Subsidiary Governance
Most corporate failures or scandals have been because there was a governance failure in a subsidiary and therefore subsidiary governance should be seen as part of risk management by mitigating any risks associated with a subsidiary.
For groups that have overseas subsidiaries this is especially relevant to mitigate risks.
Many governance professionals we have spoken to struggle with where to start with a governance framework therefore we can help in them having a framework which meets their needs as one size does not fit all. We provide a range of services for UK entities and overseas organisations around the world, providing suitable subsidiary governance solutions for groups of any size.
Our experienced team will help you with:
Group structures
Health check
Annual compliance calendar
We can establish what your group structure is and what it looks like by delving into your company records and creating a visual representation. This can also highlight if there are companies or branches that you are not aware of. We can also advise on subsidiary rationalisation with regards to making efficiencies
3-way health check of UK and overseas subsidiaries which involves looking at a company’s statutory records, the in-country company trade register and the electronic records (database or excel) and highlighting gaps or discrepancies and then assist in fixing any issues.
To ensure that all subsidiaries remained in good standing we can prepare a calendar of all corporate governance filing requirements such as annual return filing deadlines and account filing deadlines.
Subsidiary governance framework
Delegated Authorities
Third party provider rationalisation
We can prepare a framework that would include categorising each of your subsidiaries to establish how often the board of directors meet, who should be the directors, what the board’s roles and responsibilities are and the board’s governance requirements.
For an effective governance framework, there should be a delegated authorities policy or schedule in place to ensure that everyone knows what they are able to approve and what needs escalating upwards. This would start with the matters reserved for the board and we would then assist in drafting the delegated authorities downwards, which would involve looking at policies and procedures that have been implemented. To accompany this there should be an authorised signatory schedule of who is authorised to sign on behalf of a company.
We can help with rationalising the number of service providers you use and advise on the best way to manage third parties proving company secretariat support or advise on the best solution to manage the compliance obligation of your overseas entities.
Featured Insights
Insights from headquarters
This paper delves into the strategic role of expatriate placement in shaping subsidiary management control systems within a multinational corporation. Expatriates, employees deployed from the parent company to the subsidiary, play a pivotal role in transferring corporate culture, values, and expertise. Drawing on real-world experiences, this paper explores how expatriates influence various aspects of the subsidiary’s management control system, including policies, procedures, decision-making, communication, and talent development.
The tipping point
Managing a multitude of different types of subsidiaries efficiently is a top priority for organisations aiming to expand their global reach while ensuring control and compliance. What the governance teams need to establish is how many subsidiaries the team can effectively manage without specialised software? There is no one-size-fits-all answer, but there’s a tipping point in subsidiary management around the 50+ entity mark, where manual methods have limitations. The following paragraphs detail the challenges faced when managing many subsidiaries and the solutions that specialised governance software can provide.
Subsidiary Management
Subsidiary governance often takes a backseat in the priorities of many multinational organisations. While the parent company typically receives ample attention and resources, the management of its global subsidiaries is often neglected. In certain cases, local teams are tasked with handling the management and regulatory compliance of these entities, but this approach comes with inherent risks. To ensure proper oversight and effective management, it is essential to involve the central team as a minimum requirement, along with the implementation of an assurance mechanism to instill confidence that matters are being handled and resolved.
