– Setup and Maintain Legal Associations• Map Establishments to BSVs in a Ledger.• Map Establishments to OUs, Inv Orgs, and Business Locations to enable tax
calculation.
– Setup and Maintain History• Maintain history of Registrations for comparative reporting and analysis.
Key Concepts
First Party Legal Entity (LE)– Legal Entity of the Deploying Company.– Initiates and Owns Transactions.– It can own property, trade, repay debt, pay taxes and account for themselves.
Establishment– “Building block” of a Legal Entity.– 100% owned and controlled by the Legal Entity.– Required for registrations within local level Jurisdictions.
Legal Authority– Legal body in charge of enforcing legislation, collecting fees/taxes and making
financial appropriations.
… Key Concepts
Jurisdiction– Is a formulation of a legislative category and territory to which legal rules are
grounded.
Legal Associations– Centralized repository and a common mechanism for maintaining associations
between business entities (BSVs, OUs, etc) and legal constructs (legal entities, establishments).
Default Legal Context– One of the Legal Entities sharing the Ledger will be stored on the Operating Unit
(OU) when the OU is created. This LE will provide any downstream process with a DLC, which will act as a proxy for the owning LE.
Legal Entity Stamping– Stamping is the identification and recording of the first party legal entity for the
given transaction. The first party legal entity is the legal entity that owns the transaction.
Set Key Profile Options
• Default Country– This profile option determines the default value for the
Territory in the Create Legal Entity page
Profile Value Description
Country Name This will be the default Territory in the Create Legal Entity page. For example, United States.
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Presentation Notes
The Create Legal Entity page by default populates the territory field from the profile option “Default Country”. If the default territory does not have an identifying jurisdiction or the profile option is not set or the user wants the territory other than the default territory, the user has the option to select another territory from the attached territory List of Values. If the selected territory does not have an “Identifying” jurisdiction, the system will display an error message and ask the user to have at least one “Identifying” jurisdiction before creating the legal entity. Based on the territory, additional country specific information will be recorded using the Descriptive Flexfields.
Set Key Profile Options
• LE: Generate Legal Entity Identifier
– This profile option determines whether the Legal Entity Identifier is generated automatically or entered manually.
Profile Value Description
Yes
If this option is set to “Yes”, the Legal Entity Identifier is generated automatically based on the International Organization for Standardization (ISO) code of the Country of Registration, plus the Registration Number (of the Identifying Jurisdiction) which qualifies an entity to be a Legal Entity in that particular territory.
No If this option is set to “No”, the user must enter the Legal Entity Identifier manually.
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Presentation Notes
Another profile option that can be setup is the LE: Generate Legal Entity Identifier. This profile option determines whether the Legal Entity Identifier is generated automatically or entered manually. The Legal Entity Identifier will identify each Legal Entity within a single Oracle Applications instance and across multiple instances. If this option is set to “Yes”, the Legal Entity Identifier is generated automatically based on the International Organization for Standardization (ISO) code of the Country of Registration, plus the Registration Number (of the Identifying Jurisdiction) which qualifies an entity to be a Legal Entity in that particular territory. If this option is set to “No”, the user must enter the Legal Entity Identifier manually. For Example: Territory: Singapore ISO Country Code: SG Registration Number of the Identifying Jurisdiction (RCN Number) = 23231 (User enterable field) If the profile option is set to “Yes”, the Legal Entity Identifier will be SG23231, otherwise the user is required to enter the Legal Entity Identifier manually. If user enters an identifier that is not unique, an error message will be displayed.
Set Key Profile Options
• HZ: Generate Party Number– This profile option determines whether the Organization
Number is generated automatically or entered manually.
Profile Value Description
Yes If this option is set to “Yes”, the Organization Number is generated automatically.
No
If this option is set to “No”, the user must enter the Organization Number manually. The Main Establishment’s Organization Number will be the Legal Entity Organization Number appended with ETB.
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Presentation Notes
Another option that needs to be setup is the Profile Option HZ: Generate Party Number. Organization Numbers can be automatically generated or user enterable, depending on profile option “HZ: Generate Party Number”. If the profile option is set to “Yes”, the organization number will be generated automatically and the field will not be displayed. If the profile option is set to “No”, the Organization Number must be entered manually and the Main Establishment’s Organization Number will be derived of the Legal Entity Organization Number and “ETB” (which stands for Establishment). For example, if the Legal Entity Organization Number entered is ‘12536’, the Establishment’s Organization Number will be ‘12536ETB’. Keep in mind, that the Legal Entity Identifier and the Organization Number will be displayed in the Create Legal Entity Page only if the profile option is set to “No”. If the profile options are set to “Yes”, the Create Legal Entity Page will not display the Legal Entity Identifier nor the Organization Number.
Set Key Profile Options
• LE: Change Affectivity– This profile option determines whether the Change
Affectivity Region is enabled and displayed in the Update Registrations page .
Profile Value Description
Yes
If this option is set to “Yes”, the Change Effectivity region is displayed in the Update Registrations page and the user can enter an effective from date as well as comments for the change.
No If this option is set to “No”, the Change Effectivity region is not displayed in the Update Registrations page.
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Presentation Notes
The last profile option that will need to be set up is the LE: Change Effectivity profile option. This profile option enables access to an additional region named Changed Effectivity on the Update Registrations page. If this profile option is set to “Yes”, the Change Effectivity region is displayed and the user will have access to enter an effective date for the change and comments information related to the change. This date is defaulted with the system date, but it can be modified to a date in the past. This profile option is set to ‘Yes’ as default site value (display region to enter effective from date). If the user does not want enable it and update will need to be done to the profile options.
Legal Entity Setup Process Step 1: Enter Legal Information
The Territory chosen sets the context of the information required
Activity Classification
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Presentation Notes
The Navigation is: Legal Entity Configurator: Create Legal Entity The minimum required information to create Legal Entities is gathered in this first page. The Create Legal Entity page enables the user to create a complete, Transacting Legal Entity, which consists of the Legal Entity profile, registration with the identifying jurisdiction, and a Main Establishment. The first attribute of the Legal Entity is the Territory [PRESS ENTER], which determines the identifying jurisdiction to which the Legal Entity needs to register. The territory chosen sets the context for the information that needs to be recorded for the legal entity and determines which are the required attributes for the Legal Entity as well as the activity codes that need to be displayed. Required attributes of a Legal Entity (LE) differ by territory. Most of these attributes are seeded by territory, but in the case the user wants to add additional attributes, they could use Oracle Flexfield technology to add the additional attributes under the Context Value. The Identification Information Region: This screenshot is an example of the Create Legal Entity page displayed when the territory is chosen or derived, with appropriate country related fields (in this case, the United States). The Default Country profile option was set to be the United States. The user will enter the Legal Entity Name, Organization Name, and Registration Number (in the U.S. case is the EIN/TIN). In this case, the Organization Number is displayed because I set the HZ: Generate Party Number to “No” and the user will need to enter the Organization Number. Also, the Legal Entity Identifier profile option was set to “No” and the user will need to enter the Legal Entity Identifier. The last attribute under the Identification Information attributes is the Transacting Entity. If I select “Yes”, this means that this is a Legal Entity authorized, through the Registration process, to play the role of a First Party (i.e. initiate and own) in a transaction. Keep in mind, that a non-Transacting Entity can only play the role of a Third Party Legal Entity. Third Party Legal Entity is not in scope for the R12.0 release of this functionality. The Legal Address Region: A Registered or Legal Address is the address a Legal Entity uses to register with a Legal Authority. A Legal Entity may use different addresses for different authorities and hence, may have more than one Registered Address. This Legal Address must be located within the Territory entered. The General Information Region Type of Company and Business Activity are both specific to the territory of the Legal Entity. The required Activity Classification types [PRESS ENTER KEY] for Legal Entities and Establishments depend on the Jurisdiction to which the company is registered (e.g., NACE for Ireland, NAICS for US (previously was SIC Code), APE for France). Activity Codes are modeled using Descriptive Flexfields, as this technology allows the capture of contextual data (territory/country specific), the storage of data in multiple segments, and the interdependence between those segments. Conceptually, the Legal Entity and Main Establishment are tightly coupled. Therefore, every Legal Entity must have a Main Establishment. Whenever a Legal Entity is created, a Main Establishment will automatically be created. A main Establishment is always located in the same Legal Entity’s country. Legal Entities may or may not have additional Establishments. By selecting “Apply”, Countries that do not have strong legal requirements can complete Legal Entity creation process at this level and the information will be stored. Other countries will need to click on ‘Save and Add Details’ button, to add further information (e.g. other registrations, contact). You can always go back and search for the Legal Entity and update it with additional attributes. When user has clicked on either the “Apply” or “Save and Add Details” buttons, a confirmation message will pop out, saying: “You have successfully created Legal Entity XXXXX.”
Legal Entity Setup Process Step 1: Enter Legal Information
These are required attributes for a French Territory
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Presentation Notes
Enclosed is an example of a different Territory “France”. The default Territory was the United States, but I changed it to “France” by just inserting it into the field. You will notice additional required attributes [PRESS ENTER]. For example, SIREN and SIRET numbers are part of the Identification Information (for France, SIREN is the Legal Entity Registration number and SIRET is the Main Establishment number ) and an additional 4 attributes for General Information: APE which is the equivalent of NAICS 1997 in France, the Share Capital, the Currency and the Month and the date for the Fiscal Year End. In this case, the Organization Number and the Legal Entity Identifier are not displayed because I set the HZ: Generate Party Number and the LE: Generate Legal Entity Identifier to “Yes” and the numbers will be generated automatically. Now, once a Legal Entity is created, a few objects are created in the background such as a party in TCA for the Legal Entity and the Main Establishment with an organization profile for the legal entity.
Legal Entity Setup Process Step 2: Enter Detail Main Information
Automatically generated LE Identifier and Org Number
Registration Number is the SIREN and EIN/TIN Numbers
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Presentation Notes
In order to enter Detail information, either the user selects the “Save and Add Details” button or goes to the Legal Entity Configurator Home Page and searches or selects the Legal Entity that was created. If we look at the two Legal Entities that were just created, please notice the Legal Entity Identifier and the Organization Number [PRESS ENTER] that were created automatically for the Legal Entity TOI2. Also, please notice that the Registration numbers [PRESS ENTER] for the Legal Entities that I created are the SIREN and EIN/TIN codes and that a Registration was automatically created for each Legal Entity. If the user selects one of the Legal Entities that were created, the next page will allow the user to see the Legal Entity Identification Information and Tax information. �
Legal Entity Setup Process Step 2: Enter Detail Main Information
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Presentation Notes
Step 2 is Enter the Detail Information. The Navigation path is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: In order to add the Detail information the user must select the Legal Entity in the Search Legal Entity page or select the “Save and Add Details” button from the Create Legal Entity page. In the Legal Entity Details page you will notice the Legal Entity Information that you entered and 6 subtabs for: [PRESS ENTER] The General subtab provides the identifying information, such as the legal entity name, identifier, organization name, and organization number. [PRESS ENTER] [PRESS ENTER] The Registrations subtab provides and updates the registration information. [PRESS ENTER] [PRESS ENTER] The Establishments subtab provides and updates the establishment information. From this subtab you can create a new establishment or change the main establishment. [PRESS ENTER] [PRESS ENTER] From the Contact Information subtab, you can view contact information and create contacts and addresses. [PRESS ENTER] [PRESS ENTER] The Intercompany Exceptions subtab provides all the legal entities that are related to the legal entity being created or updated. [PRESS ENTER] [PRESS ENTER] And from the History subtab, you can view any changes that have been made to the legal entity’s registration. This subtab is view only and cannot be updated.
Legal Entity Setup ProcessStep 2: Enter Detail Main Information
Ends a Legal Entity
eTax Attributes
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Presentation Notes
The Navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: General: Update or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: General: Update By pressing the Update button, the user can update the Main information for the Legal Entity. The additional attributes included in this page are: Under Identification Information Region, the End Date attribute was added [PRESS ENTER]. By putting an end date, the Legal Entity is ended. This action will end date all the Establishments and all Registrations records for this Legal Entity and the user won’t be able to enter any transactions against this Legal Entity. The Transaction Tax Profile region has two attributes that are mainly used by the eTax initiative [PRESS ENTER]. Set for Self Assessment/Reverse Charge – if this is checked, this party is liable for self-assessment, reverse charges, or, in the United States, Consumer's Use tax. Tax Classification – the user can select a tax classification to use as a determining factor in tax rules.
Legal Entity Setup Process Step 3: Enter Legal Entity Registrations
Functions such as income tax declaration
Jurisdiction and Legal Authority
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Presentation Notes
The next step in created a Legal Entity is entering the Legal Entity Registration. The Navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Registration: Create Registration or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Registration: Create Registration or Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Registration: Update Registration or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Registration: Update Registration Company Registration is done in accordance to Commercial Law, Income Tax Law or Civil Law (depending on the country); it is the backbone of all other legal obligations a company must fulfill. This registration confers the status of Legal Entity and therefore, the right to do business in a territory (often a country). To comply with the law in the territory of its operations, a Legal Entity may be required to register with different Legal Authorities depending on its activity. However, Company Registration is the first registration, before any others, to gain official recognition to qualify for other registrations. In some countries, additional registrations may be required for Establishments of the Legal Entity. Keep in mind that, the registration information was created in the background when the primary registration information was entered when creating the Legal Entity in the Create Legal Entity page. There are two regions on this page: General Information Legal Functions Under the General Information Region for Registrations you will notice the attributes that were entered originally to create the Legal Entity and some additional attributes. The first one you see is: The Jurisdiction. [PRESS ENTER] A jurisdiction is a combination of the physical territory (group of countries, country, state, county, parish, etc.) and the type of legislation (French Labor Law, Singapore Transactions Tax Law, US Income Tax Laws) within which the judicial authority can be exercised. When you create a legal entity or establishment, the jurisdiction is defaulted from the territory of the legal entity or establishment, or you can select one of the seeded jurisdictions. The jurisdiction determines the registration numbers required. The Identifying Jurisdiction is the jurisdiction to which the legal entity must register in order to be created. This jurisdiction is most likely the first jurisdiction or the most important jurisdiction in which the legal entity must register in order to do business in a country. Registrations to the identifying jurisdiction will be marked as identifying. When registering to a jurisdiction, a Legal entity will have to perform some functions (e.g. produce a yearly report, pay fees). Legal Functions are predefined at jurisdiction level and are assigned during registration. We will discuss how to create a Jurisdiction in the Legal Entity Authorities and Jurisdiction presentation. The key fields are: Alternate Registered Name – the user can enter an alternate registered name Registration Effective To – this attribute is only allowed for registrations that are not flag as primary identifying and when there are multiple registration rows. The Identifying Registration (which means the registration belonging to the Identifying Jurisdiction) can only be end dated when the Legal Entity is not transacting entity. Issuing Legal Authority – is the Government, legal body that is charged with such powers as making laws, levying and collecting fees/taxes, and making financial appropriations for a given jurisdiction. The user can select the Legal Authority office where the registration was done. For example, in the case of the U.S. Legal Entity TOI1 a registration to an EIN/TIN jurisdiction (Income Tax), the Legal Authority is the ‘Internal Revenue Service’. In relation to the Legal Functions region, [PRESS ENTER] when a legal entity or establishment registers with a jurisdiction, there may be a set of functions that it needs to perform, such as payment or income tax declaration. Legal functions are pre-defined in the jurisdiction to facilitate the registration process. When a registration is created, the specific functions of the jurisdiction can be assigned to the legal entity or establishment. Legal functions that are defined as required on the jurisdiction are by default assigned to the legal entity or establishment during registration. Some legal functions may indicate specific legal authorities that are used when the function is performed. The legal authority information can also be captured during the registration process for each legal function. We provide seeded function names. You can add additional functions names if necessary. This region has the following fields: Function - Enter the function that have to be adhered to as a result of this registration. This is a drop down list. Legal Authority Name - Enter the legal Authority against whom the function has to be adhered to. Legal Authority Address - This is the Legal Authority address is displayed, once the Legal Authority is selected. The creation of additional functions will be discussed in the Jurisdictions presentation. Keep in mind, that in the case of an Update, this page does not display the Change Effectivity Region because the profile option LE: Change Effectivity was set to “No”. If it was set to “Yes”, there will be an additional region in this page that allowed the user to enter an Effective From data as well as comments for the changes done in this page.
Legal Entity Setup Process Step 3: Enter Legal Entity Registrations
Identifying Flag
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Presentation Notes
Furthermore, you can create an additional registration, instead of updating the Registration. The Navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Registration: Create Registration or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Registration: Create Registration or Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Registration: Update Registration or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Registration: Update Registration The attributes are the same as the update attributes. The only difference will be that you will need to enter the following additional attributes: 1. The Jurisdiction, the Registration Number, in this case the BIN for Canada, and the Registered Name The Registration Effective from date, and The Place of Registration All these attributes were discussed when we created the Legal Entity. Once the Registration information is entered and applied, you will notice a page listing the 2 Registrations [PRESS ENTER] and with a flag marking the Identifying Registration.
Legal Entity Setup Process Step 4: Enter Contact Information
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Presentation Notes
The Navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Contact Information: Contacts: Create or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Contact Information: Contacts: Create or Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Contact Information: Contacts Select Contact: Update or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Contact Information: Select Contact: Update This page summarizes all the contact information associated with a Legal Entity and information linked to contact persons of the Legal Entity. In the case where the Legal Entity is converted from a Party in TCA, its contacts and addresses will be displayed here as well. There are two regions in the Contact Information subtab: Contacts Addresses The User can select an existing Person (stored in TCA) or create a new Person, assign him/her a Legal Role, and enter an address and contact point information (Phone Number, Email). For the Legal ID attribute, the user can enter the legal identifying number for an individual; for example, Social Security Number for US residents and Identity Card Number for SG citizens. The Legal Role is the position the contact person has in the company; for example, Director, President. A few countries require the Director's person legal id to be printed on the report; for example, India and Brazil. A Legal Association of type LEGAL_CONTACT will be created between the Person and the Legal Entity. Users will be able to create contacts, update and delete contacts in this page. Deleting a contact will not physically delete a record from the database only the Roles and Contact relationship will be end dated. The Addresses Region shows the contact’s addresses of the Legal Entity. If the Legal Entity is converted from an existing Party, all addresses associated with the Party (TCA addresses) will be shown here. Legal Addresses related to Registrations will be displayed with other registration information in the Registrations subtab and will not be shown here. In the rare case where the legal registered address has other uses besides being a registered address, the user would click on the Create button to add it here. New addresses for the Legal Entity can be added via the ‘Create’ button, and a particular existing address can be updated by clicking on the Update icon beside the address in question.
Legal Entity Setup Process Step 5: Add/Review Intercompany Exceptions
When adding an Intercompany Exception, a legal association is created between the legal entity that is being created/updated and the selected legal entity.
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Presentation Notes
The next step in creating a Legal Entity is Adding/Reviewing the Intercompany Exceptions. The Navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Intercompany Exceptions: Update or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Intercompany Exceptions: Update It is assumed that all legal entities could have intercompany relations with all legal entities in the applications. In this case, the transactions between these legal entities are considered intercompany transactions. Basically this page lists all the legal entities that cannot have intercompany relationships with the legal entity being created or updated. The ‘Update Intercompany Exceptions’ button allows the user to access the Update Intercompany Exceptions page in order to: Add an Intercompany Exception Remove Intercompany Exceptions When adding an Intercompany Exception, a Legal association is created between the legal entity that is being created/updated and the selected legal entity. The Start Date of this relationship is defaulted to the System Date. When a user removes an Intercompany Exception, the End Date of the association is defaulted to the System Date. We will discuss Legal Associations in the Legal Associations TOI.
Legal Entity Setup Process Step 6: Review
The History subtab displays any changes that have been made to the Legal Entity’s Registration.
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Presentation Notes
Step 6: Review involves several actions: Review History Review all information entered, and Review Main Establishment information This is another subtab in the Legal Entity Details page. The navigation is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: History: or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: History From this subtab, you can view any changes that have been made to the legal entity’s registration. This subtab is view only and cannot be updated. The Effective from is always defaulted to the System Date except for the Registration Update page, that the user can change the Effective from date to a different date. In addition, Users can personalize the table display as needed (for example, hide ‘Change By’ or Effective Dates columns) using OA Personalization. Access to the View History page can be restricted by roles via ‘permission sets’. You can also go to the other subtabs and review the information entered.
Legal Entity Setup Process Step 6: Review
Main Establishment Flag
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Presentation Notes
The last step is reviewing the Main Establishment created. An establishment is a location that is registered with the appropriate governmental authorities. An establishment can be a physical address or a logical subdivision of the legal entity. Establishments are required only in countries where other legal entity locations need to register with legal authorities (such as the United States, India, Brazil, and Germany). Establishments may follow different sets of rules if they do business in different activities or are located in different areas. To fulfill registration requirements at a local level, a legal entity must register a main establishment. For this reason, the main establishment is created automatically when you create a legal entity in the Legal Entity Configurator. While establishments may or may not be located in the country of the legal entity, the main establishment is always located in the legal entity’s country. It is the main site (location) of a legal entity, which supports specific duties related to compliance with legislation and reporting needs for the legal entity. If a legal entity consists of only one registered establishment, then that one establishment is the main establishment by default. Eg. Oracle Corporation was registered in the state of Delaware and was considered a Legal Entity with a legal structure. In addition, Oracle Corporation had several establishments registered to do business; for example, Redwood Shores, CA and Reston, VA. The navigation for the View Establishments page is: Legal Entity Configurator: Search Legal Entity: Select a Legal Entity: Legal Entity Details: Establishments: or Legal Entity Configurator: Create Legal Entity: Legal Entity Details: Establishments This page displays the information related to the Main Establishment [PRESS ENTER] created during the Create Legal Entity process. From the view pages, user can Update/change the Main Establishment or create a Establishment. Keep in mind, that whenever the Legal Entity was created, the Main Establishment was created automatically. The legal entity territory, name, address, effective date, activity code, and jurisdiction are defaulted to the main establishment. The establishment inherits the registration number of the legal entity only if the establishment does not have it own number. This concludes the setup process for the Legal Entity. Part 2 of this presentation will discuss in more detail how to update/change the Main Establishment as well as create additional Establishments.
