board governance

Legal Structures

2 min read
Table of Contents

Legal Structures

What Types of Legal Structures Exist 

The business of managing various entities and subsidiaries can be difficult for organizations of any scale to effectively evaluate and plan for. Understanding the types of legal structures that exist, of which there are many, complicates the process especially as your organization expands ownership into new regions. The different types of legal structures for your business entity are:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company
  • Corporation

The important things to remember when creating an entity is to better understand what the legal structure risks are. Your legal team should pay close attention to making sure to choose the right entity type, to not create an unnecessarily complex group structure and to make sure to always be in compliance with local regulation on substance or directorships.


Compliance Trends Organizational Structures

Organizational structures are required to follow local law and in order to follow compliance trends, your organization needs to better understand what the true implications are when it comes to legal structures. One of the easiest ways to control compliance and get visibility of ownership structures is with entity management software. The right software will help you better manage filing better with regulators, such as:

  • ASIC (Australia) 
  • Delaware
  • CRO (Ireland)
  • Companies House (UK)

Through the use of legal structure visualizations, your board and management can assess the whole business in a functional way to better understand organizational performance. By creating visual pictures of each entity, the data allows a story to unfold that can help quickly analyze which units of the business may need more attention at this time than another or predict potential effects and changes.


Visualizing Legal Structure Diagrams

Visualizing legal structure diagrams will help you manage various subsidiaries throughout an organization. Also known as organizational charting, entity relationship diagrams or a relationship model, a visualized legal structure diagram shows you visually the relationships between key places, people or systems within an organization. This can then be the foundation for additional charting, evaluating business units at a high-level or creating a database structured around positional relationships. It’s primary purpose is to create a functional representation of data that is visualized in such a way that you can easily parse your next steps. 

Key components of visualizing legal structure diagrams include: 

  1. Various colors, shapes, and texts meant to effectively communicate information such as the size of a subsidiary or the percentage of the workforce at a specific location
  2.  A detailed key that explains the denotation of the various visual elements used in the chart
  3. Lines demarcating the relationship between various concepts in the diagram