records, and create online minute books, you're not doing it in a vacuum but instead that core foundation of information is there at your fingertips to build on top of.

John: And of course, our international counterparts or registered agent services. Oftentimes, registered agent services coupled with annual report filings in the United States. Our suite of Global Subsidiary Management Services is here to manage your corporate secretarial responsibilities around the world. Really the hallmarks of Global Subsidiary Management or GSM as you'll frequently hear me say, it's really about proactive support with a centralized team. Giving you the ability to work with one team, largely based on our Wilmington, Delaware headquarters, hubs for this service in our London office, and our Hong Kong office. Of course, CSC offices around the world and together with our vast and trusted partner network, we have boots on the ground in over 140 countries around the world.

Centralization is key. Centralization both in the centralization of your workflows but also the centralization of your entity data through our technology which you'll see here in a second, CSC Entity Management. When we talk about the centralized approach really is a proactive approach. It's giving you access to this one team who's not waiting for your direction, but is acting essentially as your personal assistant when it comes to corporate secretarial matters around the world.

We start by understanding the deficiencies that may exist through a corporate health check. Also understanding core vitals such as officer and director data, signing authorities, and powers of attorney, capital and ownership, reviewing all of this information with you, often times we find some skeletons in the closet there. Seeing a director that's currently listed in Brazil perhaps, who is no longer with the company. We iron out any of those challenges with your data and then migrate all of that beautiful clean embedded data into our technological platform, CSC Entity Management.

From that point forward, you take a single conduit of information. One phone call to a team member or email to your project manager here in Wilmington or around the world, and we make it very simple for you to manage these entities. We offer a flat rate pricing structure in U.S. dollars as opposed to working with many different law firms around the world. And of course, so importantly, we're going to do so as one platform, one contact opposed to working with these different law firms charging you hourly rates.

You'll see dual language support. So, everything that's drafted in even the native language will be also drafted in an English translation, so you can read everything. It's so important that we're here working during your business hours, speaking your language, and just simplifying the processes.

Maybe most importantly is the flexibility that we offer. Global Subsidiary Management is not a one size fits all kind of product here at CSC. It is a premium service that we offer, where we really conform to your needs, even to the point of using your naming conventions for document generation and so on. And of course, it interfaces specifically with CSC Entity Management, so I'm happy to hand it back to David to talk about our award-winning technology.

David: Absolutely. And again, we're going to see this in the live demonstration in just a moment but just to sort of prep you for what you're about to see. The slide that you're seeing now talks about some of the core functionality within the award-winning CSC Entity Management platform. To just maybe pick out a few, certainly the ability to track officer and director information is critical. And when we say directors and officers that certainly could encompass other capacities like members and managers, partners, powers of attorney. There's tremendous flexibility in terms of what those capacities could be in signing authorities.

Also, another critical component would be the electronic document management, but we call that our electronic minute book capability where our clients have an unlimited capability to securely store electronic documents within our solution. One of the great strengths of the solution beyond the order that it provides in terms of managing those documents is that all documents become searchable. And so, whether it's a word, or a phrase, a name, or a clause, you can plug that information in, click search, and the application can look across all the documents within the minute book area and find documents where there's a match very, very easily.

The system can help assemble documents. If you're having elections, re-elections, resignations, things of that nature, the platform cannot merge those types of changes into templates that you can use to create documents. We have the ability to dynamically build graphical org charts, something that we'll certainly take a look at in the demonstration. The ability to simply track the ownership data, click a few buttons, and get a graphical or linear representation of your ownership structures.

I also want to throw out a shot to our section 16 filer, for organizations that might be publicly traded that deal with the SEC filings for insiders. We do have an integrated tool that allows them to submit forms 3, 4, and 5 directly with the SEC. And then certainly, there is a very robust reporting tool that is built into the platform as well.

So, really the one thing that I want to mention before we go into the live demonstration which I think really does make CSC unique, is that there are organizations that have services whether that's a registration service or maybe a corporate secretarial service like John talked about. There are some organizations that might have a technology offering. But it is pretty rare to have an organization that can do all those things together. And so, I would sort of challenge you to say, show me who else can bring all these things together in one offering. And that's really what makes CSC unique in this regard.

Anu: Well, I think that's probably a good place to stop. Folks, thank you for joining us today. If we didn't get your question, we will contact you with the response after the webinar. Thank you to everyone who joined us. We hope to see you next time.