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Corporates looking to switch service providers for entity management can do so with ease

Corporates looking to switch service providers for entity management can do so with ease

26 October, 2023
Corporate Corporate Administration

International entity management is moving up the corporate agenda as nearly one in three (31%) senior legal executives predict a dramatic increase in entity management obligations at their organisation in the next three years, according to new research* from Ocorian, a global market leader in corporate services. 62% still expected an increase in obligations, but to a lesser extent.

Ocorian, which supports 15,000-plus corporate entities across its global network, questioned 100 company secretaries, general counsels and senior tax and corporate lawyers working for companies with combined revenues of more than £45.8 billion.

Entity management obligations a growing issue for corporates

The research 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.

Those 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.

69% concerned about impact on investors if entity management falls short

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. 

Companies looking to switch can now download Ocorian’s new guide entitled, ‘A complete guide to switching your corporate services provider’, to help them decide when and why to switch - and then how to do it with ease.

Entity management outsourcing is on the rise

When sourcing a corporate services provider, the research reveals that more than two out of five (43%) rely on their law firm or accountants to recommend a specialist third party but around one in five (22%) say they ‘Google it’ while 25% rely on word-of-mouth recommendations and 10% source suppliers via trade fairs.

The study shows they expect major increases in the level of outsourcing across a wide range of services. More than half (51%) expect significant increases in outsourcing of company secretarial services over the next three years while 49% forecast sizeable increases in outsourcing accounting, tax and reporting services, the research found.

Around 36% believe voluntary liquidation services will see dramatic growth while 28% predict strong expansion in directors and substance services. Just 18% believe they will increase their use of outsourcing for incorporation and establishment services.

Problems recruiting in-house staff and the cost of compliance are the most important reasons for increased outsourcing. More than half (51%) rated the issues as among their top two reasons for outsourcing. Around a third (33%) say the growing number of jurisdictions they operate in is a major influence.

Jason Gerlis, Global Head of Corporate Services at Ocorian said: “At Ocorian, we aim to make onboarding as painless as possible, offer a dedicated point of contact from day one and build a team around our clients’ particular needs. Our regulatory experts keep up to date with legislative headwinds so that we can proactively anticipate what to expect and when, what it means for our clients, as well as the steps they need to take to remain compliant” 

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 the establishment of entities complies 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 providers for some or all of their entity management obligations.

Download our complete guide to switching your corporate services provider here: