The structure was right on the day it was signed. Is it defensible in year seven?

Nobody signs a bad structure. Structures are signed when everyone in the room agrees they are right, and usually they are.

What happens next is the problem. The company grows into new activities the structure did not anticipate. A director resigns and is never formally replaced. Distributions are made on advice given verbally in a meeting nobody minuted. Two entities acquire overlapping purposes. Legislation changes in one of the jurisdictions involved. Somebody starts banking through a different entity because it was easier that quarter.

None of these is a scandal. Each is an ordinary consequence of a business continuing to operate. Cumulatively, they are how a structure that was correct in year one becomes difficult to defend in year seven.

What “defensible” means in practice

It is worth being concrete, because the word gets used loosely.

A structure is defensible when a well-informed outsider (a revenue authority, a verification agency, a buyer’s due-diligence team, a bank’s compliance function, or a family member’s lawyer after you are gone) can be shown, from records that already exist, that the structure did what it says it does.

Note what that requires. Not that the structure was well designed. Not that the advice was good. That the evidence exists, contemporaneously, and can be produced.

This is the gap. Design is a project, with a budget and an end date. Evidence is a habit. Most engagements are scoped as the first thing.

Four drifts worth checking for

Documentary drift. The written arrangement and the actual practice diverge. A trust deed requires trustee resolutions for distributions; distributions happen, resolutions do not. A shareholder agreement requires a particular consent; the decision gets made informally between people who trust each other. Years later there is no way to show the arrangement operated as described, because it did not.

Structural drift. Entities accumulate. A new company for a new venture, a second trust set up on separate advice, a holding entity in another jurisdiction, a dormant company nobody dissolved. Each addition was rational. Nobody is looking at the shape of the whole, and the interactions between entities are where the expensive surprises live.

Advisory drift. The lawyer who drafted the structure has moved on. The accountant who understood why it was built that way retired. The founder remembers the intent but not the mechanism. Institutional memory of why is held by individuals, and individuals leave.

Regulatory drift. Cross-border structures live under more than one regime, and regimes move. Reporting expectations, substance requirements and disclosure standards have all tightened over the last decade. A structure designed against an older standard is not automatically non-compliant, but it is a structure whose assumptions nobody has re-tested.

What a governance function actually produces

Governance is a badly chosen word for this. It sounds like committee work. What it produces is closer to a maintained record.

A calendar. Every obligation the structure creates, in every jurisdiction, with dates and an owner. Filings, reviews, renewals, verification cycles, trustee meetings. Ordinary, and almost never written down in one place.

Minutes and resolutions that exist before they are needed. Contemporaneous records of the decisions taken and the reasons for them, produced as a matter of course rather than assembled in response to a request.

An evidence pack. The documents an outsider would ask for, kept current, in one place, in a form that can be handed over. Its real value is on the worst day: an audit, an unexpected death, an offer that arrives with a two-week exclusivity window.

An annual review with a written output. Someone reading the whole structure once a year and answering three questions in writing: has anything changed in the business, has anything changed in the law, and does the structure still do what it was built to do. That output is the artefact. A review that produces no document did not happen.

A forum. One meeting where the lawyer, the accountant, the auditor and the fiduciary provider are in the same conversation. Each of these people is competent. Left in separate conversations, each optimises their own piece, and nobody owns the interactions. This is the least technical part of governance and frequently the highest-value.

How to tell whether you have one

A short, uncomfortable test. Without asking anyone:

• Can you name every legal entity you or your family own or control, and say what each is for?
• Could you produce, today, the last three years of resolutions for each?
• Do you know who is responsible if two of your structures contradict each other?
• When was the whole structure (not one entity, the whole thing) last read by one person in one sitting?
• If a buyer asked for an ownership history with supporting documents, how long would it take, and who would do it?

If those questions produce a list of people to call rather than answers, the structure does not have a governance function. It has a group of advisors, each looking after their own part, which is not the same thing and is the ordinary state of affairs.

The reason this is a product, not admin

Governance gets deferred because it is the only part of this work with no signing moment. Nothing completes. There is no document to frame.

But defensibility is not a property a structure has. It is a property a structure is kept in. The cost of keeping it is small, predictable and boring. The cost of restoring it, under a deadline set by someone else, is neither.