Regulatory pressure is turning up the heat on governance at energy firms
Financial penalties and negative investor sentiment key corporate governance concerns
Energy companies are becoming increasingly concerned about the risk of fines and negative investor sentiment when it comes to overseeing the governance and compliance of their international group structures, according to new research* from Ocorian, the specialist global provider of compliance services to corporates.
Of the companies surveyed: third party service providers were used to manage over half (54%) of the entities in their corporate structures with the rest managing them inhouse, however, concerns about entity management and governance are rising. Around 70% questioned say they are worried about the investor impact which might arise from entity management issues whilst 67% also worry about the risk of fines.
Energy sector needs to be proactive on governance
Ocorian, which supports 15,000-plus corporate entities across its global network, says the increased attention on net zero targets worldwide has led to a growing focus on ESG, particularly with energy companies and is urging them to take a proactive stance.
Key issues to address include establishing a strong framework around global entity compliance, keeping up to date with regulatory changes worldwide and maintaining a lean corporate structure as dormant entities are not only expensive to maintain but also expose companies to unnecessary regulatory risk.
Chris Mayfield, Head of Business Development for Corporate Services (EMEA) at Ocorian said: “Energy companies should develop clear, comprehensive policies around ESG and take a proactive approach to corporate governance if they want to remain competitive and attract future investment. By demonstrating a strong commitment to compliance and reporting regulations, companies can build trust with stakeholders and investors, mitigate regulatory risk and put greater focus into growing their business.”
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 listed and private companies with annual revenues of between £10 million and £1 billion during June 2023. That included 30 working in the energy sector in the UK, Switzerland, Sweden, the Netherlands, Germany, France, Italy and Denmark.
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