Where do Legal Entity Relationships belong?

When there is a relationship between two legal entities, there is data defining the relationship that needs to be maintained.

One slightly tricky aspect of these relationships is that you might be allowed to edit one Legal Entity, but not the other Legal Entity involved in the relationship. Typically this is due to the workflow process controlling the creation or change of a legal entity, only involving one of the two legal entities. An inputting user is therefore only able to perform work on the one legal entity. You don’t want to involve the second legal entity as this may trigger it’s own workflow with associated review and sign off stages.

One fairly easy way to manage this issue is to always associate a relationship directly to one Legal Entity. One Legal Entity contains and owns the relationship, so that the creation, maintenance and removal of these relationships is consistently associated with the editing of only one Legal Entity.

One example is the ‘is a Director’ relationship in which a Person Legal Entity is a director of a ‘Company’ Legal Entity. In this case the relationship can be defined as ‘Has Director’. A company has directors, and any director relationships are created and maintained only as part of editing the company Legal Entity. The diagram below illustrates this in UML:

The same policies can be set for other relationships, so for example, any ownership relationships are only directly associated with the company that is owned by another. A user only changes a legal entity to set that it is owned by it’s parent legal entity. A user cannot edit a legal entity to record it owns another legal entity.

Once all relationships have a defined directory and point of object containment/ownership there is a consistent mechanism for editing a Legal Entity hierarchy that always associates changes with a specific Legal Entity.

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