How to Manage Entity Documents

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5 min read

In today’s economy, there is an era of ever-increasing air of corporatization. The pace of mergers and acquisitions, corporate reorganizations and divestitures has accelerated as companies try to gain market share in an era of intensifying competition. Each of these transactions involves the change, creation or dissolution of entities new and old alike. Each of these entities is created for a reason, as the goal of corporatization is to isolate risk among a complex of subsidiaries so that when one folds, the rest may remain solvent. To understand this complex of subsidiaries is a daunting task, one that begins with the creation, collation, replication and tracking of all entity documents.

Defining Entity Documents

What are entity documents? Simply put, all entities are reliant on their entity type in determining their specific entity documents. Corporations, Limited Liability Companies (LLCs), Limited Partnerships and General Partnerships all have a specific set of entity documents, which include the following:

  • Certificates of incorporation and by-laws for Corporations.
  • Certificates of formation and limited liability company operating agreements for LLCs.
  • Certificates of limited partnership and partnership agreements for Limited Partnerships.
  • Partnership agreements, statement of operational purpose and/or statement for operational purposes for General Partnerships.

You can see how, with a large company such as Apple, which has made at least 100 recorded acquisitions as of this past year, managing all of these entity documents can be a challenging task. That is not to say that these are all of the acquisitions that have been made, simply the ones that have received enough publicity to be logged into sites that maintain databases containing this kind of information. Each one of the acquisitions noted is also for a company that may have many attached entities of its own.

To further complicate things, other documents may be required that verify the filing of an Entity Identification Number (EIN), potential state tax identification number, stock certificates, various resolutions, and further documents detailing the officers and directors. With multiple documents required for each entity to exist and operate, not to mention other mandatory documents such as regulatory filings, things can get complicated very quickly. How does one begin to manage this many entity documents?

Managing entity documents

The difficulties inherent in tracking this many documents puts decision-makers such as executives in a compromising position if their advisors – namely the general counsel and their legal strategists – do not have immediate access to the most recent entity documents. In the old days, things moved much more slowly, as these documents were not available digitally; largely, as technology has evolved, so have the ways in which – and the speeds at which – business may be conducted. This also allows for documents and filings to be updated much more quickly and on the fly, with the newest version easily separable from the previous one.

What is required is a digital system to track and access these entity documents – often, a central repository. In this way, the key stakeholders have access at any given moment. The most powerful systems will involve a customizable database to fit the needs of any organization, and that, after the initial customization of the database, should be available for further modification pertaining to any changes in the organization itself. That is, the database should be able to be characterized as a reflection of the structure underlying the corporation and its subsidiaries. As previously mentioned, many corporations are restructuring or participating in mergers, acquisitions or dissolutions on a regular basis. Without the ability to easily modify a directory of documents, the system becomes more burden than boon.

Once the structure is established, the system should be rendered in such a fashion where the addition of documents to the database will clarify instead of cluttering. Each entity requires a special touch in its record-keeping, so the initial filing of documents will often be localized to those directly responsible for the upkeep of the entity itself, as opposed to the corporate umbrella of which it is a part.

Each entity will require multiple annual filings, potentially including annual reports, corporate tax returns and domain name renewals – these tasks are occasionally outsourced, but this can become very costly in no time at all given the sheer number of entities some corporations possess. The maintenance tasks that most often involve in-house execution can involve other tasks beyond upkeep, such as multiple filings to impose dissolution of an entity. To accomplish this, it is often necessary to file withdrawal or dissolution notices, file taxes, retire domains and trademarks, and obtain a tax clearance so there is no mistake to be made about the dissolution during the next tax period.

Technology can streamline and simplify the task of managing entity documents. For example, security is a major concern in any entity management system. The most robust systems allow permissions to be assigned so that the right people can view the right documents at the right time. In this way, only personnel with the correct authority can act on documents relevant to their specific job function. Workflows can be established so that compliance and legal tasks are accomplished on time and correctly, avoiding missed deadlines or incorrect filings.

Leverage Blueprint for Entity Management

If you find that your business is laboring under the burden of an ineffective system for entity document management, consider Blueprint OneWorld. Blueprint OneWorld offers a data library to suit the specific needs of your organization. These libraries can be customized to suit the needs of your organization and the business units within your organization to create a personalized document management system. Leveraging technology in this manner will allow legal and compliance teams to meet or outperform expectations by allowing corporate secretaries to access the right information and insights at the right time.

Blueprint OneWorld offers an entity management software package that has evolved alongside its other entity management solutions, philosophically and technologically, for more than three decades. Our technology is used by Fortune 100, FTSE 100 and ASX 50 corporations, as well as fast-growing midlevel corporations across 140 countries. If you are interested in optimizing the output of your legal office and compliance functions in one secure, centralized repository and find yourself interested in Blueprint, please give us a call or send us an email to schedule a demo today.