General Counsel Guide to Entity Management

Copyright 2017 Berkman LLC
General Counsel
GUIDE TO ENTITY MANAGEMENT
855.517.2193 North America
info@berkmansolutions.com
+1.503.517.4293 Global
berkmansolutions.com
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with examples from
Berkman Solutions

Berkman Solutions provides compliance
and risk management software and
services. We help organizations around the
world to improve performance with better
management of contracts, legal entities,
due diligence, compliance, and legal risk.
We are lawyers, compliance experts, and
business people ﬁrst; technologists, second.
Our team has managed, negotiated, and
drafted almost $4 Billion in contracts
across industries and around the world for
the last ﬁfteen years.
We have performed and facilitated due
diligence on thousands of companies.
Berkman staff are recognized experts on
contracts, risks, due diligence, and legal
entities. We write and speak about
compliance, legal risk, and contract
management regularly.
Our clients operate in every sector of the
economy: health care, sports and
entertainment, manufacturing, business
services, and more. We count Fortune
500 companies as well as small
businesses (and everything in between)
among our clients.
Company overview
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Disclaimer
These materials are for informational purposes
only and not for the purpose of providing legal
advice. You should contact your attorney to
obtain advice with respect to any particular issue
or problem. Use of these materials and any email
links contained within the site do not create an
attorney-client relationship. Berkman LLC is not
a law ﬁrm and the author or presenter is not your
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Framework for
Legal Entities
Common Information for Legal Entities
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Common
data
An entity
management
framework creates a
consistent view of
legal entities
notwithstanding the
variations.
Legal name
Form of organization
Address
Jurisdiction
Registered agent
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Important
records
Over time entities
amass additional data
and documents.
Documents, ﬁlings, and statements
Owners, investors, and equity holders
Ofﬁcers and directors
Compliance requirements
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Entity
record
General counsel can
view important entity
details and
documents at a
glance.
Body text
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Documents &
Records
Optimize corporate document management for
legal entity compliance
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Objectives
Manage exponential
growth in documents
and records.
Time and duration
Does this document have an effective or start date?
Does it have an expiration date?
Jurisdiction
Does the document relate to a particular jurisdiction,
whether that is national or subnational?
Classiﬁcation
What type of document is it? What is the right way to
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Formation
documents
Classify types of
organization
documents.
Articles of Incorporation
By-Laws
Ownership Agreements
Resolutions
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Filings
Keep all ﬁlings in one
place and connected
to the entity record.
Filing name
Type of ﬁling
Filing date
Expiration date
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Meeting
minutes
Stay on top of growth
in meeting minutes
over life of entity.
Board of Directors
Committees (#)
Type of meeting
Date of meeting
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Key
agreements
Track contracts which
are indispensable to
entity management.
Ownership agreements
Intellectual property ownership and
licensing
Intercompany agreements
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Compliance & Filing
Requirements
Monitor obligations for each entity across all
jurisdictions
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Objectives
Comply with critical
ﬁling deadlines.
Filing = Document + Event
Name
Filing Date
Expiration Date
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Annual
reports
Annual reports (or
annual statements)
are the most basic
legal entity
requirement.
Periodic renewal
Frequency varies
Jurisdiction speciﬁc
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Regulatory
ﬁlings
Compliance
obligations are tied to
a jurisdiction,
industry, and/or
business practice.
Step 1. Classify Requirements
Organize requirements by type of ﬁling or requirement
Step 2. Add Requirements by Entity
Include a short descriptive name, the relevant
jurisdiction, and the due date
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Permits &
licenses
Permits and licenses
are often tied to an
industry or use of an
asset.
Zoning applications
Construction permits
Transportation licenses
Telecommunications
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Ownership &
Org Charts
Generate business entity org charts the right way
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Objectives
Generate dynamic,
accurate org charts.
Hand drawn org charts are inaccurate
With one change to any ownership in the corporate
family, the org chart is no longer accurate.
Hand drawn org charts are not
validated
The very phenomenon that makes an image attractive
prevents anyone from verifying that the image reﬂects
the underlying legal data about ownership.
Hand drawn org charts are locked on a
focus
Org charts must respond to the entity in focus and
display a chart relative to that entity.
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Ownership
The most reliable way
to add ownership for
entity management is
to focus on one entity
at time and then add
that entity’s
immediate parents
and subsidiaries.
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Org charts
Org charts should be
generated, not drawn.
When entity
management
generates an org
chart, the image is
grounded in data,
data about the equity
relationships.
Body text
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Generation
skipping
It is important that
the org chart preserve
the layers even when
ownership skips a
generation.
Body text
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Ofﬁcers &
Directors
Assign people to entities and roles as needed
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Objectives
Stay current with
board structure and
management team.
Body text
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Roles &
entities
Work with evolving
pool of individuals
and investors.
Assign individual to as many entities
as necessary
Assign individual to as many roles as
necessary
Generate reports by entity, role, or
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Terms of
service
Look back to
determine who was
involved for a decision
or during a ﬁscal year.
Appointment for deﬁned term of
service
Track start and end of term of service
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Jurisdictions
Legal entities occupy national and subnational
jurisdictions
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Objectives
Track comprehensive
inventory of all the
jurisdictions with
which an entity has a
legal relationship.
193 countries in the United Nations
522,000 subnational jurisdictionsaccording to the OECD
A few too many…
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Tailored list
Develop a tailored list
of national and
subnational
jurisdictions.
Place of incorporation
Principle place of business
Foreign authorizations
Operating sites
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Use of
jurisdictions
Jurisdictions cut
across the main entity
record, corporate
documents and
records, and
requirements.
Anchor the entity record
Associate compliance and ﬁling
requirements
Connect documents and ﬁlings
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Reports
Demonstrate and deliver value to the board and
senior management
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Objectives
Demonstrate and
deliver value to
management.
Consistent, valuable communication
Turn text into data for management
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Report
examples
Many types from
simple to complex.
“All the entities incorporated in
California.”
“All the entities with pass through tax
status, which were incorporated in
California prior to 2016”
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Collaboration
Work efﬁciently within and across teams,
including outside counsel
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Objectives
Improve risk
management through
better collaboration.
General counsel and senior
management
General counsel and outside counsel
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Security
Encrypt legal entity
data.
Encrypted at rest
Encrypted in transit
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Access
controls
Limit access to legal
entity records.
Share legal entity data
Leverage access controls
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Customization &
Conﬁguration
Adapt legal entity management
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Objectives
Accommodate unique
needs.
Customize at no additional cost
Avoid IT implementation project
Conﬁgure ﬂexibly
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Core
changes
Customize important
types of information.
Form of organization (legal entity
types)
Document types and categories
Jurisdictions
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Easy
changes
Customize in the
administrative area.
Body text
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Flexibility
Use tags and custom
ﬁelds as necessary.
Tags are semi-structured data
elements
Custom ﬁelds are the ability to add
data collection elements
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Conclusion
Entity management software can
empower general counsel and the entire
legal team to deepen the relationship with
business leaders while managing risk and
improving compliance.
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General Counsel Guide to Entity Management

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