Entity management tools have become indispensable for maintaining and easily accessing important documents and tracking compliance deadllines
In today’s highly regulated business environment, the corporate secretary plays a critical role in managing an organization’s risk. Risk for an organization today can range from mismanagement of legal and other documents to non-compliance with numerous ever-changing business regulations. The consequences of not taking a pro-active, comprehensive approach to risk management within your organization can include lawsuits, millions of dollars in fines, years in prison, and negative publicity, to name a few.
The new data privacy compliance obligations to which US companies are subject under the EU-US Privacy Shield are the latest example of why it’s more critical for global corporations to maintain consistent compliance measures across borders.
It’s within this environment that the corporate secretary faces these increased demands for both internal and regulatory reporting and information with very constrained resources. In addition, he or she must advise the board of directors on its governance responsibilities, manage board meetings and document minutes, and take care of company records to maintain compliance with governance authorities.
Mitratech’s white paper, "At the intersection of legal and compliance," features a recent case study about MorganStanley that highlights the differences between reactive and pro-active approaches to compliance. Because MorganStanley had established a training program and an internal controls framework, it avoided prosecution and penalties and was even praised by the Department of Justice. As the case study notes, MorganStanley "had already adopted [a] structural approach to their compliance program. Within this structure they had put in place a policy awareness and attestation program, a risk management framework and a set of internal controls that allowed them to demonstrate that they had met their obligations under the FCPA, even if they hadn’t prevented the incident." Utilizing technology to implement the training programs and internal controls framework will aid in the ability to track both, and will provide invaluable and irrefutable evidence if a situation should arise in which either needs to be confirmed.
With these increasing demands, the age in which disparate home-grown solutions, Excel or Access databases, and minute books, serve as sufficient solutions to these problems is long gone. As a company focused on reducing risk for a legal department, and the organization as a whole, Mitratech reached out to Shelley Wilson, senior manager of legal operations and support at The Independent Order of Foresters, to understand how that organization utilizes technology to reduce risk. For more than a century, there was not a complete solution in place to manage corporate records. These records were kept as hard copy files and piled up – enough to fill an entire storage room. When asked for corporate information, Wilson was forced to dig through thousands of records and manually search for the appropriate file. Over time, the use of multiple tools demonstrated high levels of inefficiency, prompting Foresters to implement an entity management solution.
Many other corporations are also recognizing the benefit of – and perhaps, more importantly, the risk of not – implementing a solution that allows the corporate secretary to maintain all corporate records, including historical information and documents, receive notifications about key compliance dates, track the whole corporate structure, log meeting minutes and much more. An entity management solution provides a single source of information for all corporate structure and compliance needs.
Wilson credits Secretariat, an entity management solution, with enabling Foresters to consolidate all its records, current and historic, into one database and provide access to the people who need that information. “It really did enhance the level of service we were able to provide to our stakeholders. When we are asked for specific information, we are now able to generate reports and send as an email,” explains Shelley.
The ease of access to all entity information allows an organization to quickly pull critical information needed to maintain internal and external compliance. In addition to maintaining an organization’s records, the corporate secretary manages and maintains the documentation and records for the board and tracks any affiliations that executive officers may have outside of the organization. Having an annual auditing system in place to track these affiliations is another way to ensure compliance and provides documentation that can be used as evidence within annual reports to shareholders that the organization is committed to abiding by the Sarbanes-Oxley rules.
An entity management solution is critical to streamlining the corporate secretary’s administrative tasks and duties. Even more importantly, it can increase operational efficiency and help minimize a corporation’s exposure to risk and non-compliance.
Lance Ellisor is vice president of product management at Mitratech, whose entity management solution, Secretariat, is currently in use at over 160 companies across a dozen countries.
