Subsidiary management: how to govern, document and review each entity

Key takeaways

Subsidiary management is the operating discipline that keeps each group entity’s purpose, authority, records and reporting connected. Start by deciding whether an entity is needed for the activity at hand. Then make the people responsible for decisions, statutory work and financial handoffs visible before a deadline or transaction exposes a gap.

• Treat every subsidiary as its own governed company. Group structure does not erase local governance or the effect of local company law. Record ownership, minority interests where they exist, the board and the people with authority to act.
• Set decision rights in writing. A parent request may need subsidiary-board review, and the rules on a board’s ability to consider group interests differ by jurisdiction. Define reserved matters, delegated authority and an escalation route that local directors can use.
• Run records as an event-to-proof process. Give each change an owner, update the source record, check the relevant local requirement, complete the filing or control, and retain the proof and exception history. In the UK, some changes require reporting separately from the annual confirmation statement.
• Connect the entity map to finance. For IFRS-reporting groups, control drives consolidation, while related-party relationships and intercompany transfers require records that the local finance team and the group close can reconcile.
• Keep people and work-product records alongside the entity record. Contract labels do not settle the actual working relationship, and a contractor’s rights in commissioned work may need a written ownership agreement under the applicable law.
• Review each entity’s continuing purpose. Before restructuring or closure, map people, creditors, assets, records and business-critical knowledge, then check the local route and preserve the supporting evidence.

What subsidiary management covers

Subsidiary management covers the practical work of keeping a group’s legal entities governable: knowing why each one exists, who can decide for it, which records it must maintain and how its information reaches the group. Each company in a group has its own governance structure. Cross-border groups must account for different company-law regimes.

Subsidiary, parent and group control

A subsidiary is a legal entity distinct from the company that formed or acquired it. That distinction matters in daily operations: an entity needs its own record of ownership, directors, authority and obligations even when the group sets a common direction.

Where a subsidiary has minority shareholders, the entity register should show who owns what and which rights attach to that ownership. Those interests can change the governance analysis. A group map that stops at legal names cannot answer who should review a decision, receive a report or approve a change.

Keep the terms separate when you use them:

• Parent company: the company above a subsidiary in the ownership structure.
• Subsidiary: the distinct legal entity being formed, acquired or operated within that structure.
• Group control: the arrangements through which the group receives information, sets boundaries and oversees risk. The applicable ownership, governance and accounting tests can differ, so record the relevant one for the decision in front of you.

The UK offers a useful contrast for formation decisions: a branch is an office of an overseas company and has no separate legal personality. A subsidiary is a separate entity. Other jurisdictions require their own formation analysis.

Management versus governance

Management runs the entity’s work: maintaining records, preparing reports, administering contracts and carrying out approved actions. Governance decides who has authority, which matters require approval, what information the board needs and how conflicts or exceptions move upward.

The distinction becomes visible when a routine action reaches a boundary. Local management may prepare a proposal and complete the approved work. The subsidiary board or another designated authority reviews the matter when it falls within its remit, and the group receives the information it needs for oversight. The exact route depends on local articles, reserved matters and director duties.

This separation keeps a group from treating a parent instruction as a substitute for local decision-making. It also gives finance, legal and operations teams a clear place to take questions: management owns execution; governance owns authority, challenge and escalation.

When a subsidiary is the right structure

A subsidiary is the right structure when a defined operating need justifies a separate legal entity and the group is ready to carry its ongoing duties. Test the activity, the available local structures and the ownership model before formation, then assign the people who will maintain the entity. Headcount, revenue and country count alone do not settle the choice.

Reasons to form or acquire an entity

Groups form or acquire subsidiaries for different operating reasons. OECD comparative work identifies organic market expansion, acquisition, internal services and financing needs among the ways group structures arise. Each reason may justify examining an entity; none proves that a new subsidiary is automatically required.

Write down the specific job the entity must do. For example, an acquired company may need to continue operating as a distinct entity while its ownership and governance are integrated into the group. A growth plan may instead point to an activity that needs a local structure. The later management design should trace back to that purpose, so the group can tell whether the entity still earns its place.

Subsidiary, branch and other operating arrangements

Start by comparing the legal arrangements available in the relevant jurisdiction. In the UK, a subsidiary is separate from the existing company, while a branch is an office of an overseas company and is not a separate legal entity. A subsidiary may be newly formed or acquired.

A joint venture is another arrangement to examine where it fits the commercial relationship. UK guidance notes that it may take the form of a company, a partnership or a contractual arrangement. The available routes and their consequences need local review.

The choice changes the management work that follows. A separate entity needs its own governance, records and local obligations. A branch or another arrangement may create a different set of responsibilities. Treat the structure decision as the first entry in the entity register, with the legal basis and responsible local adviser recorded alongside it.

Questions to settle before formation

Before forming or acquiring an entity, settle the questions that define its operating case:

1. What activity requires this structure? Describe the local activity, the expected duration and the reason a separate entity is being considered.
2. Which local arrangements are available? Confirm the lawful options for the jurisdiction. A structure used in another market needs a fresh local check.
3. Who will own and govern the entity? Record the proposed shareholders, directors, board authority and any minority interests that change the decision rights.
4. Who will maintain its obligations and records? Name an owner for registrations, accounts, corporate records and group reporting before the entity begins operating.
5. What recurring work and cost will it create? UK guidance identifies initial registration plus ongoing legal, registration and accounting costs for a subsidiary. Obtain the relevant local view before committing elsewhere.

Local counsel and tax, worker-status and director-duty specialists should test the jurisdiction-specific points. That review makes the operating decision usable when the entity must register, contract, report and later be reviewed.

Who decides what across the group

Group governance works when the parent, the subsidiary board and local management have different, documented roles. The parent needs enough information to oversee group objectives and risk. The subsidiary still has its own governance structure, and the law may give its board duties that a group instruction cannot override. Build the route before a sensitive approval reaches someone’s inbox.

Parent shareholder and subsidiary board

The parent shareholder sets the ownership framework and the group’s broad direction. The subsidiary board governs the company itself: it reviews matters within its authority, exercises the judgement required of it and records the decision. Local management prepares work, acts within delegated authority and reports back.

That division is especially important when a subsidiary has minority shareholders. The OECD’s 2023 corporate-governance benchmark, aimed mainly at listed companies, frames a board member’s loyalty around the company and all its shareholders, including minority shareholders. Local law determines how that principle applies in a particular entity, so treat the benchmark as a prompt to check the local position.

The parent board also needs a reliable line of sight into subsidiary activity. The OECD benchmark calls for a publicly traded parent board to have key subsidiary information for managing group risk and objectives. Give that requirement a practical form: define what each entity reports, who receives it, when it is reviewed and what requires escalation.

Reserved matters and local authority

Reserved matters distinguish decisions that require a higher approval from decisions local management can make. The list should follow the entity’s articles, shareholder rights and local requirements. The resulting decision map should fit the entity and its jurisdiction.

For each matter, record four things: who proposes it, who reviews or approves it, who carries it out and where a disagreement goes. A historical Indian financial-services example described the value of mapping board and committee reporting, proposal approvals and delegated responsibility. The example illustrates the value of naming the owner of each handoff. Check current local rules before using that arrangement.

The authority flow below offers an adaptable sequence. Route a parent request or reserved matter to local board review, pass an approved action to local management and escalate a conflict through the agreed route. Local articles, director duties and reserved rights determine the actual approvals.

Director duties, conflicts and escalation

A parent instruction may still require subsidiary-board review. Laws differ on whether, and when, a subsidiary board may take the group’s interest into account. Where a request creates a conflict, the board needs a route to obtain the relevant local advice, document the issue and escalate it to the appropriate group owner.

Make escalation usable in ordinary work. The register for each entity should identify the directors, delegated managers, local advisers and group contacts. It should also state where a director can raise a conflict, what information the reviewer needs and how the final decision is recorded. Accurate, relevant and timely information is a useful test for whether this route will work when needed.

Board composition, training and succession

Board composition is a governance control, not a name on an organisation chart. The OECD benchmark calls for boards to exercise objective judgement independent of management and to have suitable composition and structure. It does not prescribe one board model for every private or cross-border group.

For each subsidiary, keep a current view of who sits on the board, which local responsibilities they hold, which group role they also occupy and where a conflict might arise. Give new directors a short briefing on the entity’s purpose, authority limits, reporting line and escalation route. Review the record when a director changes, when the entity’s activity changes or when the group acquires a new company.

Succession deserves the same treatment. Identify who can take over a director’s statutory or governance role, who updates the corporate record and how the group preserves the decision history. That preparation prevents a board vacancy or an unrecorded delegation from becoming an operational stop.

How to keep obligations and records current

A repeatable response to change keeps entity records current. Give each entity a local obligation map, assign an owner to every event and retain the evidence of what happened. The deadlines and filing routes differ by jurisdiction, but the control design remains useful: identify the change, update the record, review the requirement, complete the action and keep proof.

Map each entity and its local obligations

Create one working record for each legal entity. It should identify the entity’s purpose, jurisdiction, shareholders, directors, local advisers, reporting line, recurring reviews and the person accountable for each obligation. Keep the local source for each duty with the record, so a new owner can see both the task and its basis.

Separate recurring reviews from event-driven work. For a UK limited company, the confirmation-statement process requires a review of records and at least one filing every 12 months. Other company changes may need reporting before that annual cycle. That example illustrates why a static annual calendar is not enough.

Track changes from event to filed proof

Treat a director, ownership or other entity change as a workflow with a visible owner. Connect the underlying event to an updated source record, the relevant review, any filing or control, and retained proof. The diagram maps that handoff.

For a UK person-with-significant-control change, the company must identify and confirm the person, then update Companies House within the stated 14-day period after confirmation. The exact trigger and deadline are specific to that regime. Your entity map should hold the equivalent local rule, the responsible person and the location of the final proof for every jurisdiction where the group operates.

Avoid leaving the process inside one team’s inbox. A local company-secretary or legal owner may update the source record; a board or group contact may need to review the effect on authority or reporting. Record the handoff and the completion date so the group can distinguish an open exception from a finished obligation.

Keep board, ownership and authority records usable

A record is usable when the person handling a decision can find the current answer without rebuilding it from emails. Keep the board list, shareholder information, delegation of authority, reserved matters, resolutions and filed confirmations in a place with clear ownership and version history.

Use one source record for each fact and link related documents to it. If a director changes, update the director record and check the authority map, board approvals and local filing requirements. If ownership changes, update the ownership record and review the people-with-significant-control analysis where it applies. This avoids a register that is technically populated but operationally stale.

The UK PSC register shows the standard to aim for in a current-record control: it must not simply be blank. A useful group register makes unknowns and pending confirmation visible, assigns them to a named owner and records the deadline for resolution.

Review exceptions and audit the record

Review the record on two clocks: the local statutory cycle and the group’s own control cycle. The local cycle confirms that required filings and updates are complete. The group cycle tests whether ownership, directors, authority, source documents and proof still agree with one another.

Keep an exception log for missing information, overdue actions, unresolved ownership questions and departures from the normal workflow. Each entry needs an owner, a next review date and a decision or closure record. That makes the audit trail useful to the people correcting the issue as well as to the people checking the group’s records later.

When an exception touches a change in control, board authority or a local deadline, escalate it through the route set for that entity. The value of the record lies in this connection between a current fact, a responsible person and a documented response.

How subsidiary finance connects to group reporting

Subsidiary finance connects local books, entity facts and intercompany records to the group close. The handoff starts with a current entity map: finance needs to know which company made a commitment, which party sits on the other side and who can explain the supporting records. The applicable accounting framework and local rules determine the treatment, so make that scope visible from the start.

Local accounts and the group close

Give each entity a named local finance owner and a named group recipient for the close. They need an agreed timetable, a record of open questions and access to the corporate facts that affect the accounts: ownership changes, board approvals, authority changes and material related-party activity.

For groups that report under IFRS, consolidated financial statements present the parent and subsidiaries as a single economic entity. Finance teams still need to trace the group position back to entity-level accounts and supporting documents.

A practical close handoff should state what the entity sends, when it sends it, who reviews it and how unresolved items are escalated. Every group adjustment or intercompany balance should have an owner who can explain the local transaction.

Control, consolidation and intercompany records

Under IFRS 10, control is the basis for consolidation, subject to an investment-entity exception. Determine whether that framework applies to your group before treating it as the answer for every entity. Once it does apply, finance needs a control map that agrees with the ownership and governance records maintained elsewhere in the group.

IAS 24 identifies parent, subsidiary and fellow subsidiary relationships in specified circumstances. It defines related-party transactions broadly enough to include transfers of resources, services or obligations even when no charge is made. Keep a record of the relationship, the transaction, the supporting agreement or approval, the relevant balance and the local finance owner.

That record should join up with the entity register. A change in ownership or control may change the finance analysis; a new intercompany arrangement may need a fresh related-party review. When the same fact appears in the legal and finance records, give both teams a route to reconcile it and resolve conflicting versions.

Payments to the parent and tax review

There is no universal route for a subsidiary to transfer value to a parent company. The lawful options and their treatment depend on the entity, jurisdiction, governing documents, local corporate rules and tax position. Obtain local advice before choosing a route or assuming that an arrangement used elsewhere in the group applies here.

Management or service charges need evidence of what the group entity received. HMRC guidance treats significant management or service fees paid to UK group affiliates as a reason to consider whether the services add commercial value and whether the charge is at arm’s length. The UK tax risk screen calls for a review of the actual services and charge; local rules govern elsewhere.

For each arrangement, retain the agreement, approval, service evidence, calculation, accounting treatment and the people responsible for the local and group review. The record gives finance a basis for the close and gives the board a clear view of what the entity has committed to.

Who is responsible for people and work results

The entity record should also show who directs the work, holds the agreement and owns the resulting work product. Map those relationships for local employees and contractors separately. The legal consequences depend on the facts and the applicable jurisdiction; forming a subsidiary does not settle them by itself.

Directors and local employees

Directors govern the company and carry the authority set by local law and the entity’s documents. Local managers run the work assigned to them. Keep those roles distinct in the entity record, especially when one person holds a group role and a local role at the same time.

Do not infer a statutory role from a job title. A UK private limited company must have at least one director, but the cited UK formation rules do not require a separate CEO position. Other jurisdictions set their own requirements. Record the named director, the person responsible for day-to-day management and the route for escalating a people or work-product issue.

For UK copyright, work created by an employee in the course of employment generally belongs first to the employer, subject to a contrary agreement. That rule is a UK example. The group should still retain the relevant employment agreement, role information and work-product record so the ownership position can be checked when needed.

Contractors working through or alongside a subsidiary

Contractors may support the same local activity as employees, but they need their own relationship map. Record which entity engages them, who directs the work, who approves deliverables, where the agreement sits and which team holds the supporting documents. This makes the relationship visible when a project changes hands, the entity is reviewed or a work-product question arises.

ILO Recommendation 198 directs national policy to examine the facts of work and remuneration even when the contractual description suggests a different relationship. The UK employment-rights example reaches the same practical starting point: the reality of the working relationship can override its label, with factors including control, personal service and integration. Neither source creates a universal classification test.

When a contractor works alongside a subsidiary, check the actual arrangement with the relevant local adviser. The entity register can flag the question, but it cannot decide status by itself.

Status, contracts and work-product records

Use a working record that links each person to the correct entity, agreement, manager, work description and work-product documentation. Keep the facts that may matter to status review with the relationship record. A signed contract alone leaves out the working facts.

For commissioned work, ownership needs a separate check. UK copyright guidance states that the creator is generally the first owner unless ownership is agreed in writing, and a licence to use the work may be narrower than ownership. That is a UK rule and should not be projected onto another jurisdiction.

For every material work product, retain the agreement, the ownership or licence terms, the relevant approval and the location of the final record. Assign one owner to maintain that chain when a person leaves, a contractor changes entity or the group restructures. Clear records give a later status or rights review the underlying agreement, approvals and work history.

Which controls to standardize and which to adapt

Standardize the control objective across the group, then adapt the local procedure to the entity and jurisdiction. Every entity needs current information, a clear authority route and a way to surface an exception. The policy, record, deadline and approver that satisfy those objectives may differ locally.

Common policies and local exceptions

Use group-wide baselines for the controls that need a common answer: who owns the entity record, how authority is documented, what information reaches the group and how an exception is escalated. The OECD governance benchmark says group compliance programmes should extend to subsidiaries and, where possible, third parties. It is a benchmark, not a ready-made policy set for every company.

Local procedures need room for company law, the entity’s articles, ownership structure and local filing requirements. A group policy should therefore identify the required outcome and the evidence to retain, while the entity record names the local owner, adviser, deadline and approval route. An exception is useful information when it shows that a local rule needs a different process; it becomes a control failure when nobody owns the decision.

Information paths between the parent and subsidiaries

The parent needs information that is accurate, relevant and timely enough to oversee group objectives and risk. Put that standard into a reporting map: list the recurring information each subsidiary sends, the events that require immediate escalation, the recipient at group level and the source record behind the report.

Information should also move between subsidiaries when they share an operating dependency. That may include a common service, a group policy, a related-party arrangement or a change in a shared approval route. Send the current information to the people affected by a decision.

It’s not just about establishing connections between the group and its subsidiaries, but also facilitating communication among subsidiaries or those within the same industry.

— Angel Sze, FCG HKFCG, Company Secretary, Fosun International Ltd

Angel Sze’s 2023 practitioner view reinforces the value of peer communication. It does not establish a universal governance outcome, so define peer routes around the group’s actual dependencies and review them when those dependencies change.

Risk review, training and remediation

Use periodic review to test whether group controls still match the entity’s activity. Compare the entity record with the board list, authority map, reporting route and local obligations. Look for unassigned actions, outdated approvers, missing proof and information that reaches the group too late to support a decision.

Training should explain the entity’s own authority and escalation route to directors, local management and the group contacts who rely on their reporting. Focus the briefing on the decisions those people actually make: what they may approve, what they must record and when they need local input or group escalation.

When a review finds a gap, assign a named owner, the corrective action and a follow-up date. Retain the original exception, the decision taken and the evidence of completion. The control record then retains the remediation after the next reporting cycle.

When to use software or a specialist provider

Choose the operating model after you understand the work it must control. A spreadsheet, shared system or specialist provider can all support subsidiary management when the ownership, records and escalation routes are clear. The test is whether the chosen approach gives the board and group accurate, relevant and timely information for the decisions they need to make.

Start with the existing workload and failure points

Map the work before selecting a tool or provider. List the entities, record types, recurring obligations, event-driven changes, people who update information and people who rely on it. Then identify where the current process breaks: an owner cannot see a deadline, two teams maintain different records, a local change never reaches group finance or a board decision has no retrievable proof.

Treat those failures as requirements. If the problem is missing ownership, assigning a named owner may resolve it before a system change. If the problem is inconsistent records across entities, define the source record and review route first. Agree the authority model before relying on technology to carry it.

Compare a register, shared system and external support

A maintained register can fit a portfolio with a limited number of entities, stable owners and a clear review rhythm. Its value depends on disciplined updates, access to source documents and a visible exception log.

A shared system becomes worth evaluating when several teams need current information from the same record, when approval and reporting handoffs cross entities or when history and permissions need stronger structure. Test whether it can represent the group’s actual entities, local obligations, authority routes and evidence locations. A generic template may miss those distinctions.

External support can add local expertise or administrative capacity. Define its remit before engaging it: which records it maintains, which deadlines it monitors, what it reports to the group and which decisions remain with the board or internal owners. The group remains responsible for knowing whether the information it receives is current and usable.

Test permissions, history, handoffs and cost

Test a proposed approach with a real change, such as a director appointment, ownership update or new intercompany arrangement. Follow the change from the person who records it to the people who must review it, act on it and retain the proof. This reveals whether the handoffs work across local and group teams.

Check four practical areas:

• Permissions: Can each person see and update only the records appropriate to their role while the board and group contacts can obtain the information they need?
• History: Does the record show what changed, who made the change, when it was reviewed and where the evidence sits?
• Handoffs: Can a local owner, group finance contact, board member and adviser pass a question without recreating the same facts in separate places?
• Cost and ownership: Who pays for the approach, who administers it, what local support is included and what work remains with the entity and group teams?

Make the decision against the group’s own workload, control needs and handoff cost. Revisit it when the portfolio changes, because the operating model that fits a small, stable group may no longer give decision-makers the information they need.

When to keep, restructure or close an entity

Review every entity against its current purpose, activity and dependencies. Keep an entity when it still has a defined operating role and a workable control model. If that role has changed or ended, separate the business decision from the local eligibility and dependency checks needed before restructuring or closure.

Review purpose, activity and dependencies

Start with the reason the entity exists today. Compare its current activity with the purpose recorded at formation or acquisition, then ask whether the group still needs that legal structure. A dormant entity, an entity whose activity moved elsewhere and an entity supporting an active local operation call for different decisions.

Map the dependencies before deciding on the route. Include directors, employees and contractors, creditors, assets, accounts, contracts, corporate records, intercompany arrangements and business-critical knowledge. The decision gate below distinguishes the choice to keep an entity from the work needed if its purpose has ended.

Set the next review date for an entity that remains in the portfolio. The record should state its purpose, the owner of that purpose, material dependencies and the condition that would trigger a new review. A later restructuring decision can then be traced to the entity’s actual activity.

Plan obligations, people and knowledge transfer

Plan the transition before the formal exit step. Identify the people affected, outstanding obligations, assets, records and the entity that will own each item afterward. Assign owners for notices, contract review, account closure, corporate records and the transfer of knowledge needed to continue the work.

Knowledge needs its own plan. A 2023 longitudinal study of one Irish ICT subsidiary closure and relocation found that anger and distrust around the announcement disrupted cooperation and knowledge transfer. The single case supports a limited planning lesson: identify critical knowledge holders early, agree what must be handed over and retain the supporting records.

The plan should record who receives each dependency, when the handoff is reviewed and what evidence closes it. A completed legal step cannot substitute for an unresolved contract, missing record or knowledge gap.

Confirm the local exit route and preserve proof

Confirm the local legal route after the dependency review, with advice appropriate to the entity and jurisdiction. In the UK, voluntary strike-off may suit a dormant or non-trading company, but it is not an alternative to formal insolvency proceedings. Other jurisdictions have their own eligibility tests, notifications and obligations.

UK guidance also requires a company to close down legally and address affected people, business assets and accounts before applying for strike-off. It says that affected members, creditors and employees must receive a copy of the application within seven days. These are UK requirements, not a global closure timetable.

Retain the board decision, local advice, notices, proof of actions taken, final records and any remaining exception log. The portfolio record should show the entity’s final status and where its retained evidence sits. That gives the group a defensible history of the decision and avoids treating closure as the deletion of a name from a register.

Frequently asked questions

Does a subsidiary have to be wholly owned?

No. A subsidiary may have minority shareholders, and their presence changes the governance analysis. Record the ownership split, the rights attached to each holding and the approval route that follows from the entity’s documents and local law. Do not treat a parent instruction as the only governance input when other shareholders have relevant rights.

Does a subsidiary need its own CEO?

That depends on the jurisdiction and the entity’s operating model. In the UK, a private limited company must have at least one director, but the cited formation rules do not require a separate CEO position. Check the local statutory roles first, then decide how the group will assign day-to-day management and escalation responsibilities.

What are the main disadvantages of a subsidiary?

A subsidiary creates a separate legal entity that requires ongoing attention to governance, records and local obligations. UK guidance identifies initial registration plus continuing legal, registration and accounting costs. Cross-border groups also face differing company-law regimes, so the group needs a local ownership and reporting model for each entity.

The practical disadvantage is the work required to keep those responsibilities current. Before formation, define the operating reason, name the people who will maintain the entity and review whether the structure still serves its purpose as the group changes.

How does a subsidiary pay its parent company?

The lawful route and its tax treatment depend on the entity, jurisdiction, governing documents and the facts of the arrangement. Do not assume that a route used in one group company applies elsewhere. Seek local advice before acting.

For IFRS-reporting groups, IAS 24 treats relevant transfers of resources, services or obligations as related-party transactions even when no charge is made, and may require disclosure of transactions and outstanding balances. If a UK subsidiary pays significant management or service fees to a group affiliate, HMRC guidance calls for checking whether the services add commercial value and whether the charges are at arm’s length. Keep the agreement, approval, service evidence and accounting record together.

What is the difference between subsidiary management and governance?

Subsidiary management runs the entity’s operating work: maintaining records, preparing reports, administering agreements and carrying out approved actions. Governance sets the authority for that work: who decides, what requires approval, what reaches the board and how conflicts or exceptions are escalated.

They meet at each material decision. Management prepares the information and executes an approved action; governance supplies the decision route, challenge and record of authority. A group needs both to keep local activity connected to oversight.

A workable subsidiary management plan

A workable plan gives every entity a current purpose, a named authority route and records that connect local action to group oversight. It does not assume that one company’s process or one jurisdiction’s rule will govern the entire portfolio. Start with a clear group standard, then document the local owner, requirement and evidence for each entity.

Use this operating cycle:

1. Define the entity’s purpose. Record why it exists, the activity it supports, its ownership and the condition that will trigger the next review.
2. Set authority before decisions arise. Map the parent shareholder, subsidiary board, local management, reserved matters and escalation route. Local law and the entity’s own documents determine the actual decision rights.
3. Turn changes into retained proof. For each event, name the owner, update the source record, check the applicable requirement, complete the filing or control and preserve the evidence. This is a control design that each jurisdiction must adapt to its own rules.
4. Connect entity facts to finance and people. Give the local and group teams a shared route for ownership changes, intercompany records, workforce relationships and work-product documentation. For IFRS-reporting groups, keep the control and related-party records aligned with the group close.
5. Review the portfolio, not just individual deadlines. Reassess purpose, activity and dependencies. If an entity is no longer needed, identify people, liabilities, assets, records and knowledge before choosing a local restructuring or exit route.

The board needs access to the current entity record, its responsible owner and the evidence behind each completed action. Local directors and advisers must apply the relevant jurisdiction’s rules.

Sources

• Setting up and registering a business in the UK — UK Government
• The governance of company groups — OECD-hosted comparative working paper
• G20/OECD Principles of Corporate Governance 2023: company groups — OECD
• G20/OECD Principles of Corporate Governance 2023: board responsibilities — OECD
• Interview with a company secretary specialist — Hong Kong Chartered Governance Institute
• Confirmation statement — GOV.UK
• People with significant control guidance — Companies House
• IFRS 10: Consolidated Financial Statements — IFRS Foundation
• IAS 24: Related Party Disclosures — IFRS Foundation
• Management and service fees — HMRC
• Employment Relationship Recommendation, 2006 (No. 198) — International Labour Organization
• Employment status and rights — GOV.UK
• Ownership of copyright works — UK Intellectual Property Office
• Appoint directors and company secretaries — GOV.UK
• Bridging Hong Kong and Mainland — Hong Kong Chartered Governance Institute
• Striking off and dissolving a company — GOV.UK
• Close down your company — GOV.UK
• Subsidiary closure, employee cooperation and knowledge transfer — Reilly, Tippmann and Sharkey Scott