SIMPLIFYING & CENTRALIZING GLOBAL CORPORATE GOVERNANCE

*This is a direct transcription and may contain inaudible portions

Anu: Welcome to our webinar, Simplifying & Centralizing Global Corporate Governance. My name is Anu Shah, and I will be your moderator today.

Joining us today are John LaPalomento and Rob Farrugia. John is a Product Manager on the CSC Global Subsidiary Management team and has been with CSC for nearly five years. Rob is Director of CSC's Global Corporate Solutions Group and has been with CSC for 13 years.

With that, I welcome John and Rob.

John: Hi. Good afternoon, everybody.

Rob: Hi. Good afternoon, and thanks, Anu. My name is Rob Farrugia, and thanks to everybody for joining us. This is going to be a fast-paced session. We'll be covering a lot of information.

We'll be discussing the challenges of managing a global portfolio, how CSC can help achieve compliance through our Corporate Health Check and Annual Compliance solution while remediating any outstanding issues with your filings or minute book maintenance. We'll talk about one of our newest solutions, Global Legal Entity Identifiers, and conclude with a brief demonstration of our award-winning Entity Management System.

Okay. Let's go [Audio gap 01:08 – 01:10].

Thanks, John. This is where we look a bit as though we're mind-readers. The reason is because we've done this a few times and so we're very familiar with the challenges that people raise.

The first challenge – let's talk about it, John – is expertise. Somebody raised it in the poll, and that is the difficulty of keeping current with the differing legislation across different jurisdictions and different countries.

In the U.S., we're very used to paying fines if things go wrong, if entities fall out of compliance, and that generally makes things good. In other countries, there is a more stringent – there could be more stringent penalties, including up to jail time for directors when they fall out of compliance. So this is a serious business that we're dealing with.

John: Sometimes I see expertise also referring to the trust that you have in your current provider. Let's face it. Everybody on this call today is on the call because you're probably not completely an expert when it comes to corporate governance in all jurisdictions around the world.

What you really need is a trusted partner who is an expert, and that's one of the things we'll be bringing to the table today.

Rob: The second one, logistics, again, was mentioned in the poll, the difficulties of managing multiple vendors, time zones and languages. I was chatting to a counsel for a large corporation the other day and he mentioned just that. His legal team was a small team and they were simply exhausted, waking up at all times of the night to speak with their legal counsel around the world. So a big, big challenge.

Moving on to the third one, understanding costs, unclear invoicing and uncertainty of overall budget. When we got into this business, we talked with our clients and asked them what they needed. And resoundingly, the message came back that as far as possible, they wanted certainty for budget. They wanted fixed costs, and so we worked on that model. Most of the solutions that we offer as part of the Global Subsidiary Management Solution are indeed fixed cost, the Corporate Health Check that John will be talking about and the Annual Compliance Solution.

There are some things – if research is required, for example, obviously it's very difficult to put a fixed number on that, so therefore, hourly rates will be charged. But wherever possible, we will invoice on a flat-price basis.

John: I speak with a lot of prospects who come to us who frankly don't even have an understanding of what their costs look like, not that their costs are too high or their costs are lower than they expect. They're paying small invoices or maybe large invoices that are received throughout the year from different providers, from a myriad of providers around the world. What we're prepared to do is help you understand your budgeting up front.

Rob: Let's talk about data management. Once you've filed those documents, you have all those papers and your entities are in the equivalent of good standing around the world, you need to store those documents and the data and be able to report on it, be able to recall it at will and to be able to permission who actually can see and access that document.

For those of us on the call that already work with CSC on the domestic side, you'll be familiar with our award-winning Entity Management system. We use exactly the same system on the global side so that it's possible to see all of your entity data in one place.

John: The big change that you're going to see here is that as opposed to receiving data and documents from your current providers around the world and having to manage that yourself, we're going to provide you with a mechanism that is self-maintaining in terms of both your documents, specifically your minute book management, and the data that these documents point to.

Rob: John, we've spent enough time on the negatives. Let's see how CSC can help.

John: Let's certainly do that. We're going to be talking today about our suite of Global Subsidiary Management services, which we shorten to GSM.

GSM truly is, as you see on the first bullet point, centralization and simplification. I typically talk about centralization as a two-pronged effect. Centralization in terms of the centralization of your workflows. As opposed to working with local counsel in hypothetically 50 jurisdictions around the world, you can work directly with our experts here in Wilmington, Delaware where we have boots on the ground in over 120 jurisdictions. So that's one massive centralization certainly, but it's also the centralization of your data. We're going to be coupling our service with our technology and centralizing that data for you.

In terms of simplification, I hope it's already clear that we're here to help simplify your processes, simplify it from an understanding standpoint, simplify it in terms of your workflows and overall, make life easier for all of our partners.

I use the word Partner as opposed to client. As you see here on the next bullet point, GSM certainly is a partnership. Very rarely do I use the word Outsourcing because I feel that that's a lie. We're not here to make all of this work disappear, we're here to make it easy. We're here to work as an extension of your legal team, to work under your direction in a proactive manner for the management of your entities around the world.

GSM is comprehensive. You're going to see differences from jurisdiction-to-jurisdiction, and we're here to meet all of your specific entity needs in terms of corporate secretarial support.

In terms of how dynamic this solution is, we're here to move not only with jurisdictional changes around the world, but we're here to move with your own entity's needs. We have some clients who have different entity needs based on the region of the world, and we have the capabilities of meeting those needs.

GSM truly is efficient. When we talk about efficiency, we can talk about this in two different manners. It's efficient in terms of the workflow efficiency that we're going to provide for you. We're going to free you and your team up to focus on revenue-generating activity. But also, as you see in the next bullet point, it's efficient from a cost standpoint as well. When you're utilizing one trusted partner as opposed to partners around the world, those efficiencies in terms of the financials are going to be numerous.

GSM truly is a marriage of our award-winning and time-tested technology with the service model that we've had in place for the last 117 years. People, of course, think of us as a service company, and we are. We call ourselves a service company, but the technology that we've been delivering for the past two decades is second to none.

We can substantiate the award-winning piece here and the fact that we've been recognized by the readers of the New York Law Journal for the past five years in a row as the number-one Entity Management platform. When we take that technology and couple it with this concierge-type of white glove service for your corporate secretary needs around the world, you're going to love what you see.

Overall, GSM truly is peace of mind. For those of you who may think, "You know, there could be some challenges in a couple of our jurisdictions around the world" or "I'm not sure what local counsel is doing in Africa" or "I don't know if my local controller in Singapore is handling things properly," those challenges –we're here to take those challenges off of your plate, give you transparency and a clean [audio gap 08:15 – 08:17] solution through the GSM suite of services.

What we're here to do is to first identify any deficiencies, identify the needs of the entities, and then move into a state of management.

Let's go ahead and first start talking about our Corporate Health Check. If ultimately you like everything that we bring to the table, if our flat-rate pricing structure makes sense, if you appreciate the team, the way we've built the service, and of course the self-maintenance of the data and ultimately you pull the trigger and decide to move forward with CSC in this capacity, the very first thing we do is what we call a Corporate Health Check.

This concept of a corporate health check is fairly universal. Many different providers provide a corporate health check, and they even use that terminology perhaps. Our corporate health check tends to be quite deeper in terms of the research that we put into this, being compiled of both a registry review and a review of your minute books.

We will start by reviewing the data on file at the local business registries, oftentimes walking people into the registry, firing up the microfiche machine and understanding what's on file. In some jurisdictions that have a digital database, we're able to access that remotely.

We pull current information. We understand your current slates of officers and directors, signing authorities and powers of attorney. We understand all of your dates and deadlines in the eyes of the local registry – when do meetings have to happen, when do your audited financials have to be filed, and so on.

We also understand deficiencies through the eyes of the registry. Are you lacking a local director? Do you not have your meeting minutes filed from the past two years? Have you filed properly or have you failed to properly file your annual financials, and so on? We can understand the deficiencies, and then report back to you.

Then very importantly and very critically, a big differentiator for CSC is the next step that we take on, which is a very detailed analysis of your minute books, oftentimes moving the minute books and holding them for you in-country or reviewing digital copies of the minute books. This allows us to provide an audit and gap analysis between the registry data and the minute book data.

Consider this. If the registry is showing that Susie is currently a director in France, but Susie retired two years ago and that was simply never filed properly with the local registry, we wouldn't understand that, nor would anybody, unless we review your minute books where that expiration consent is stored. This allows us to review current minutes, typically three to four years back. But we're also going to be reviewing your formation documents, understanding your articles and your bylaws, getting very familiar with the lay of the land that the producers of the company set forth in the beginning. If you're acting out of accordance with any of those, we'll report them as an area for remediation.

The end result is an understanding of your data, but also a report of any of these deficiencies that CSC can then take on the remedial actions. If you wish to take on something yourself, you're more than welcome to. We'll supply you with the proper information, but we are here to fix the errors within the jurisdiction as best as possible.

The other byproduct of this is all of this beautiful clean data that we're then going to migrate into CSC Entity Management, the technological platform that we'll be looking at here shortly today.

All of the current information will then be there and be transparent for an unlimited number of users. You can determine who can see what. But knowing that you have at your fingertips accurate information in terms of officer and director data, jurisdictionally-specific information like identification numbers and more at your fingertips as a byproduct of the Corporate Health Check is a wonderful, wonderful peace.

Once the Corporate Health Check is complete, we roll into really our core service here at GSM which we call Annual Compliance Support. Frankly, Annual Compliance Support is a fancy way of saying, "We're here to take on your corporate secretarial responsibilities."

Annual Compliance Support, this is the flat-rate piece that we've been alluding to the entire time. It is a flat-rate cost that's inclusive of all of your day-to-day needs of each of your entities. It is flexible. It's flexible based on your portfolio and based on your needs, but it's also very dynamic in terms of what has to happen from one jurisdiction to another.

There's no easy way to say that everything is included in Annual Compliance Support because it differs so greatly. I'm sure many of you on the call can easily understand that it's much more challenging to manage a Brazilian company than it is a United Kingdom company. Our services are going to morph to the needs of those entities around the world.

In terms of proactive management, we're here to work ahead of the schedule. We're going to reach out to you 90 days in advance of meetings and filings, making sure that we have the proper information to draft documents accurately. Everything that we draft will be drafted in dual languages, as you see on the bottom bullet here.

Our services typically include – and again, differences from jurisdiction-to-jurisdiction – but typically include the maintenance of your minute books and shareholder registers. In the case of minute books, we'll oftentimes hold them physically in-country, or if you're maintaining your own registered office, you perhaps will be holding the minute books and we would send any documents for addition.

It also includes attention to your annual general meeting documents, drafting your meeting minutes and consents, doing everything in dual languages for you, and again, working proactively so there's no 11th-hour types of scrambles.

Also included is the filing of the equivalent of annual reports. In many cases, we'll be preparing and filing those reports. When these reports are financial in nature, your accountants or CPAs would continue to prepare those reports, but we would take on the necessary filing and management of those documents once completed.

As I've already alluded to, when it comes to registered office or domiciliation support, we are able to support that in many jurisdictions around the world. As a matter of fact, in many jurisdictions, we will build that service into our core offering for the simple fact that it's expected that your corporate secretarial partner will take on that provision in many places. For instance, places like the United Kingdom, Australia, Singapore, Hong Kong, Israel, and a good handful of others.

If there are jurisdictions where you require support, maybe you don't have an office in Germany, you only have a sales team working out of their homes, certainly ask me. I'm here to help formulate a solution that makes sense for your needs.

Of course, very importantly, as I've highlighted already several times, is the automation of documents and data in the technology of CSC Entity Management. Everything that we do, every document in dual language will be stored there in perpetuity. Every officer and director change that we file for you will be managed from a database standpoint in the system. It's all of the great hands-on benefits of our technology with a self-maintaining capacity.

Very importantly, for those of you on the challenges question who said, "Hey, it's just tough to manage the logistics of dealing with outside counsel in all of these jurisdictions," we're here to support this with our U.S.-based Wilmington, Delaware-based support team.

We have a fantastic team with fantastic management in place, like Rob sitting next to me. We have a team that will be assigned to you, a dedicated three-to-four-person team, including one project coordinator and several fulfillment specialists who will get very familiar with you, your needs, the naming conventions for your documents, and ultimately the management of your entities around the world.

But we do have boots on the ground in over 120 different jurisdictions where we're able to draft documents in the native language, understand the local law, and keep abreast of any regulatory changes.

As we've mentioned several times, everything that's been discussed within Annual Compliance Support, all of your day-to-day corporate secretarial needs are included in a flat-rate price in American dollars.

That's a quick overview of the day-to-day types of services through Annual Compliance Support, but it's also important to mention that we support any other types of transactions that are considered change management, oftentimes the change of officers and directors around the world, ad-hoc types of resolutions or consents that need to be drafted, share transfers, document retrieval projects, even the formation and liquidation of new or old entities around the world.

To give a quick hypothetical situation of how this all comes together and to really paint a beautiful picture of how all of our services come together, I'd like to quickly chat about a very common project that we see all of the time, and that's the resigning of a prominent official, perhaps an officer or director who holds a post on many of your entities around the world.

It's typically a plausible situation and oftentimes something that clients and prospects say, "John, we did this three months ago and it was very challenging." Most commonly, I hear that somebody resigns, and it's somebody on the legal teams' task to reach out to all of your law firms that you're currently working together with in a corporate secretarial capacity, and say, "Hey, this person resigned." You're managing that project 15 times in 15 different jurisdictions or whatever the count is, and oftentimes there are challenges in terms of understanding what has to happen, there are language barriers, there are certainly time zone barriers and the fact that you're taking on duplicative efforts all over the world.

When you look at the other side of the coin, when you're partnered with CSC in this capacity, this is simply an email or a phone call to your project coordinator here in Wilmington, Delaware. Let us know that Bob resigned, and go ahead and say, "Hey, what do we have to do?"

We're here first of all to mitigate costs however we can. We understand where Bob was sitting as a director or an officer, and we can very confidently say that in these jurisdictions, these handful of jurisdictions, you're more than welcome to wait until your next annual general meeting, be that in 60 days or in 34 days or whenever that is, but we also understand where things have to be handled in an expeditious fashion so we can avoid any liabilities or fines and penalties.

You're going to manage this with our team as one project. We're going to take on the drafting of the necessary consents, resolutions and specific forms that have to be completed in dual languages across your entire portfolio as required and work together with you for the circulation for signature.

Ultimately we're there to file in all of these different jurisdictions with the proper registrations, we're there to update your minute books physically and digitally in the Entity Management platform, and ultimately, we'll be impacting the officer or director management portal within CSC Entity Management listing expiration dates, and if there are newly-appointed officials, we'd be adding that data as well.

So it comes complete full circle, the management through one team, the understanding of what has to happen in these given jurisdictions, and ultimately the management [audio gap 19:18 – 19:20] any of that in any capacity that you wish, and we're very flexible in that regard.

We're going to be moving forward here talking about a newer application that we offer at CSC, Global Legal Entity Identifiers. Rob, share with us.

Rob: Thanks very much, John. If you cast your minds back to 2008, 2009 when the global economy was in a pretty tough shape and companies were going to the governments, banks and people and asking for bailouts, the governments were fairly reasonably asking the question, "Well, who was borrowing all this money? Who were the counterparties to some of these transactions, these over-the-counter financial derivative transactions?" And in many cases, the financial companies didn't know.

When all the dust had settled and we'd come back from the brink, a couple of senators, Dodd and Frank, did the report that we're all so familiar with, and an act, a piece of legislation came out of that called the Wall Street Reform and Consumer Protection Act, and part of that was a recommendation that counterparties or borrowers to these transactions should be able to be identified.

The methodology by which they are now identified is something called either a legal entity identifier or a global legal entity identifier. This is a randomly-generated 20-character number and letter code that is registered with what are called local operating units around the world that are authorized by the governments.

Just as with most of our services – all of our services, we at CSC won't advise that our clients need these things. We don't provide legal advice. But when our clients tell us that they need them, then of course we're happy to register them. We will amend them and we will renew them. So you don't have to worry about when these things are coming up for renewal. We actually store them in the same systems that we store all of your other data.

I was talking to a counselor, a law firm the other day, and he was saying that he is currently registering these things himself and paying on his own credit card, and he's very concerned that in a years' time when they come up for renewal, he will have forgotten how to do this. He knows that some of his other attorneys are doing the same thing.

So CSC is that independent partner that will register these things, that will keep a record of them, and you really don't have to worry about them. So in a nutshell, that is the Global Legal Entity Identifiers.

We've been talking now about the importance of Entity Management Systems to manage your data, and John, back to you to talk in more detail.

John: Certainly. Very good. Thank you very much, Rob. It's very important. Whenever you talk about a digital platform of any kind, there should be questions in terms of the trustworthiness of the data and how secure that data is. We wouldn't be bringing this up if we couldn't answer it with 100% confidence in terms of the security and technology that we've developed here at CSC.

To reiterate, for the past five years, we've been recognized by the readers of the New York Law Journal as the number-one Entity Management platform out there. We're happy with this. We're thrilled with this for so many reasons, and one of the biggest reasons is simply the fact that we're competing against software companies.

CSC is a service company. We've always been a service company, but over the last two decades or so, we've developed such amazing technology that we're recognized as the leader in this space. We've done so through the input of all of our clients. We work with over 95% of the Fortune 500. And that fact alone, that such a big, known global brands have their data on our systems is certainly valuable in terms of understanding the security we have behind this.

This is SaaS technology, meaning that it's cloud-based. You can access your data from anywhere. If you have access to the Internet, you can fire this up and find the data that you have been granted access to.

We certainly take security very, very seriously. We undergo third-party audits on an annual basis. The current audit is the SOC 2 Type II data audit that we go through. This is very comprehensive, including both the technological data and security that we have in place making sure that the proper firewalls and technology are there, but even to details such as our employees carrying badges that grants us access to parts of the building and the fact that we do not keep personal data out on our desks for anybody to see. So we're very cautious there.

This system is going to grant you unlimited user access. If any of you are familiar with some of the other software platforms that are out there, very commonly there are seat licenses and restrictions in terms of who can see what or what it's going to cost you to give access to the key players at your organization.

In our case, we grant you unlimited user access, whether it's five people in your corporate office or 5,000 people around the world. They can all have access and you can determine what level of access they have. You can be very granular in terms of the permission settings, be that one person having access to everything or one person having access to just viewing the contents of one company regionally, split up however you would like to.

In terms of transparency, of course, CSC will be managing data on your behalf, but you have access to all of the data that we're managing. You also have access to managing and maintaining data and storing an unlimited number of data and document pieces in here. Most importantly is the self-maintained baseline data that our GSM team will provide.

To be very clear, CSC Entity Management is available as a standalone platform that you could use on a self-service capacity for managing your own data. That's how most people know this system. But coupled with our suite of global subsidiary management services, that data now becomes self-maintaining.

So in the example of that officer or director change, we'll take on the service aspect of streamlining and simplifying that director change in terms of the documents and filing in-country, but then, very importantly, the data will magically change in the system. We're here to manually work within that system and make sure that that data is accurate at all times. [Audio gap 25:54 - 25:56]

Anu: Also on the screen, we have one last [audio gap 25:59] didn't get to your question, we will contact you with a response after the webinar. Thank you to everyone who joined us today. We hope to see you next time.