Automating corporate action templates
Have you automated your organisation's corporate action templates yet? Doing so provides an excellent opportunity to drive efficiency and profitability.
What do I mean by "corporate actions"?
The "corporate action" umbrella term can be used to refer to a very broad range of actions which a company may want to implement. For instance, it can be used to describe the documents relating to:
altering a company's share capital (e.g. allotment of shares, consolidation and sub-division of share capital and capitalisation issues);
transferring assets within a group (whether single assets, business assets and shares in group companies);
returning value to shareholders (such as capital reductions, cash and non-cash distributions and share buy backs);
documenting transactions involving intra-group debt (e.g. executing or novating loan agreements as well as assigning or setting off intra-group debt);
passing routine resolutions (e.g. approving annual accounts, adopting or amending articles of association, changing the company's name, etc.);
documenting appointments and resignations of directors, company secretaries and auditors.
Implementing corporate actions will require the passing of resolutions by the directors of the (group) companies involved in those corporate actions as well as the execution of any documents required to implement that action. For some types of corporate actions, the members of one or more (group) companies involved in implementing a corporate action may also need to pass resolutions.
There are various scenarios in which companies may be implementing corporate actions. For instance, implementing an intra-group reorganisation (involving group companies incorporated in one or multiple jurisdictions) or carrying out regular or one-off actions to effect a variety of company secretarial, entity management or compliance matters.
Client interest in implementing corporate action automation projects has been increasing recently with some clients reassessing the way they work particularly where they are generating vast quantities of documents covering multiple jurisdictions.
Why should we automate our corporate action documents?
Here are some of the reasons why these types of documents benefit hugely from automation.
Ideal automation candidates
Unlike many types of transactional documents, the documents required to implement corporate actions are comparatively shorter, simpler, standard and not generally negotiated. Given these characteristics, corporate action documents are ideal candidates for automation.
Minimising repetitive data insertion
Usually a number of documents are required to implement a corporate action with the same data being included into multiple documents. Automating those documents means this data does not need to be retyped into each document multiple times. Not only is this more efficient but it can help to reduce errors and unintended variations of the same data appearing in different documents.
Automating your corporate action templates also provides opportunities to ensure the correct forms of documents are prepared (e.g. for different types of companies), common mistakes are avoided and the correct content is included to comply with regulatory requirements.
From experience, automating corporate action templates can dramatically reduce the time spent preparing first drafts of documents. Not only does this provide an opportunity to reduce the turnaround time between a request for documents and the documents being prepared but also gives team members more time to focus on the less routine aspects of documentation generation that may require more legal thought or tailored drafting.
How can we ensure our corporate action automation project will be a success?
As with all automation projects, ensuring your templates are up to date and well drafted are key requirements. Here are some other tips that are particularly relevant with respect to these types of documents.
Ensure template compatibility
To enable one or more companies to implement multiple corporate actions, it is vital all relevant templates can be used together and in different combinations. For some types of templates, that will most likely require having skeleton templates into which text related to different corporate actions can be inserted.
Develop an overall vision
Having an overall vision as to what you want to achieve is crucial. Thinking about the documents required to implement each corporate action as the building blocks that can be fitted together flexibly to construct a bespoke structure (covering multiple corporate actions) is a useful way of visualising a corporate action automation project.
Adopt a phased-delivery approach
Articulating your overall project vision, should enable you to implement the overall automation framework at the outset and then to integrate the documents required for particular corporate actions in stages and thereby reducing work in progress. Your first releases should focus on the templates that are most used by your team. Particularly at the outset, you want your team to buy in to the project with enthusiasm and embrace the change in the way they produce documents.
Redraft with automation in mind
Developing an overall vision should also assist in identifying where templates may need to be amended to ensure that they can be generated as sets of cohesive documents. Don't be afraid to redraft your documents. Just because a document is usually structured in a particular way doesn't preclude it being set out differently (but still achieving the desired legal and commercial effects).
Automating your corporate action templates is likely to be a large-scale project but the key is to adopt strategies that ensure the project does not become overwhelming. Automate iteratively and focus on key automation points initially that will deliver significant gains with minimal effort. Don't be afraid to start small while you figure out the approach that works for your templates. Avoid over-automating by asking for information which a user is unlikely to have to hand when completing the questionnaire.
Enable corporate action sequencing flexibility
One challenge to address is how to allow users to select the order in which multiple corporate actions are to be implemented (particularly in documents setting out directors' and members' resolutions). Although, in some cases, there may be a typical order in which corporate actions are to be implemented, the grail should be giving users maximum ordering flexibility while maintaining useability.
Having implemented a number of corporate action projects, I have seen how automating corporate action templates can lead to a high level of ROI. There can be risks. Unless you ensure your templates are in good shape and spend time developing an overall vision, you may end up having to carry out an extensive rework. These risks are manageable though, and implementing the suggestions outlined here should get you on the right path.
Though less tangible, consider the non-financial benefits as well. You can be more responsive to turnaround, and have your team spend less time on the more mundane elements of the overall work.
✔ better client service;
✔ quicker delivery; and
✔ a happier team!