The regulations, risk and responsibilities of the legal entity management have been on the rise, especially because firms have their operations across the world. Parent companies across the world have been nullifying this problem by maintaining strong subsidiary governance framework, preventing expensive financial and reputational damage of the brand.
Among many aims of compliance in a subsidiary framework, the most important ones are being listed below:
That being said, it is not absolutely fair to ignore the ironical risks that come with subsidiary governance. These risks include personal exposure of directors and officers, regulatory mitigation failure and potentially unauthorized commitments. However, corporate governance should forever be an innate counter-component of an organization’s compliance management framework. This ensures timely audits and legal entity management processes and controls.
Going in for a subsidiary governance strategy comes with a few questions organizations need to answer to themselves:
Web and technology have made operations of global companies easier and have had a positive impact on their pace of business. The same can be true for subsidiary corporate governance. Technology should become the anchor of the governance framework. It is the means by which a global company with myriad legal entities can precisely supervise the activities of its subsidiaries. The parent company will know how many entities it has at any given time and will be able to provide regulators, management and directors with accurate timely information.
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