International entity management is rising up the corporate agenda, with senior legal executives expecting a dramatic increase in their obligations, new research* from Ocorian, the specialist global provider of services to corporates, shows.
Its study of over 100 company secretaries, general counsels and senior tax and corporate lawyers working for listed and private companies with combined revenues of more than £45.8 billion, found nearly one in three (31%) predict a dramatic increase in entity management obligations at their organisation in the next three years.
Another 62% of the senior executives at the firms based mainly in the UK but also working in Switzerland, Sweden, the Netherlands, Germany, France, Italy and Denmark expect a slight increase in entity management obligations.
The research from Ocorian, which supports 15,000-plus blue-chip corporate entities across its global network, found that entity management obligations are already a growing issue. Around 60% of the executives working for FTSE 250 and FTSE 350 firms as well as private companies with revenues of between £10 million and £1 billion say the level of entity management obligations has increased in the past three years and is set to continue in the future.
The executives surveyed, who work in sectors including energy, mining, retail, real estate, transport and manufacturing, manage on average 33 entities in their organisation's corporate structure including joint ventures. Around 15%, however, have more than 51.
Chris Mayfield, Head of Business Development – UK & EMEA at Ocorian, said: "Our research shows that entity management is a major issue for both listed and private companies and is set to become a bigger focus in the next three years as corporate structures and regulation continue to evolve."
The research shows that 69% are concerned about the impact on investors should their entities not meet local compliance obligations, 59% point to fines and penalties, 52% are concerned about loss of credibility within their organisation and 24% underline negative media attention.
When considering a corporate service provider, more than two out of three respondents (68%) say their primary concern is keeping up-to-date with new legislation, while 60% want more visibility and control over their global estate.
Chris Mayfield, Head of Business Development – UK & EMEA at Ocorian, said: "Senior executives recognise the potential for problems with the impact on investors as the biggest concern although the risk of fines and penalties as well as negative media attention and internal repercussions are also potential flashpoints. Corporates need to have expert local support to help them ensure entity management runs smoothly."
Ocorian's study found that whilst less than half (46%) say that fee levels are a decision making factor in taking on a corporate service provider, the growing cost of entity management is seen as the biggest influence on how corporate structures will evolve over the next three years, with 68% highlighting the issue.
Jason Gerlis, Global Head of Corporate Services at Ocorian, said: "Cost is an increasing factor in clients' decision making when selecting between jurisdictions and overall corporate structures are expected to reduce in size as companies look to dissolve unused entities from their estate."
Ocorian provides entity management, fiduciary and corporate administration to thousands of businesses around the world offering a broad range of corporate services to establish, administer and give substance to a wide range of legal structures across sectors including telecommunications, energy, manufacturing, aviation and shipping.
Its company incorporation specialists are commonly involved in the set up and ongoing administration of corporate structures and SPVs for M&A, private equity investment, asset housing, restructures, real estate, international expansion, funds and debt listing purposes.
Ocorian also provides a range of ancillary services including corporate administration, statutory compliance, board meeting support and local resident director services. Its global network means local experts have in-depth knowledge of the regulatory requirements in different jurisdictions ensuring entities comply with all local laws.
*Ocorian commissioned independent research company PureProfile to interview 100 company secretaries, general counsels and senior tax and corporate lawyers working for FTSE 250 or FTSE 350 companies and private companies with annual revenues of between £10 million and £1 billion during June 2023. Senior executives interviewed work in the UK, Switzerland, Sweden, the Netherlands, Germany, France, Italy and Denmark in the energy, mining, retail, real estate, transport and manufacturing sectors and currently use third-party corporate services provider for some or all of their entity management obligations.
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