Simplifying and Centralizing Global Corporate Governance

Simplifying and Centralizing Global Corporate Governance

Global corporate governance is complicated because each country has its own requirements, governance policies, and compliance demands.

View this recorded webinar as we explain how CSC® can help. During this webinar, you will learn:

  • What the global corporate secretarial landscape looks like after experiencing data breaches over the last several years
  • The challenges of achieving entity compliance and maintaining corporate secretarial functions internationally
  • Ways to centralize your data and documents for visibility into all your global subsidiaries
  • Global legal entity identifier requirements
  • And more...

Slideshare


Webinar Transcript:

Disclaimer: Please be advised that this recorded webinar has been edited from its original format, which may have included a product demo. To set up a live demo or to request more information, please complete the form to the right. Or if you are currently not on CSC Global, there's a link to the website in the description of this video. Thank you.

Annie: Hello, everyone and welcome to today's webinar, "Simplifying and Centralizing Global Corporate Governance." My name is Annie Triboletti, and I will be your moderator. Joining us today are John LaPalomento and Andrea Jonaitis. John is a product manager on the CSC Global Subsidiary Management team. He's been with CSC for over nine years previously as a sales team leader and a product engineer with CSC Matter Management Solutions. John works with GSM prospects to present an accurate and clear scope of services and remains in contact with them as the overall relationship manager for all GSM clients.

Andrea is a Sales Engineer in the Corporate and Legal Solutions Group at CSC. Since joining CSC in 2017, Andrea has specialized in global subsidiary management and entity management, working with prospects to present an accurate and clear scope of services, including helping subsidiaries stay in compliance as well as demonstrating CSC Entity Management. And with that, let's welcome John and Andrea.

Andrea: Thanks, Annie. Hi, everybody. Welcome.

John: Hi, everybody, we hope you're joining us comfortably from your offices around the world. We're excited to share information about our global subsidiary management suite of services today.

Andrea: Excellent. Let's start by taking a look at our agenda. We'll begin by discussing the global corporate governance industry landscape, and kind of some of the changes over time. We'll discuss the challenges of managing a multinational entity portfolio and the ways in which CSC can assist you with your global corporate governance. Then we'll talk about how to understand the status of your entities and achieve international statutory compliance through the corporate health check. John and I will share with you our core service to support your global portfolio which we call annual compliance support. And also some of the international transactional work with which CSC can assist you.

We'll briefly talk about global legal entity identifiers, or global LEIs, as you may have heard them referred to previously. And finally, we'll talk about how to maintain trustworthy data in a central repository with CSC's award winning Entity Management solution. And we'll also have the opportunity to view a demonstration of the entity management platform together. So with that said, let's get to our first topic today, which is the challenges of managing a multinational portfolio.

John: Yeah, truthfully a lot has changed in the world of corporate governance, from a global perspective, and we're going to touch on this briefly in a couple of different capacities, both the capabilities that you'll find in the industry, but some of the concerns that should certainly be on your mind as well. The industry has changed substantially. There was a time and I'm sure for those of you who are on this call who are currently managing a portfolio of entities around the world, some of you may currently be working with local law firms and country or local service providers. And frankly, until about a decade ago, that was really the only way to work, managing with local providers, seeing levels of decentralization, and trying to herd those cats if you were. Well, that landscape has changed significantly and now, you have partners in the space, like CSC who can bring centralization to the table and truly revolutionize and bring efficiencies.

But there's also a change in the landscape when it comes to some of the concerns that should be on your mind. Things have changed significantly. Data at this point in time being almost completely digital everywhere in the world. We all read about breaches, we all read about some of the challenges around the security of data and, of course, your responsibility when it comes to managing data in a secure and effective way.

For those of you who aren't aware of some of the early breaches like the Panama Papers, and the Paradise Papers where hundreds of thousands of data points were breached, and were shared, the challenges around that of keeping your data clean is not just your problem. It is the problem of your vendors in the space. And it is so important for the health of your organization and for the longevity of your organization to be working with the proper partners in these spaces. Vetting out the security and making sure that you are working not just with trustworthy companies, but companies that are taking the proper steps to ensure that your data and resources are protected properly.

Data privacy and I'm sure everybody at this point time is familiar with GDPR and some of the European protocols that are in place now. The collection of KYC due diligence and AML or anti-money laundering. I think one of the biggest hot topic right now, especially throughout Europe, now in Canada and parts of Asia are the reporting requirements around the UBO, or Ultimate Beneficial Owner registrations. Persons of significant control registers like they call it in the United Kingdom. These are the kind of things that are truly changing on a day-by-day basis. And it's very important that you're not only keeping in touch with this on your own, but the partners that you choose to work with in this space, truly have your back when it comes to understanding changing landscapes and making you aware of these changes.

This could be a webinar unto itself today, but we wanted to make sure that we're bringing this point to the surface, so everybody here if you're working internationally or maybe considering working internationally, are familiar with some of these new changes or new concerns that you should be considering. So why don't we kick off now, some of the facets around working with a multinational entity portfolio.

Andrea: John, I'm so glad that you're on top of your game today, and you talked about the right topic when I had introduced the wrong one. So now, we will transition into the challenges of managing a multinational entity portfolio so that I don't get ahead of myself.

John: Not a problem, Andrea.

Andrea: Throughout our various conversations with our clients and prospective customers, John and I regularly hear some of the recurring themes in terms of challenges that companies are facing when it comes to managing their global portfolios. One of the biggest challenges that we hear that our clients are dealing with is expertise or really lack thereof. Clients will approach CSC for help with managing their global portfolio is because there are so many nuances that vary from country to country. And these nuances are very different than U.S. law and what we're most familiar with domestically here in the United States.

It can be really difficult to understand those nuances and the requirements that are necessary to conduct business in other countries. It's very easy for a U.S. corporate individual to feel that international entities can and should be handled very similarly to the way that we manage the corporate secretarial requirements for our U.S. entities. And that's simply not the case.

Managing the requirements for your global entities is really not as straightforward as appointing a registered agent or filing your reports throughout the year. It's really important to have an expert or a team of experts in place that can help you in understanding the complexities of all of these various jurisdictional needs, so that you can have the peace of mind that all of your corporate secretarial needs for your global entities are being handled appropriately.

Another challenge we hear most often is logistics. We often hear the struggle of coordinating multiple projects with multiple vendors around the world, and the impact that this can have on your time and your resources. Typically, your global vendors are located in other countries, often time they're in inconvenient time zones. Added to that is the struggle of the receipt of invoices in different currencies and those currencies may fluctuate throughout the course of business, and then even more frustrating and confusing is maybe language barriers if vendors don't speak English.

With all of these logistical challenges, you can easily become overburdened by the process or confused as to what has or has not been completed. And really we hear it all the time in our daily discussions with people who are considering our services. Many begin their conversations with John and me with something along the lines of, "Well, I think our vendors are handling our responsibilities, or at least I hope that they are."

Understanding costs is also a critical component and can be very challenging. In addition to fluctuating currencies that I just mentioned, creating a budget or understanding your current spend for the services that are associated with managing your global entities can also be difficult. When you're dealing with law firms in particular, you're at the mercy of hourly rates and potentially unclear invoices for the services that are rendered. It can be very tough to match up the costs for your specific entities, it can be challenging to discern the difference between the fees that are tied to the direct management of entities and the fees that are charged for other unrelated services by those law firms.

And very unfortunately, John and I also speak with companies that have received surprise invoices from their vendors for standard or routine filings and services for their global entities. No one wants to be on the receiving end of these unexpected fees above and beyond what was originally discussed with vendors.

And then lastly, a lot of clients talk to us about the challenges of their data management. It's really important to have a system in place that's going to meet all of your needs and allow you to centrally see and to manage all of your data and documents for each of your entities around the globe. And it's even more important that you're able to feel confident in the system and to feel that the system is reliable and up-to-date.

Oftentimes, it can be very challenging to achieve that peace of mind with your source of data. Excel spreadsheets and network share drives, they can really help to ease your burden a bit, but they're still very manual and they can easily become outdated or incorrect when there are other pressing responsibilities that also need your attention for your business.

Companies tell John and me that they're heavily dependent upon their vendors to provide them with information or documents as a prerequisite to getting their manual systems updated appropriately. So if that communication isn't received from your partners globally, the system is going to break down despite your organization's best efforts to keep that system functioning, and to keep your central source of truth accurate and up-to-date.

John: So now, let's talk about what CSC can offer to you and to the portfolio that you're managing, the CSC solution. What is CSC Global Subsidiary Management? You're commonly going to hear us refer to Global Subsidiary Management or using our acronym GSM, which is really built around centralization and simplification. It's about taking all of the workflows that you have through multiple conduits now to different countries, to different vendors, to different partners, and centralizing that through one conduit of information and workflow.

Simplification and the fact that . . . I'm going to use a word here that I want to make sure that I clarify, for those of you who are American and using our domestic American services, we're essentially looking to mirror that, essentially an Americanization of global corporate functions. That's not to say that we're going to treat your Dutch company as if it's the Delaware company, but we're going to take the things that have made CSC successful and recognizable in this industry, security, data management, succinct customer service, American-based if that's the desire, flat rate and billing costs in U.S. dollars and so on. We're going to take those governing principles and apply that to corporate secretarial functions around the world.

CSC truly is a partnership. You are partnering with CSC to work in harmony to manage corporate secretarial responsibilities around the world, in an efficient and successful manner. Never will I use the word outsourcing. I think it's misleading. You're simply not turning on a service that runs by itself. We're acting essentially, as a corporate secretarial partner to you quarterbacking your corporate secretarial efforts around the world and simplifying those processes in harmony.

CSC, GSM truly is an extension of your team. You can almost think of us as your personal assistants, your project manager assigned to you here in Wilmington, Delaware or out of our London office or Hong Kong office, if that is the desire, is really there to act as an extension and partner to you to make things simple and successful. This is somebody who you're going to have a familiar business relationship with, somebody who you're going to trust, and ultimately, work side by side together.

GSM is flexible to meet your needs. While there's certainly some common place needs that will be thematic from region to region or jurisdiction to jurisdiction, we also understand and are aware that our clients will be unique needs to the table. And we're here to be flexible to meet those needs in either direction. If you have some capabilities and need some simple things fulfilled, we can do that for you. But if you lack some significant capabilities in a jurisdiction, such as resident director and the above, CSC will be able to assist in those capacities.

GSM truly is comprehensive. This is not simply a registered agent appointment in a given jurisdiction as some of you certainly may be thinking. GSM is comprehensive to include all of your corporate secretarial needs, including the drafting of documents in dual languages, including proactive support when it comes to filings and meetings. And very importantly, comprehensive in terms of the research required to keep up-to-date on the ever changing landscape.

GSM is dynamic, we have to move quickly, we have to move efficiently and effectively. When you have a change that needs to be made, you know, you can reach out to a team that is dynamically going to make those changes and in a fashion that is appropriate to the time and speed required.

GSM is efficient. When I talk about efficiency, I talk about efficiency in a couple of different manners. Here I'll talk about efficiency in terms of workflow efficiencies. Rather than duplicating, triplicating and so on efforts in different jurisdictions, you get to work in a streamlined capacity with your project manager. Of course, we have fulfillment specialists working regionally. We have boots on the ground in over 140 countries with hubs for this service out of our London and Hong Kong office. So you're truly going to get an efficient workflow.

We're also efficient in terms of cost effectiveness, rather than paying hourly rates in Yen, Euro, Great British pounds, Real, whatever currency it may be, you have the ability to work in flat rate costs in U.S. dollars across your entire portfolio. So rather than simply leveraging the fact that you have a handful of entities formed in Brazil and trying to work a discounted price out for one jurisdiction, you have the ability to leverage your entire portfolio with CSC, where we're going to find cost efficiencies that makes sense for you and your organization.

CSC truly is a marriage of our time-tested service and our award-winning technology. GSM is going to bring together our entity management platform, CSC's is award-winning technological platform, and we're going to automate that. The collection of data and documentation in an automated fashion is truly one of the hallmarks of our service. In the space, you'll largely see providers that are one or the other, either service companies, or software companies. CSC brings us together with our proprietary technology, again, in this automated fashion. It's something that truly sets us apart and something that we look forward to sharing in more detail momentarily.

GSM ultimately is peace of mind. It's giving you the trust and the peace of mind that your filings are being handled properly around the world, that we have your best interest at heart when it comes to changes to regulation and legislation around the world, and that you have transparency into your data and visibility to everything that is happening, very much unique to CSC.

Andrea: Very good. So let's move into the achievement of your international compliance through the corporate health check here. When clients come to CSC, and get on board with our global subsidiary management services, the first step in the process together is going to be for us to understand the status of all of your entities, and the requirements that are necessary in each jurisdiction to remain in good standing. This is achieved through the corporate health check, which is a process that you probably have heard of before, but I'll talk about it briefly now.

The corporate health check is a comprehensive audit of your global entities and it helps us to do three things. The first function of the corporate health check is to understand the current entity status. So through a review of the data from the public registry in country, CSC is able to understand what has or has not been completed for each of your global entities, and to identify any deficiencies if they exist within any global corporate portfolio according to that business registry that needs to be addressed.

Some of the common deficiencies that we uncover through our corporate health tech projects include things like the missed annual general meeting filings or other general filings, perhaps an incorrect number of directors in place, incorrect addresses or other company changes that just weren't updated in the business registry.

The second function of the corporate health check is the uncovering of current and correct data such as your slates of officers and directors, your powers of attorney, jurisdictional IDs, address information, share capital and ownership, and a complete understanding of all of the filing responsibilities and deadlines by entity and by jurisdiction. After the corporate health check is complete your dedicated project manager located here in Wilmington, Delaware will review the results with you and if any deficiencies do exist in your global portfolio, they'll sit down with you to understand the plan for remediation and help you to bring those entities back into good corporate health.

And the third function of the corporate health check includes the migration of the vetted data, all of those requirements, the dates and deadlines, all of that data is migrated into CSC's Entity Management technology platform. This proprietary technology solution captures all of your current entity information. It provides clients with visibility and complete transparency across the organization, and one secure and easily accessible central repository that's managed in an automated fashion through CSC's Global Subsidiary Management services. And that data forms the foundation of our core service of ongoing entity maintenance, which we refer to as annual compliance support.

John: Before we move to the discussion of annual compliance support, I want to highlight one of the bullets that Andrea had mentioned with the corporate health check, and that's the review that we go through together with you and your team. We really want to take a humanistic approach to your data. Just because data is on file in a country certainly does not mean it's correct. Even if it checks all the boxes. We're going to review data with you and you may see outstanding powers of attorney who no longer work for your company, or directors who have moved on. And it certainly may look like things are satisfied in country and based on public records. But that review of information is critical to your success, and of course, our success moving forward.

Andrea: John, we got a really interesting question from Michael here. It says, "Our business has headquarters in California, Hong Kong, and United Kingdom with subs in four countries in Europe as well as in China. Would we need three managers or just one to handle our account?" That's a great question. So I had referenced the project manager that you'll have in Wilmington, Delaware here. Typically, our clients prefer to work with one centralized point of contact, typically located here in Wilmington, Delaware.

If you would prefer to have some other type of a process in place with contacts, we do have hubs for the service out of our London office and our Hong Kong office, and it's based upon companies and their personal preferences. If you would prefer to streamline your points of contact with just one project manager, and then our team of specialists in the global subsidiary management support group standing behind that person to complete your corporate portfolio and requirements, you can do that. If you would prefer to have a couple different touch points available to you perhaps located in different regions, we can accommodate that as well.

John: It's really a testament to our flexibility, again, for our client base who is desiring centralization, we're going to meet that need every day. But if you wish to be decentralized, we're going to do that as well. Thanks so much for that great question.

So talking a little bit about really our core offering here at CSC when it comes to global subsidiary management, annual compliance support. Annual compliance support is CSC's fancy way of saying corporate secretarial services, and truly flexible, truly dependent upon the regulations of the jurisdiction. But based on the fact that we're here to tie together all of your prescribable events, annual meetings, annual filings, minute book maintenance, and so on and so forth, and pull them together in a centrally-managed functions through your project manager with whom you'll have regularly scheduled communications, talking about what's coming up around the world over the next 30, 60, 90 days and beyond. And also bundling that together in a flat rate, U.S.-based cost, so you have budget certainty.

Moving down the list here, truly flexible, truly solution-oriented service. So while it's much different managing a British company, than a Brazilian company, than an Argentinian company, than an Australian company, you'll see flexibility from jurisdiction to jurisdiction. It's all with the same goal of satisfying the corporate secretarial requirements in that given jurisdiction.

Dynamic and proactive ongoing corporate secretarial management based on the results of the corporate health check. So through the corporate health check, we've identified specific dates and deadlines for your meetings, your annual filings. We've done so based on the nuances of the jurisdiction, perhaps stating that this date is flexible based on the last meeting or based on your paid up shared capital, whatever it may be, we understand and build that foundation and then manage the company accordingly moving forward.

We're going to do lots of different things, but commonly we're going to be maintaining minute books and shareholder registries. We'll be keeping track of your slates of officers and directors. We'll be doing that always digitally in our technology, CSC Entity Management. But in jurisdictions where we're acting as registered office, which we'll touch base on in a moment, we'll also be holding physical books when that is the regulation.

We're also going to be attending to your annual general meeting requirements. Now, I say this loosely. In a jurisdiction like India or Spain, if you have a board of directors, you would have responsibility for quarterly meetings. If you have a jurisdiction on your portfolio such as the Cayman Islands or United Kingdom, where there's no requirement for an annual meeting, we're going to be flexible in that way. So we're going to base our meeting endeavors on the regulations of the jurisdiction. We're going to be preparing minutes for these meetings.

We're going to be doing so in dual language and that's an important separator for CSC. Everything that we draft will have an English components. Those drafted documents will be captured digitally in CSC Entity Management, any subsequent filings that are required will happen as well.

I've already highlighted the dual language support, but that truly is something that our clients around the world benefit from not just our American clientele. English being certainly a language of business recognized internationally. It's so beautiful to be able to see your German documents that are required to be drafted in German, having an English counterpart and so on.

We'll also be handling what I'll loosely call your annual report obligations around the world. Now, of course, this takes on different forms and different jurisdictions. In the U.K., we'll be drafting and filing your confirmation statement, in many jurisdictions around the world we'll be drafting the resolutions to approve your audited financials, and handling subsequent filings and so on. Of course, those documents will then be uploaded in a searchable format into CSC Entity Management in real time giving you transparency.

In many jurisdictions, we do include the provision of registered office. Now, I would think most of you on this call understand exactly what a registered office is, but I'll touch on the fact that this is not a registered agent relationship like we commonly are fulfilling here in the United States. The requirement for registered office is commonly thought of as your principal place of business in the given jurisdiction. And in most jurisdictions around the world, the best course of action is to list your own physical brick and mortar location as your registered office.

But there's many jurisdictions specifically those that are governed by English common law, where it's very common to have your corporate secretarial provider act as your registered office and commonly hold physical minute books. And in those jurisdictions, for example, places like Canada, United Kingdom, Ireland, Singapore, Hong Kong, Australia, New Zealand, Malaysia, and a handful of others. Since it's the common practice, CSC is proud to include that provision as part of our standard service for no additional cost.

Now, that's not to say that we can't fulfill it in other places. For instance, if in Germany, you only had a marketing team and you didn't feel confident listing your address there as your registered office, we can assist and fulfill that. And that's true for most jurisdictions. Of course, there's some jurisdictions that regulate whether or not a third-party can act in that capacity. So there's definitely some nuance.

We're also going to be handling the automatic and automated migration of documents and data that we produce in CSC Entity Management. Of course, we've highlighted this already so many times, but it's such an important part of our service. And it's important to say that we're acting not only in our proprietary technology, but in real time. If we were to make some change for you around the world, that change, the documentation, is going to flow into the system and the data around that change is going to be highlighted as well.

There's many different providers in this space who say they do this, but oftentimes they're working with the third-party technology and it seems like an afterthought, or the data is not trustworthy because it's not happening in real time. In CSC's case, it is absolutely critical that we're handling this because CSC Entity Management is not only your portfolio to see information transparently, but it is also the workbench through which CSC manages your events. So we're here to do so in a successful fashion.

And lastly, as mentioned several times already, flat-rate pricing in U.S. dollars. We're here to provide you budget certainty. You go into the world of corporate governance, perhaps not knowing what you're spending with law firms working with hourly rates, and we're here to change that significantly bringing a budgetable number to your organization.

You know, it's important to know that CSC works with portfolios of all shapes and all sizes. So if you have a smaller portfolio of maybe four or five entities outside the United States, or a robust portfolio of hundreds of entities outside of the United States, CSC can equally handle your needs.

Andrea: Excellent. So the next portion of our discussion here is talking about to Brittany's question, the way that we can fulfill your additional filing needs through the international transactions. There's lots of things that CSC can do, they're outside of the scope of our annual compliance services that John just spoke about. But CSC can also assist clients with those other needs that might arise from or are separate kind of from your day-to-day needs. So this would include things such as your officer director changes, and the ad hoc revolution draft, transfer of share capital, document retrieval, research projects if you need formations or liquidation support, there's so many things that we can do. And when those changes occur within your global portfolio, CSC can continue to help to simplify those projects using the same streamlined and centralized approach that sets us apart from our competition here.

One of our favorite examples that we like when we try to illustrate this point is a very common director change project that I feel will really resonate with many of you with us on the phone today. Let's say for example, that one of your directors is retiring and this person happens to be a director for many different entities around the world within your company. This is a frequent occurrence that John and I hear about and most commonly people will tell us. Well, what we do is we reach out to the law firm in Brazil, the firm in Singapore, our partner in Australia, and so on and so forth. And then they quickly find themselves juggling 20 different projects in 20 different companies with 20 different points of contact. Wouldn't it be so much easier for you to just simplify this process? Call or email your project manager here in Wilmington, Delaware, you say, "Hey, Susan retired, what do we have to do?"

From there, our team is going to assess the scope of the project with you. We'll evaluate the best course of action in terms of achieving these director changes. And really, we're going to customize a perfect solution for you, so that rather than having to manage those 20 different projects in 20 countries, you're managing one project with CSC spearheading the efforts to manage and execute those changes on your behalf.

We have the knowledge and the expertise available here to understand where we can mitigate your costs versus where we might need to be more expeditious in order to avoid fees or penalties. We would know, for example, if we needed to execute a director change in Australia, and if we had an upcoming annual general meeting coming up in the next 30 days, we could fold that change into the meeting so that we could avoid extraordinary measures and thus kind of save you some money and avoid additional costs of that change.

But conversely, we would also know that we need to expeditiously handle the change within the requisite 15 days in Hong Kong or 30 days in Singapore, for example. And very similarly to our annual compliance support services, we provide flat rate pricing for all of these ad hoc services, so that we can continue to bring you budget certainty, and the work that's completed by CSC on your behalf will continue to also flow automatically into the technology. You'll see the data, the documents, and all of the information updated dynamically in real time in CSC's Entity Management solution. So that's the data and documents do become available to you immediately upon the completion of those projects.

John: I'm going to very briefly touch on legal entity identifiers or GLEIs, LEIs, LEs, a number of different nicknames for global legal entity identifiers. A number of years ago, post Enron, if you will, where banks were lending out money fairly haphazardly and oftentimes duplicatively, it was recognized that there is no global thumbprint for organizations. Of course here in the United States, you probably have a registered FEIN number. And in other jurisdictions, there are different tax IDs, but cross borders, there was nothing that did the job.

So a clearinghouse was opened to issue global legal entity identifiers, which has a 20-character reference code that uniquely identifies your organization. Somebody there's probably managing at least one global legal entity identifier for your organization. And very commonly, when it comes to banking, this will be a need.

The model around LEIs is really one of an initial filing and an annual renewal which very much fits the mold of what CSC offers. So please know that since the inception of GLEIs, CSC offers a renewal filing service where we keep track just like your domestic annual reports or your global services. We keep track of initial filings and renewal dates and can automate the renewal filings of GLEIs. If you have any questions about this, please reach out to any member of our customer service team or your specific customer solutions manager as well.