International Legal Entity Management

Legal Precision - Petra Ribbens

31 août 2023

How well do you manage your legal entities, whether these are incorporated in Switzerland or elsewhere? And why would you pay more attention to that administrative burden on your business? Isn’t this just the stuff you want others to deal with, no matter how they get it done?

Many high-growth (and other) companies underestimate the importance of legal entity management, and the risks of not paying due attention to how these entities' records are organized and kept up to date.

Legal entity management, along with the corporate secretarial work it entails, is often an after-thought for companies and their legal department heads alike – but how wrong is that approach.

How your legal entities are managed will play an important role in allowing your business strategy to develop. This is a responsibility and oversight that should always sit with the legal department – or your preferred legal counsel in charge; not with finance, and not with tax.

When entering into major transactions such as a restructuring, an acquisition of another (international) company, a spin off, or divestment, or when getting prepared to sell your shares to another undertaking, or even when dealing with certain state agencies and customs authorities, it will be crucial to have a well-structured, up to date and compliant legal entity organization in place. Having anything less than that, may lead to deal-breaking delays, unnecessary and unbudgeted extra costs, and have an impact on how your counterparts perceive your business... even if we might think this is all about routine, unimportant administrative work. The fact is: it’s not. Having a solid legal entity management in place at all times, isn’t just nice to have – it’s a must.

Now, given limited financial and human resources, how do we achieve that goal of impeccable corporate governance and well-organized legal entity management?

There is no solution that will fit all: for certain companies, depending on where your entities are located and how you have structured these, it will make sense to have in-house legal counsel be in charge of legal entity management without necessarily having recourse to much technology or a costly software solution. For other companies, with a higher volume of entities and depending on their location, having in-house counsel deal with a number of local corporate law experts, might be ideal from a quality and cost-perspective. And yet other companies would greatly benefit from the use of a well-established, proven integrated technology solution – to the extent the provider is carefully chosen and managed.