New York, NY – 10 October 2019 – Computershare has revealed a list of the most common reasons that companies are found to fall short of state compliance requirements.
The company’s growing Registered Agent Services division supports companies with statutory representation, annual report filings, and transactional services to help them remain compliant.
It says that its work onboarding new clients, by summarizing their state-by-state compliance footprint, has revealed a clear top five most common causes of non-compliance.
“Companies need to ensure their legal entities are compliant to avoid penalties, business disruption and damage to their reputation,” said Andrew Moore, President of Governance Services at Computershare.
“It’s clear that the responsibilities of corporate secretaries, general counsel, paralegals and other governance professionals are continually increasing in both scope and complexity, which is leading to substantial administrative and regulatory demands.
“As a result, companies are increasingly looking for additional solutions and expertise to help with compliance, lower the administrative burden, reduce risk and improve ease of access to the data and documents they need.
“Computershare is ideally placed to provide that RegTech support to companies that helps clients with becoming and remaining compliant,” Moore added.
Computershare said the most common causes of potential non-compliance among new clients are:
- Missing annual filing deadlines
Although requirements vary from state-to-state, companies across the U.S. are required to submit certain documents and information regarding their legal entities to relevant authorities on a regular basis. Failure to meet these deadlines is the most common reason that legal entities become non-compliant. Checking that a legal entity is in “good standing” should be a regular task for businesses.
- Manual data entry
Manual data entry significantly increases instances of error, which can increase the risk and complexities associated with compliance filings. Input errors typically result from entity data tracked without proper controls, policies and oversight. In many instances the information needed to stay compliant is not clearly collated, but is instead distributed across documents in an unstructured manner.
- Failure to audit and remediate issues at newly-acquired entities
Companies that acquire new entities also inherit legacy systems, and processes — and new risks. Companies who do not undertake a full audit of any new entities may fail to uncover compliance issues, which can lead to accrued penalties or default judgements.
- Non-integrated entity management and service platforms
As companies increasingly look to external providers and systems to help administer complex areas of their businesses, a disjointed approach to procurement of these systems can lead to the use of multiple applications for various tasks. Computershare says that the higher the number of systems in use to manage legal entities, the less likely they are to interact smoothly with each other — and the greater the chances of system problems or errors that lead to time wasted and compliance issues.
- Lack of business knowledge at registered agent
A significant proportion of compliance issues result from a previous registered agent missing obligations. An expert agent should be able to stay on top of changes, filing dates and any relevant rules for all the states in which a business operates. Using an agent who cannot scale to meet large-scale and long-term plans, or who is unable to respond to unexpected needs, can lead to administrative difficulties later down the line.
About Computershare Governance Services (CGS)
Computershare Governance Services offers corporate governance and compliance solutions to help companies transform their business practices and stay ahead of ever-changing market dynamics. As the leading global supplier of web based subsidiary governance solutions, clients rely on our integrated service and technology to address today’s global compliance challenges. Leading companies from all market segments look to our entity management, registered agent services, board governance and regulatory filing solutions to stay compliant and minimize risk in an ever increasing regulatory environment.
CGS is part of Computershare (ASX: CPU), a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications. We also specialise in corporate trust, mortgage, bankruptcy, class action and utility administration and a range of other diversified financial and governance services.
Founded in 1978, Computershare is renowned for its expertise in high integrity data management, high volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the world’s leading organisations use us to streamline and maximise the value of relationships with their investors, employees, creditors and customers.
Computershare is represented in all major financial markets and has over 12,000 employees worldwide.
For more information, visit www.computershare.com