As companies grow, merge and enter new jurisdictions, they need to be careful about keeping their legal entity management compliant. This typically includes updating registrations, tax filings and other required submissions to regulators before deadlines.
Legal entities include corporations, limited liability companies, subsidiaries, joint ventures, nonprofits and limited partnerships. These types of arrangements sometimes stem from mergers and acquisitions.
"Legal entity management is complicated, and it seems to be an area that is not receiving the priority that it needs," said Susanna McDonald, chief legal officer for the Association of Corporate Counsel (ACC), a legal association in Washington, D.C.
"There continues to be the pain point of limited resources from a talent perspective and a financial perspective. There's a host of competing priorities," said Michael Rossen, who leads Deloitte's legal entity management business in Jericho, N.Y.
HR can assist by bringing relevant company departments together to help the company do a better job with legal entity management, McDonald said.
Consequences of Poor Legal Entity Management
If legal entity management isn't done correctly, fines and lost deals could follow.
"One of the biggest risks is that the entity falls out of good standing with the appropriate regulator governing structures that they reside in. That can have huge tax penalties associated with it," McDonald said. "If an organization falls out of good standing—...
Budget figures show 1.765 million permanent migrants will arrive in Australia over the next three years. Our verdict False. The budget doesn't forecast permanent migration, and other migration for...