In the fast-evolving world of multinational corporations, managing a global portfolio of legal entities is becoming increasingly complex. Luxembourg-based Kariem Abdellatif, the head of Mercator, explains how entity management, ranging from subsidiaries to investment vehicles, has become critical for companies navigating the shifting geopolitical and regulatory landscape. Abdellatif offers valuable insight into how businesses can maintain compliance across jurisdictions and ensure corporate governance frameworks remain robust.

Mercator is part of Citco, the global corporate and fund services provider.

Kangkan Halder: Very briefly, what exactly is ‘entity management,’ and how does Mercator assist its clients in this area?

Kariem Abdellatif: Entity Portfolio Management (EPM) is the practice of maintaining a robust governance framework for a company’s global portfolio of entities. In today’s interconnected business world, EPM is critical. Just as a chain’s strength depends on the weakest link, a multinational corporation’s compliance is only as sound as its ‘least-managed’ entity.

In-house teams face rapidly evolving regulations across jurisdictions. Stakeholders need assurance that each entity, regardless of location or activity, is properly managed. A compliance failure in any single entity can have far-reaching consequences, risking fines and reputational damage.

Mercator addresses these challenges with comprehensive solutions, including regulatory compliance, governance support and digital tools through our Entica platform.

Do you believe recent elections and geopolitical changes impact entity management for multinational corporations? If so, how and why?

Yes, elections and geopolitical changes can, and do, significantly, impact entity management. This past year, we’ve seen political shifts have far-reaching implications, rippling through our social, political and business spheres. Multinational corporations increasingly face the challenge of navigating changed regulatory landscapes, adapting to technological advancements and managing unpredictable market conditions.

Against this backdrop, robust corporate governance has become crucial.

Compliance is often challenging, particularly across multiple jurisdictions with evolving regulations. What key lessons has Mercator learned in navigating these challenges?

Drawing on Citco’s over 75 years of experience in assisting multinationals with subsidiary governance, Mercator has gained valuable insights into navigating the challenges of multi-jurisdictional compliance. Our expertise has led us to several key lessons.

Firstly, be proactive. Keeping corporate books up-to-date and in good order across all jurisdictions prevents time-consuming and costly remediation later. Utilise online filings where possible to speed up processes, reduce costs and improve tracking of compliance tasks. Preparing simplified articles of association allows companies to adapt more easily to regulatory changes across different jurisdictions.

Also, standardisation is very helpful. Implementing consistent internal workflows, especially for processes like ultimate beneficial owner reporting, ensures efficiency despite varying regulations.

Lastly, attention to detail matters. Each jurisdiction has unique requirements, from document formatting to signature rules. Overlooking these can lead to rejected filings and compliance issues.

What factors differentiate successful entity management jurisdictions from others?

Successful jurisdictions typically distinguish themselves through three key factors: clear, transparent and stable regulatory frameworks, efficient administrative processes, and robust digital infrastructure. These elements collectively reduce the complexity and cost of compliance, enabling companies to manage their entities more effectively and with confidence.

Mercator produces . How do time and cost scores influence your rankings?

Time and cost are the primary factors influencing our global entity management rankings. We base our rankings on real-life data drawn directly from our Entica platform, which individually records all corporate activities that our clients undertake when managing their entity portfolios.

Each jurisdiction receives scores based on the average time and average cost to complete key corporate secretarial activities. These scores are then used to create an indexed ‘league table’ for entity management efficiency.

What is your forecast for how technology will enhance entity management in the next year? Do you foresee faster cost optimisation or increased efficiency?

Technology will continue to drive both cost optimisation and increased efficiency. We expect further advancements in automation to streamline more complex compliance tasks, while integrated digital platforms will enhance real-time data access and reporting.

By enhancing automation capabilities and system interoperability, it means clients receive more cost-effective entity management. Improved technological infrastructure will lead to seamless data flow and more efficient compliance processes across the board. These principles are something we are actively implementing.

Do you believe technology is also challenging corporate governance? If so, what changes are occurring, and how should companies plan for them?

Technology is both enhancing and challenging corporate governance. While it improves efficiency, it introduces new risks like cybersecurity threats and data breaches. The rapid adoption of digital tools, remote work set ups, and blockchain technologies are changing traditional oversight methods and financial processes.

To address these challenges, companies should be prioritising cybersecurity, ensure data protection compliance and implement comprehensive governance strategies. Regular updates to board members on technological advancements are crucial. Companies should integrate technology risk assessments into their overall risk management and develop policies for ethical use of emerging technologies.

Luxembourg ranks high in entity management turnaround time but lags in overall rankings. What do you think is missing, and how could it improve?

Luxembourg's position as a leading financial hub sees it score high for efficiency. However, multinationals still face unique challenges in this jurisdiction. The complex regulatory environment, coupled with high standards of governance and a specialised workforce, results in higher costs compared to other jurisdictions.

By further leveraging technology and promoting regulatory innovation, Luxembourg can maintain its high standards while potentially reducing operational costs for businesses. This approach could enhance its attractiveness as a global financial centre, balancing excellence with cost-efficiency. Moreover, continued investment in digital infrastructure and regulatory advancements will keep Luxembourg ahead of global trends, attracting businesses looking for an adaptive jurisdiction.