Survey finds that organizations continue to struggle with formal policies and compliance related to their subsidiary governance, impacting standing with regulators and ability to complete business transactions.
Washington - The Association of Corporate Counsel (ACC), in collaboration with Deloitte, today released the second edition of “An Inside Look at Legal Entity Management Practices.” The results of this survey, which focuses on a critical, but often overlooked business function, reveals that many organizations lack policies, procedures, and processes to effectively manage their subsidiary governance, putting them at greater risk of non-compliance.
“The lack of robust subsidiary governance programs and procedures is causing some significant disruptions to businesses operating efficiently,” said Blake Garcia, Ph.D., ACC’s senior director of business intelligence. “With organizations falling out of good standing with regulators or having business transactions impacted, it will be interesting to see how teams adjust to an increasingly complex regulatory framework across numerous jurisdictions. We hope this unique survey provides value to ACC’s members and others regarding legal entity management and appreciate Deloitte’s collaboration in making it happen.”
“The survey results highlight the increasing number of pain points many organizations are facing with respect to their entity management,” said Michael Rossen, managing director, legal business services, Deloitte Tax LLP. Whether to address competing priorities, lack of resources or bandwidth, insufficient use of technology, or outdated processes – organizations are turning to customized solutions, inclusive of outsourcing, to bring about greater efficiencies with their entity management practices. The survey conducted by ACC via its membership will serve as a great resource for those organizations wishing to obtain a pulse on the leading entity management practices – and solutions – being put in practice today.”
Additional key findings from the report include:
- Most organizations expect no changes to their budget or staff dedicated to LEM – 79 percent of organizations expect their LEM staff levels to stay the same, with only 14 percent expecting an increase (down from 22 percent last year).
- Consistent LEM policies are still lacking – many organizations lack specific policies, procedures, and processes for effective LEM, with 31 percent reporting they have no processes to enable effective subsidiary governance in general.
- Lack of LEM having significant consequences – 26 percent report their corporate entities have been out of good standing with regulators and nine percent said a delinquency regarding an entity’s status with regulators impacted a business transaction.
- Technology to manage LEM remains a challenge – 62 percent are dissatisfied or neutral with their LEM technology and 38 percent still use Excel exclusively.
- Legal entity governance top priority for LEM teams, but face numerous pain points – LEM teams cited entity governance (66 percent) and regulatory compliance (61 percent) as their top two priorities, but face numerous obstacles, including too many competing priorities (62 percent), lack of bandwidth (49 percent), and inconsistent processes (37 percent).
The report can be downloaded here.
Deloitte Tax LLP does not practice law or provide legal advice.
About ACC: The Association of Corporate Counsel (ACC) is the premier global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other organizations through information, education, networking, and advocacy. For more than 40 years, ACC has set the standard for in-house counsel and raised awareness regarding the value of the chief legal officer in the C-suite and boardroom. With more than 45,000 members employed by over 10,000 organizations and spanning 100+ nations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel® remains the foundation for ACC’s market leadership. For more information, visit www.acc.com and follow ACC on LinkedIn, Twitter, and Facebook.
Deloitte: Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 345,000 people worldwide connect for impact at www.deloitte.com.
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