Understanding the Importance of Corporate Maintenance
The bigger your business grows, the more complicated it becomes to manage it. The complexity not only arises from running daily operations but in terms of governance as well. Just think about it. When you were a small startup, there were probably a handful of things you needed to handle. But, as your business progressed to what it is today, you needed to set up a number of systems to facilitate enterprise activities. That’s when corporate maintenance comes in.
As your business grows, it’s easy to overlook the mechanisms that need to be incorporated for it to grow. Soon enough, they’ll become unmanageable and may lead your business to incur hefty fines and penalties if no corporate maintenance regimes are in place.
Here we look at the importance of corporate maintenance and what it means for your business.
Fair Market Valuation
Corporations have a duty to respect the wishes of their shareholders and trustees every time they make a business decision. However, there are many public and private institutions looking into the decisions they make. These decisions drive the trajectory of a corporation such that outsiders can view their standing and seek to invest in it based on their valuation. Misrepresenting your company’s financial outlook or its annual reports may have a drastic impact on its share price. If word was to get out that your company isn’t playing fairly in the market in order to protect its image, you’d have serious repercussions to face in the long run.
Corporations have to adhere to certain rules and regulations in the way they conduct business. These laws are in place so as to allow for other market competitors to gain a fair advantage and prevent monopolies from emerging. More importantly, these laws also include taxation requirements, any changes in board members, the returns they offer to their shareholders, and any annual reports they may have to submit.
Without these regulations, corporations have free reign to conduct business, which at times may infringe upon the rights of others. For example, a corporation may be laundering money obtained via illicit means. This may stagnate the market and devaluate a currency. Both of these outcomes are detrimental to a country and other businesses.
Negative Brand Image
If a corporation fails to adhere to laws and restrictions, even due to neglect or oversight, it raises serious questions in the eyes of shareholders and the general public. Questions like how can such an oversight have occurred given company X had so many resources? Or, why hasn’t company X released a press statement for investors given the allegations against them? As a result, investors may back off. If a significant drop in share price occurs, it may lead to a landslide effect causing other investors to follow suit.
In severe cases, it may negatively impact the image of a corporation. They may have to resort to changing their business name or selling their company altogether.
To Protect Your Company’s Rights
The mechanisms of corporate maintenance can work both ways. They’re not only in place to protect the rights of others but can also shield corporations from liability. You may be operating well within your rights, and an entity or individual(s) come along, seeking to implicate you in any way. Giving them access to your company’s business proceedings, audit reports, and governance meetings records can help protect your rights if you know for a fact that no wrongdoings were involved.
Choose The Right Partner for the Job
Depending on the range of operations of your company, it may suit you to outsource these responsibilities to other entities that specialize in corporate maintenance. Aadmi is your best bet when seeking corporate maintenance services, given our extensive experience and expertise in managing such operations. We take a collaborative approach with each client, making sure that transparency is at the core of every element of how we conduct ourselves.