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Entity management refers to a governance system that compiles, organizes, and manages the corporate records of a business entity. Business entities include anything from multinational corporations to partnerships, limited liability partnerships, trusts, LLCs, and other organizational structures.

Legal entity management establishes a consistent framework for how a business entity and any subsidiaries conduct themselves. It aligns department leaders from an organization’s legal, accounting, taxation, and compliance divisions to establish a set of rules and principles that allow the company to operate in a legally responsible manner.

What is the purpose of legal entity management?

The purpose of entity management is to install a structured system that promotes effective corporate compliance and responsible organizational governance. Entity management policies and procedures ensure companies respect the interests of owners, shareholders, managers, employees, regulators, and the public at large.

Entity management is a central piece of an organization’s environmental, social, and governance (ESG) policies and procedures. ESG goals are broad commitments by legal entities to introduce greater diversity, sustainability, and environmental awareness into their operations. Legal entity management respects the objectives of those goals while maintaining strict policies and procedures to respect regulatory compliance.

What information belongs in entity management platforms?

Many companies use legal entity management software to remain in compliance with jurisdictional laws. These platforms function as secure centralized databases for all information pertaining to the organization.

Some of the most common information that can be found within entity management documents include:

• The legal name of the entity (or subsidiary)
• Organization classification (corporation, partnership, LLC, trust, etc.)
• Registered legal addresses for the company
• The official date of incorporation (for corporate entities)
• Jurisdictional certifications to legally conduct business
• Names of registry agents

How is a legal entity management system maintained?

There are a number of business assets that organizations use to maintain proper legal entity management. These assets include, but are not limited to, any of the following:

• Organizational charts
• Capital tables
• Tax reports
• Shareholder ledgers
• Minute book records
• Other corporate documents

Records from each of these documents give executive managers, directors, and shareholders keen insight into the inner workings and operations of the organization. Law firms and general and corporate counsel representing the organization can share the corporate documentation data with the proper regulators whenever necessary. Transparent recordkeeping keeps your organization in compliance, avoiding any disruptions to business growth and operations.

What are the penalties for non-compliance?

Regulators across North America have dedicated years to cracking down on white collar crimes to protect the public from the real consequences of those offenses. Organizations and business leaders that follow the letter of entity management avoid legal pitfalls that compromise the growth and security of their respective businesses.

Those leaders that fail to abide by the responsibilities of legal entity management risk subjugation of criminal indictments. One needs to look no further than charges laid against one former president and head of a namesake corporation as a cautionary tale of falsifying business records for personal gain.

In some cases, failures to uphold proper legal entity management practices can tarnish an entire entity’s future. Case in point: FTX founder and former CEO Sam Bankman-Fried faces multiple charges of fraud for the misappropriation of client funds. The collapse of FTX under SBF resulted in the company filing for Chapter 11 bankruptcy as new CEO John Ray III establishes proper corporate controls.

How can firms and general counsel use entity management platforms

The greatest benefit of legal entity management software is that it allows legal teams to digitize corporate documents and minute book records. By transferring corporate records into secure cloud-based servers, entity management workflows become more streamlined and time efficient.

Since the data is stored in the cloud, it eliminates the need to schedule in-person meetings with key stakeholders to certify the corporate documents. Anyone with biometric and hardware key authentication can access the records at their own convenience from any location. This makes it easier for legal departments to acquire approvals and signatory sign-offs on corporate data.

The platform is very intuitive and includes advanced search capabilities to find and review important minute book records in a matter of seconds. This is a more efficient way to conduct review sessions with stakeholders. If any executive has questions about a particular record, immediately pull up the minute book in question and present the answer. It’s a more efficient workflow for everyone involved!

As a business, every law firm is fundamentally trying to accomplish two goals:

1. Service the needs of existing clients to achieve satisfactory results
2. Attract new business to the firm and scale growth to new heights

Seems fairly straightforward, right? While most firms are very successful at goal #1, not as many are as consistently fortunate with goal #2. Part of that is simply due to the nature of the business; it’s simply not guaranteed that a new client case is available every single week that a firm can try to represent.

However, one of the main challenges to achieve scalable growth is that most firms have a limited amount of staff. There are only so many professional attorneys with trained clerks or paralegals to do all of the necessary tasks that will help grow the firm. In fact, employment statistics suggest the average firm in the United States has only 3 employees.

On top of that, most of these professionals must spend a sizable amount of time managing, storing, or updating minute book records and corporate documents. All of that work is necessary, but it does little to directly influence Legal Recurring Revenue for the firm.

Time is a luxury that law firms have little to spare

Given the fact that only a handful of professionals work in an average firm, time really is the great enemy for scalable ROI. There are only so many working hours in a day that can be used to prospect for new business, undergo introductory meetings with new clients, and arrange to review cases in greater detail.

All of those business acquisition tasks are compounded by the amount of time that’s necessary to properly manage minute books and corporate records. Due to each of these tasks and other priorities for legal professionals, the average legal professional bills clients just 2.5 hours out of an 8 hour working day.

When you break it down, it means only 31 percent of a working day is considered billable to boost Legal Recurring Revenue. That means 69 percent of any day in a firm is being spent on non-billable tasks that limit a firm’s potential for growth and prosperity.

Financial and labor costs of minute book recordkeeping

Before you can really take account of how much minute book recordkeeping can stretch your resources thin, it helps to break down the actual costs in crisp and clear terms. As they say, numbers don’t lie.

Let’s say your firm still keeps physical records of all minute book documents on location at the office. First of all, this is an expensive way to operate in 2022 since it costs firms up to $2,000 to store one single 5 drawer filing cabinet at the office. More importantly, physical documents are difficult to store and very time consuming to maintain.

With a limited number of clerks or paralegals in the office, it’s an inefficient use of time to physically review, store, or update records page by page. Companies spend up to $350 per record to file or source individual documents as well as reproduce any files that might be lost. That’s just the direct financial burden; it takes up to 5 minutes to scan, tag, and file individual documents within a corporate record. That’s 5 minutes for every file in each client minute book.

Implement innovative and efficient solutions to cut costs

So how do you reduce the number of non-billable daily hours so that you can grow the amount of time that can be billed towards clients? One of the best ways to do that is to reduce the amount of time and human resources devoted to minute book recordkeeping.

Technology has come a long way, and new breakthroughs provide law firms with cloud-based entity management platforms to digitize their minute book recordkeeping processes. Not only is this a faster and more efficient way to manage client minute books, but it also follows the trends that are shaping the industry.

In the 2020 Legal Trends Report, 89 percent of participating legal professionals cited technology as a resource to improve how legal firms operate. In the following year’s report, 79 percent of participating clients said they want the option to work remotely with their lawyers while still having the ability to access their minute books and corporate records.

Cloud-based entity management solutions offer that freedom and flexibility on both sides of the legal relationship. Firms can easily upload files into their platforms with speed and convenience, taking a significant chunk out of the time spent on recordkeeping. It also provides clients with the ability to do as they please and access records from a convenient location of their choosing.

Growth and ROI are important for any firm (any business, for that matter), and there are ways to increase opportunities to achieve those goals. All it takes is a little innovative spirit and an embrace of modern technology to help revolutionize the way your firm gets things done.

Is your firm ready to generate more ROI? Join the MinuteBox revolution so that you can modernize your minute book recordkeeping processes with cloud-based solutions that will cut costs, save valuable working capital, and help you reinvest those time savings into more billable hours charged to clients.

Lawyers can be disciplined by the Law Society for the “Dishonesty, Fraud etc” of their clients. And so, for the sake of themselves and their clients, a lawyer must always be vigilant against fraud in transactions.

• Rule 3.2-7 of the Law Society’s Rules of Professional Conduct states,

A lawyer shall not,

(A) knowingly assist in or encourage any dishonesty, fraud, crime, or illegal conduct;

(B) do or omit to do anything that the lawyer ought to know assists in, encourages or facilitates any dishonesty, fraud, crime, or illegal conduct by a client or any other person; or

(C) advise a client or any other person on how to violate the law and avoid punishment:

The Law Society’s Commentary to this rule further states that “a lawyer should also be on guard against becoming a tool or dupe of an unscrupulous client or persons associated with such a client or any other person”.

The Law Society has outlined several “red flags” that lawyers should be aware of in light of these rules and they are especially relevant for lawyers engaging in services including:

(A) establishing, purchasing or selling business entities;
(B) arranging financing for the purchase or sale or operation of business entities
(C) arranging financing for the purchase or sale of business assets; and
(D) purchasing and selling real estate

Each of the above transactions will (and ought to) require a review of the corporate minute books or corporate record books of the entities involved. Such a review will be necessary not only for the purposes of properly identifying the client and entities forming part of the transaction, but also to ensure the mechanisms of the transactions are carried out appropriately.

The Law Society advises that “Lawyers should be vigilant in identifying “red flags” in their areas of practice and make inquiries to determine whether the proposed retainer relates to a _bona fide _transaction.” To that end, the Law Society has established a list of practice tips for recognizing fraud in real estate transactions. For example, when dealing with corporations, the practice tips advise looking out for:

(A) situations where the original minute books for the company are not available or incomplete; and
(B) the minute books contain irregularities such as the lack of the “pink-stamped” articles of incorporation. (It is important to note that “pink-stamped” articles are now less common in any event due to the advent of online incorporations.)

Lawyer should also be aware that filings with the Ontario government under the Corporations Information Act can be made on behalf of a corporation easily and without proper identification. This may allow a fraudster to easily change the names of the corporation’s officers and directors or even the corporations registered address. The lawyer should be mindful of minute books that show recent changes to these corporate records.

A properly maintained minute book is an essential step for the diligent lawyer to ensure he or she has lived up to the standard of care directed by the Law Society. An online minute book with a verifiable audit trail and change history log may provide even more piece of mind for all persons involved in a corporate transaction.

Given the methodic progress of large Canadian (law) firms (“LCFs”) in adapting to ever increasing client demands, it is clear a new approach is necessary in order to fulfill clients’ legal needs at a sustainable price point.

One potential solution is the adoption of the lean startup model, a process coined in 2008 and followed primarily by fast-moving technology startups.

The lean startup model is centered around the three-step feedback loop: 1) build a minimum viable product (“MVP”); 2) measure the results of the product; and 3) learn from the obtained results. The speed at which a company repeatedly drives through the feedback loop often helps address product faults while developing a marketable product.

MVPs are typically crude, likely performing only a fraction of the final product’s functions. An MVP is a great testing ground for gaining information, getting the product into customers’ hands, reducing wasted production hours and creating a base for future products. The idea is to keep developing and modifying the product through constant testing and implementation of user feedback. In other words, have the user tell you what to create, not the other way around.

LCFs pride themselves on being “partners” with their clients, able to provide outstanding legal service derived from a true understanding of clients’ business needs. But the connection between long term clients and LCFs is eroding; clients will go to whoever can offer them practical legal service at an affordable price. The partnership needs to be strengthened.

One answer is for LCFs to leverage the partnerships with clients to develop something mutually beneficial. When LCFs try and develop efficiency systems (new technologies or processes for the delivery of legal services) the process is time consuming and tedious. Products, once developed, tested, and rolled out to clients, are near final. Aside from the cost of development, newly introduced efficiency systems may not address the specific needs of the client because clients are rarely involved in the development process. Clients may not like, want or need an LCF efficiency system. Why not include clients in every stage of development, as they are the ultimate beneficiaries?

This is where the lean startup model and LCFs can mesh. Clients should be brought in to brainstorm and repeatedly test the new efficiency systems from the MVP to the final product. Feedback should be provided to the firm in real time, and modifications to the efficiency system should be implemented based on the client’s feedback. Partnership requires parties to work together to create something of mutual benefit.

The benefits from such a collaborative system are threefold. First, the speed at which LCFs introduce new efficiency systems is increased. Second, LCFs may discover quickly during the feedback loop cycle that what was initially thought to be the solution may actually not be, and the efficiency system can and should be modified, thereby reducing risk and minimizing the chance of failure. Finally, it strengthens the partnership between the client and the firm, not the client and individual lawyers.

Corporate compliance protects legal entities from organizational risks and legal penalties. Compliance programs document internal policies and procedures that ensure your organization maintains rigid compliance with federal or provincial/state laws and regulations. Many entities hire Chief Compliance Officers to enforce these compliance policies and protocols.

Compliance workflows have modernized thanks to advancements in entity management technology. Today’s compliance workflows are more automated than traditional practices, saving corporate entities valuable time through increased efficiencies. Compliance and legal departments are the chief beneficiaries of automated compliance programs.

What is the age of automated compliance?

The age of automated compliance describes how legal entity management technology provides time-saving solutions to traditional compliance workflows. These solutions have completely transformed how business entities develop, implement, and manage compliance programs.

What are the key steps to create a compliance program?

A corporate compliance program is developed using any of the following considerations:

• Documented compliance policies
• Designated compliance officers
• Compliance training procedures
• Whistleblower protection programs
• Monitoring and auditing workflows
• Compliance enforcement protocols
• Investigative compliance procedures
• Non-compliance response mechanisms

The purpose of having these documented steps and procedures is to create a standard for truth and accountability. Compliance officers, legal talent, and general counsel use the corporate compliance program to enforce compliance protocols.

Legal and compliance department heads are responsible for protecting the corporation from risk and non-compliance penalties. A fully documented compliance program ensures compliance is maintained at every level, thereby protecting the business from legal consequences.

How automated compliance is more efficient and effective

To create an effective compliance program, each sequence must be supported by documented evidence. Corporate entities create diligent minute book records that document all written compliance policies and procedures with up-to-date information. These records must then be approved by a senior legal or compliance officer.

Documenting each record has traditionally been a time-consuming process. While necessary to protect the legal security of the business entity, compliance workflows take an abundance of time away from your legal and compliance teams.

The benefit of automated compliance through legal entity management technology is that the documentation process becomes far more streamlined. Instead of manually writing every note, your legal and compliance teams can use compliance frameworks built within entity management platforms.

Simply point and click on select fields within your compliance framework, and you can use the platform’s drag and drop feature to build diligent compliance records in a fraction of the time. The age of automated compliance empowers global organizations to create audit-ready compliance reports within one centralized platform. It protects corporate integrity, reduces organizational risk, and helps save valuable working resources for the business.

Benefits of automated compliance for legal entities

Now that the case has been made for automated compliance in the macro sense, how do automated compliance workflows translate into direct business benefits for your legal entity? Here are four of the biggest advantages that come from using automated compliance workflows.

Run internal audits to test the effectiveness of your compliance program

Audits from federal or provincial/state regulators are serious undertakings. But you can prepare for such an extreme scenario by using your automated compliance solution to run internal audits and ensure compliance is maintained.

Your legal entity management platform includes a built-in compliance framework. This simplified module allows you to check off all the requirements to remain in compliance with the laws. You can run quick and efficient internal audits to test your compliance records and ensure the program is effective. In the event government regulators come knocking, you’re fully prepared.

Comply with corporate safety and security requirements

The safety and well-being of your employees is a vital piece of any compliance program. As a business, you’re responsible for maintaining the privacy and security of personal employee information. Failure to encrypt employee information risks the consequences of non-compliance.

Using automated compliance technology, all employee data is safely protected behind rigorous security measures. Your entity management platform is protected by biometric and hardware key authentication, restricting access to only the select authorized personnel who manage compliance programs. It’s a more effective way to promote employee security and well-being.

Enable all employees to understand the compliance program

Compliance and legal jargon can be very complex and confusing to a layman. While compliance programs are essential to your corporate entity, it’s hard to communicate those facts to employees who don’t fully understand how to interpret compliance reports.

Using automated compliance solutions like entity management technology, you can create detailed yet digestible compliance reports. Employees can refer to the reports and use the records to understand how compliance is enforced throughout the organization. Keep your team fully abreast of compliance protocols so that enforcement is an easier process.

Stay on top of compliance laws and regulations

Finally, it’s important to have a system that makes changes to compliance policies fast, easy, and efficient. That’s because federal and provincial/state regulators can adopt changes to regulatory compliance policies that require your corporation to amend compliance protocols.

Using automated compliance, those changes are quick and easy to make. You can make the lives of your legal and compliance teams much easier with a system that makes changes easy to implement and enforce.

Join the MinuteBox automated compliance revolution

Don’t miss out on a chance to embrace the age of automated compliance. Contact MinuteBox to start transitioning your corporate entity to modern and efficient compliance workflows that maintain corporate security and support your future endeavours.

The role of a corporate secretary has traditionally been an administrative position that handles clerical duties that are accountable to executive leadership. Over the last few years, the responsibilities of a corporate secretary have expanded into a more strategic and advisory position for leadership.

While the responsibilities of a corporate secretary have evolved, the means that those professionals have to complete their duties often remain regressed. As a legal business entity, your institution must help corporate secretaries overcome the limitations placed on their jobs.

What are the duties of a corporate secretary?

In most organizations, a corporate secretary’s duties and responsibilities include any or all of the following examples:

• Documenting minutes of board and executive meetings
• Implementing compliance protocols under relevant ideas
• Reporting share transfers, issuances, dividends, and transactions
• Managing entity and subsidiary corporate data
• Liaising with auditors, bankers, lawyers, and tax authorities
• Administering corporate governance policies across the organization

Within each of those broad duties are a subset of tasks and requirements that must be completed to fulfill a corporate secretary’s responsibilities. They require resources and solutions that allow diligent recordkeeping so that each responsibility is effectively implemented.

Biggest emerging corporate secretary responsibilities

As the roles and responsibilities of corporate secretaries evolve, the function of the position has shifted from primarily an administrative role into a more strategic position. Here are some of the main ways that corporate secretaries support the legal, managerial, and operational functions of the business entity.

Serving as a prime compliance manager for the business

All business entities require compliance programs to operate within the boundaries of jurisdictional laws. Compliance programs refer to internal policies and procedures that protect corporate entities from non-compliance penalties.

The corporate secretary remains up-to-date on changing compliance regulations, standards and laws, which undergo regular amendments across various jurisdictions. As compliance laws change over time, the corporate secretary must amend internal by-laws to remain in compliance with the letters of the new laws.

Functioning as a corporate advisor to the board of directors

The corporate secretary is intricately familiar with the inner dealings of a business entity. Due to their deep involvement with the corporation, they can offer unique perspectives and insights to corporate board members, along with new and existing shareholders.

In their advisory role, the corporate secretary can share updates about internal risk management, compliance, and corporate governance policies. The corporate secretary may even assist with training new board members and shareholders on each of these internal protocols as they join the organization.

Organizing meetings with various key stakeholders

A more traditional responsibility of corporate secretaries is meeting management amongst the chief stakeholders of the corporate entity. The corporate secretaries are often tasked with updating and managing organizational charts for the purpose of contacting leaders responsible for implementing corporate governance in their departments.

What has evolved is the methods used to arrange meetings amongst stakeholders. Advancements in modern technology allow corporate secretaries to schedule more virtual meetings, creating a more efficient workflow when important issues must be discussed.

Documenting meeting notes and minute book records

While minute book management is not a new responsibility for corporate secretaries, the volume and method of maintaining those records has changed in recent years. Large global business entities have multiple subsidiaries under the corporate umbrella operating in various jurisdictions. Corporate secretaries compile and manage minute book records of all entities and subsidiaries to maintain global compliance.

Advancements in legal entity management technology help corporate secretaries streamline minute book management. They can use these solutions to accelerate the necessary minute book management workflows and dedicate more time to their strategic advisory roles for the organization. Having a single source of truth for all minute book data also simplifies reporting and approvals of entity and subsidiary filings.

What are the limitations placed upon corporate secretaries?

Corporate secretaries have several duties and responsibilities to help the business entity function effectively and remain in compliance. However, many corporate secretaries struggle to manage all their responsibilities due to significant limitations that inhibit their workflows.

What are those limitations? Here are three of the most common that business entities would be wise to address to support their corporate secretaries.

Outdated workflows and antiquated processes

Advancements in legal entity management technology have helped many corporate secretaries streamline their administrative responsibilities. But corporations that fail to invest in these solutions significantly inhibit their corporate secretaries, potentially creating gaps in their time management that could hinder corporate performance.

Due to their increasing responsibilities, corporate secretaries can easily become overwhelmed with feelings of stress and performance anxiety. They recognize the need to prioritize strategic duties, but they also understand that administrative work must be completed to maintain compliance with the laws.

Entity management software simplifies the lives of corporate secretaries by automating many of their administrative tasks. Entity management software offers a more time-efficient way to manage minute book data, and it allows for more transparent communication with corporate stakeholders regarding legal entity matters.

Lack of effective tools and working resources

Many corporate workflows and processes have been modernized with advancements in technology. Businesses are often willing and able to invest in new technological solutions to support sales, marketing, or product development needs that help support the growth of the corporate entity.

Unfortunately, some businesses remain stuck in the past regarding their legal matters. Advancements in legal entity management technology enable corporate secretaries and entire legal departments to fulfill their responsibilities to the business in more efficient ways.

When companies look at legal technology investments as a cost rather than an opportunity, they handicap what their corporate secretaries can accomplish. This limits their abilities to rightfully service corporate interests, which can diminish overall growth and performance.

Misalignment between legal and compliance teams

Some corporations have one legal department that is also responsible for compliance matters. In other instances, those two responsibilities are split up between different departments.

When multiple stakeholders are involved in the compliance process, there can be disconnects between the various teams. These disconnects can lead to misunderstandings regarding who is responsible for what tasks. There can also be duplications of important compliance work, creating a highly inefficient process.

The benefit of using entity management software is that the platform maintains a diligent account of who makes updates to compliance protocols. Corporate secretaries can monitor what work has been completed, and by whom within the organization to ensure compliance is maintained without any confusion or misappropriation between different departments.

Join MinuteBox to help your corporate secretaries thrive

Corporate secretaries are essential members of your corporate leadership team. Why treat them as second-class members of the organization when you can empower them to thrive and help your corporation remain safely in compliance with the laws?
Leading business entities choose MinuteBox as their entity management solution to help empower their corporate secretaries. MinuteBox is the only legal entity management solution built by legal professionals for legal professionals with dual security certifications.

Help your corporate secretaries become masters of their fields. Join the MinuteBox revolution today and turn your corporate secretaries into performance champions!