The relationship between subsidiary governance and legal entity rationalisation projects

Strong subsidiary governance is often at the core of successful legal entity rationalisation (LER) projects. The two are closely linked - effective governance can streamline LER efforts, while LER projects can highlight areas where governance needs improving.

At Computershare, we’re committed to helping clients drive efficiency in complex corporate environments. To explore the connection between subsidiary governance and legal entity rationalisation, we hosted a panel discussion at the 2025 CGI Annual Conference in London.

The panel, moderated by Kim Hyun Kyung (Computershare Entity Solutions), brought together Alex Haynes (WPP plc), Cameron Holloway (JC Consulting), and Georgina Milis (Computershare Entity Solutions) to share practical insights on aligning governance structures with organisational goals, managing risks, and improving efficiency. Below are the main takeaways from the session.

The connection between subsidiary governance and LER projects

The role of data in connecting subsidiary governance and LER projects was discussed at length during the panel session. For any legal entity rationalisation process to be successful, accurate legal entity data is fundamental. The importance of data in LER projects can help to cultivate an overall culture of better data management in organisations, encouraging accuracy and alignment across systems. This is good governance that in turn supports processes across the entire business, including regulatory and commercial reporting.

Compliance is also an important factor in linking legal entity rationalisation and subsidiary governance. As stated during the panel session, execution of LER projects fundamentally changes the makeup of an organisation’s corporate structure. Reducing the legal entity footprint and moving trade around the Group changes the demands on subsidiary governance and eases the compliance burden. Removing even a few legal entities can significantly alleviate the compliance requirements of a large Group, in turn making it easier to remain compliant.

Key drivers of effective subsidiary governance and LER initiatives

Various factors underpin successful subsidiary governance and legal entity rationalisation (LER) initiatives. The following five were considered as being key drivers during the session:

Cost management and operational efficiency: Reducing the number of legal entities helps streamline operations and achieve meaningful cost savings.
Simplified corporate structures for greater transparency: With fewer entities, the corporate structure is leaner, offering improved visibility across the organisation.
Reduced risk for boards: Fewer entities mean a greater focus can be given to those that remain. The act of eliminating those that are surplus to requirement also demands a robust due diligence process that roots out and solves any risks or issues.
Continuous governance mindset: By viewing legal entity rationalisation as a “business-as-usual" activity, rather than a one-off project, governance improvements are embedded into the organisation’s culture.
Commercial simplicity: Growing through acquisition often means legacy structures are retained, complicating customer interactions and diluting brand identity. Removing anomalous legal entities helps present a unified face to the market, reducing confusion and reinforcing a consistent brand presence.

When combined, these drivers not only enable more agile and resilient governance but also empower organisations to unlock long-term benefits from their rationalisation initiatives.

Best practices when aligning subsidiary governance frameworks with goals of LER projects

Another key theme of the panel session was best practices for alignment of governance frameworks and rationalisation projects - in particular, the importance of the involvement of the Secretariat to ensure governance frameworks are aligned from the outset.

There was emphasis on involving governance teams early in the LER process to ensure governance requirements are integrated from the start, not added later as an afterthought. Early review of governance frameworks, robust due diligence, and stakeholder sign-off all help mitigate risks. Due to the fast pace of LER projects, active participation from governance decision makers and regular meetings keep projects on track, while engaging key stakeholders across tax, legal, and finance ensures aligned goals and smooth execution.

Technology can also enable effective governance. Digital tools, such as an entity management system, allow organisations to monitor subsidiary governance in real time and maintain a single source of truth for entity data – essential for any successful LER initiative.

Resolving common challenges when integrating governance frameworks with rationalisation efforts

The rationalisation process is not without its challenges, especially if integrating governance frameworks. However, if handled appropriately, these challenges don’t need to pose a threat to the project execution – they can be easily mitigated.

The session highlighted several of the most common challenges, and how to resolve them. Firstly, inconsistent governance models across different subsidiaries make it hard to standardise. Implementing flexible governance policies which can be adapted at a local level can help.

A lack of data accuracy and centralisation also presents challenges, complicating the decision-making process and compliance tracking. Fortunately, proactive data audits help to create a single source of truth ensuring better decisions relating to the LER process. And while a lack of legal understanding and regulatory requirements may complicate LER efforts, sourcing expert advice for local requirements and tracking regulations in a legal entity management system can also help to ease difficulties.

Strategies to support and enhance the efficiency of rationalisation projects

A question about how to strategically drive efficiency in rationalisation projects sparked significant discussion. The importance of stakeholder engagement to align boards and rationalisation projects was brought up, pointing out that progress updates on impactful programmes should be regularly featured at audit committee or board meetings. These updates often highlight project expectations. For instance, that initial phases will typically involve fewer complex judgments and higher elimination volumes, while later stages may require more intricate decision-making – and while governance professionals can contextualise these expectations throughout projects, regular updates ensure that stakeholders are involved from start to finish, which supports smooth execution.

Aside from stakeholder engagement, several other strategic approaches were considered; governance frameworks to clearly define decisions i.e. governance should be seen as an enabler rather than a blocker, data to identify and prioritise high-risk entities, and agile policies that adapt to changing project needs. Solid planning was also emphasised, as was a preventative approach to avoid issues related to cost and operations further down the line.

How can effective subsidiary governance help in identifying and mitigating risks associated with rationalisation?

Effective subsidiary governance plays a key role in setting and maintaining the risk appetite for decisions during the elimination journey of the LER process. Take for example, commerciality which is a factor at various stages of legal entity rationalisation. Governance input is necessary during these discussions as it injects the ethical element into the risk vs. reward conversation, ensuring that all relevant stakeholders are being brought in and weighing in where necessary, which helps to raise risks and resolve or avoid them.

Interestingly, legal entity rationalisation in itself is a risk-mitigation exercise. In undertaking the detailed due diligence that is called for as part of a LER project, companies are forced to take a close look at entities and their corporate history. Uncovering risks or issues should be viewed positively, as it provokes proactive resolution activities to be undertaken before an entity is eliminated, rather than leaving the problems lying unresolved into perpetuity.

Future trends and how organisations can prepare to adapt governance frameworks

The session rounded off with insights on future rationalisation trends and how to adapt governance frameworks accordingly. There may be a shift toward reduced manual complexity and incremental improvements to continue to build and integrate cultures of better data management.

There may also be less focus on ‘wholesale LER’ (the elimination of hundreds of dormant entities per year) and more focus on strategic reorganisations – such as exits based on jurisdiction or performance. To succeed, organisations should approach rationalisation as an opportunity to strengthen governance frameworks, rather than viewing them as a blocker to progress.

Finally, rationalisations could shift from being viewed as periodic projects to becoming embedded in ongoing business operations - and this shift will demand greater focus on data integrity and transparency.

How Computershare Entity Solutions can help you

Computershare Entity Solutions is an industry-leader in the subsidiary governance space. We help businesses of all sizes optimise their entity governance and data management frameworks so that they can be well prepared for projects such as legal entity rationalisation. Whether you’re undergoing a rationalisation project or simply need support with eliminating burdens in your entity governance, compliance, and data management processes, we can support you.

To learn more about our services and how we can support you, reach out to our team today and we will get back to you.

Speaker information

Alex Haynes

Deputy Company Secretary at WPP plc.

Alex has valuable governance experience in large FTSE 100 organisations and regulated sectors, gained in roles across media, financial services and big four professional services. During this time Alex has undertaken international secondments within Europe and the Middle East. He is a fellow of the CGI, being a Chartered Company Secretary.

Cameron Holloway

Co-founder and Managing Director of JC Consulting Partners

Cameron began his career in EY London’s Restructuring practice, before moving into consultancy. JC was founded in 2018 by Cameron and one other partner and since then has grown into an award-winning restructuring boutique specialising in delivery of LER and other solvent liquidation projects, with teams based in the UK, Europe and Australia. Cameron leads JC’s market presence and is Client Service Partner for several of its premier clients including FTSE 100 and Fortune 500 organisations.

Georgina Milis

Director of Computershare Entity Solutions

Georgina has over 20 years’ experience of supporting a wide range of clients from private groups to large multi-nationals. She excels in advising clients on corporate simplification projects and restructuring initiatives as well as conducting extensive subsidiary governance framework transformation projects. Georgina’s technical expertise and pragmatic approach consistently yield impactful results. Her dedication and strategic vision make her a trusted advisor.

Kim Hyun Kyung
(moderator)