A statement by the management on the attitude of one and all in an organization plasticised in letter and spirit. It is not only a statutory requirement but also a necessity to strengthen the corporate governance.
Need of Compliance Management
- “To promote self-discipline”
- “To exercise self-control”
Significance
Apart from avoiding the risks of non-compliance, there are manifold advantages of CCM. These, inter alia, include Better compliance of law, Real time status of legal/statutory compliances, Cost savings- avoiding penalties/fines, minimizing litigation, Better brand image and positioning in the Company, Enhanced credibility/creditworthiness, Goodwill among shareholders, investors & stakeholders, Good Corporate Citizen.
CCM is a Three Step process:
Three Magical Concepts of Corporate functioning:
Corporate Governance (CG), Corporate Social Responsibility (CSR) and then Corporate Compliance Management (CCM) are going to be the three magical concepts of Corporate functioning worldwide. For instance, ICSI National Award for Excellence in Corporate Governance- 2010 presented to Dr. Reddy’s Laboratories Limited and Larsen & Toubro Limited.
Structured Approach:
- Every entity must have systematic and structured approach for making compliances, no casual system or approach can do well.
- The casual approach if ‘ticking the bose’ cannot serve the purpose. Further, ‘beat the bull when it comes to you’, should be avoided as it is not a befitting theory.
Advantages:
- Multitude of Compliance obligations
- Building Strong Foundations
- Extends Confidence to Investors
- Gaining Competitive Edge
- Good Compliance System leads to Excellence in Operations
Consequences of Non-Compliance
“Ignorance of Law is no excuse” keeping in mind the same every corporate must know the consequences of non-compliance which can lead to unnecessary litigations under the various Acts and also bind the officers of the company who is in default.
Corporate compliance report
Every company needs to give corporate compliance report with respect to each department of the organization. For instance, IT department in the company needs to ensure that all laws applicable to IT Department have been duly complied with.
Conclusion
The emphasis of the compliance management is on enabling companies to acquire the skill-sets and systems to ensure continued adherence of law. Core to good corporate governance is compliance with the law of land. The compliance with the various laws should be transparent showing that all desirable disclosures have been made.
Today, compliance is not optional; it has become cost of doing business and the best possible way of managing of integrated frame work supported by an automatic IT solution and strong management commitment. Therefore, the process of corporate compliance management is a continuous. Hence
“Compliance is a business enabler and not a burden.”
