In this area, Legal Departments have an increasingly important role to play and must adapt to ensure constant compliance with evolving and increasingly complex standards.
Why is good governance so important for Legal Departments?
In an increasingly large and digitalised business world, enterprises like SMEs face new challenges, inherent in organisational, legal or financial constraints, which if not met, can slow down or even alter their proper functioning.
These constraints are largely due to the increasing complexity of standards following a steady slew of corporate governance scandals which led to numerous reforms that demonstrate the need to reconfigure corporate behaviour. Multiple laws have been published to modify the functioning of the Board of Directors or to adapt company law to Community law. At the beginning of the 21st century and particularly after the 2008 global financial crisis, transparency became the founding principle of the notion of corporate governance.
Developing good governance practices is now essential to ensure sustainability and effectiveness that creates value and is adapted to all stakeholders, both internal and external. In addition, it promotes the respect and monitoring of the evolution of legal regulations, internal statutes and ethical principles, thus avoiding any disruption detrimental to the company’s image.
Well mastered, these practices are a tremendous development opportunity for the company, but they can, at first glance, seem to be a real challenge.
Governance challenges for legal directors
The profession of legal director has evolved particularly at the beginning of the 21st century, particularly following the multiplication and complexity of standards in a context of internationalisation of companies and globalisation. In a constantly changing organisation, they also face regulatory and operational requirements that are also constantly evolving. As a result, legal departments play an increasingly important, if not crucial, role in ensuring transparency and compliance.
Legal management of subsidiaries and equity interests
In this context, the legal management of subsidiaries and equity interests is certainly the process that has evolved the most. From now on, in order to carry out these operations, it is imperative to centralise information relating to companies (legal, financial, accounting data), persons (agents, shareholders, third parties, experts), secondary establishments, which leads to the need to have a global view of the company, in order to facilitate the search for information, manage corporate mandates, but above all to analyse the risks incurred by the various departments and subsidiaries of the internationalised company.
In addition, holding structures tend to be increasingly complex and voluminous, and many types of transactions (securities, capital, currencies) must be juggled. Finally, the legal secretariat is in addition to all this workload of information to be processed, bringing its share of tasks ranging from event management to the monitoring of attendance fees, including the publication of notices of meetings and minutes…
Organisation of powers and delegations of signature
Within the groups, the legal directors are also responsible for ensuring the consistency of the delegation of authority chains, which is essential for maintaining a healthy activity in the company in the event of criminal liability in the hierarchy. It is therefore necessary to ensure that the transfer of powers is accompanied by a proper transfer of responsibilities, in order to avoid any break in the delegation chain. Indeed, a break-up could potentially involve the manager and, through him, the company itself.
In addition, these chains of delegations have become increasingly complex since the internationalisation of groups with the development of subsidiaries, and it is also essential for legal directors to guarantee traceability over time to anticipate any disruption that would affect the chain.
This data considerably complicates the task of the legal departments, which need an overview of the delegations of authority within the group in order to facilitate internal control procedures and receive reliable and rapid reporting from the operational teams at all times. This dimension is essential to ensure the company’s sustainability, but the process is becoming more and more tedious.
DiliTrust Governance is designed by people who have worked in corporate legal departments to handle everything you require, including contract management, workflow validating, and archiving of all legal files and data. It offers clear reporting on all of the activities and cases in your corporate legal department. Contact us today to find out how you can get DiliTrust Governance to handle everything your corporate legal department requires.