The Global Compliance Calendar – taking control of your annual obligations
The regulations on environmental, social and governance (ESG) become more extensive, good corporate governance in all its’ forms has never been more important. Consequently, for general counsels, company secretaries, corporate compliance and legal teams, delivering a successful global compliance strategy will be front of mind, particularly as we enter a new year of deadlines and evolving requirements.
Determining the most urgent actions can make governance of large multinationals’ subsidiary portfolios a seriously challenging exercise. Alongside business event driven tasks (such as management/officer changes, Power of Attorney activities and Board of Directors/shareholders decision activities), there are numerous annual obligations that need to be completed for each subsidiary and recurring tasks to factor in. Annual obligations include: shareholders‘ approval of financial statements, filing of financial statements with the commercial registries, directors’ approval of financial statements and filing of annual returns.
Based on statistics from Mercator by Citco clients (with entities covering more than 170 jurisdictions), each subsidiary has on average three annual obligations to meet per year. However it is worth noting that in many jurisdictions, significantly more actions are required on average per year. For example, there are 9 average recurring obligations to complete for those operating in Argentina, 9 for those in India, 8 in Egypt, and 10 Spain and 10 in Indonesia. Of course, the exact number of annual obligations will depend on the specific entity type.
Furthermore, the list of annual obligations and their deadlines is dynamic because legal regulation continues to expand globally. For example, legislators in many countries are now implementing new regulations with regards to the disclosure of the Ultimate Beneficial Owner (UBO). Thus, for many entities, a new annual obligation which we call “Review of the UBO file” will now become applicable. For more information on UBO requirements and how to stay on top of compliance read Chris Butler’s article here.
In addition, deadlines can often change due to legislation changes or after major events in a companies’ life-cycle (e.g. the financial year-end changes after a merger). Missing the deadline of corporate annual obligations can result in negative consequences including delays for other filings, incorrect information available for third parties, reputational risk, fines and even initiation of the closure of subsidiaries by the authorities.
Therefore, transparent calendaring and planning are essential now in order to keep control over a global portfolio.
Meeting regulatory complexity head on
Mercator by Citco has the solution for management of overseas subsidiaries in a stable, predictable and consistent way. Our Global Compliance Calendar is a specifically designed, transparent monitoring tool with up to date information on annual corporate compliance obligations.
The list of recurring corporate compliance deadlines (general and exceptions per company) is powered by a rules engine and regularly maintained by our dedicated team. The Global Compliance Calendar is available 24/7 and is located within Mercator by Citco’s proprietary technology – EnticaTM. It provides a schedule for the full year, with the specification of the work to be done and accompanying deadlines, increasing efficiency and visibility across the organization and ensuring that annual obligations do not take corporations by surprise.
This was particularly apparent in 2020 and 2021, when reporting deadlines were significantly adjusted due to COVID-19 pandemic and lockdowns, with many countries announcing that the legal deadlines for the annual obligations had been extended. A practical example of this was provided by The Western Union Corporate Governance team who commented that, “The annual calendar is very helpful. It has been especially useful during the pandemic when due dates may have been extended”.
Mercator by Citco clients also stress that the calendar helps in planning leave as well as providing full visibility on the peak periods in the entities portfolio management. A large telecommunications corporation (Global 2000) engaged Mercator by Citco for subsidiary governance more than 10 years ago and each year, have received an updated, customized compliance calendar. Its representative noted that, “There are, in my view two aspects: ability to plan my work and absences based on the upcoming due dates and secondly, having confidence that things get done as they should”.
The annual compliance calendar is created upfront, and is updated dynamically during the year, showing the status of each annual obligation in a progress report. It provides transparency on which items are critical, which need immediate attention and which items are upcoming. The senior legal specialist of a large pharmaceutical company (Global 2000) shared her experience of using the global compliance calendar, highlighting that, “We received a tailored yearly financial yearly obligations report which we refer to almost daily. The calendar is also very useful and allows us to support local markets as well in working towards obligation deadlines”.
In addition to real-time updates on the status, the information is used strategically to provide analysis for efficiency improvements moving forward. The statistics of the overdue annual obligations also indicate the most problematical affiliates and subsequently specifies where the focus of corporate secretarial team should be for the upcoming year.
The Global Compliance Calendar is combined with our client servicing teams’ ‘white glove’ service model. Our client servicing teams and in-house teams know what is in the pipeline and act in partnership to complete these actions items. Intelligent planning, transparency and efficient processes of the annual corporate compliance obligations are the key ingredients of a successful global compliance strategy.
The Mercator by Citco compliance calendar is a unique and easy to navigate tool, making group-wide entity information 24/7 accessible to all project members and ensures corporate control through transparency.
Director of Citco Mercator, UAB, Head of Client Services, Mercator by Citco