Does the never-ending list of legal compliances for your business stress you out? We are here to guide you about everything related to compliances. Compliance is the rules, policies, and processes followed by a particular jurisdiction that businesses have to comply with. It includes regular checks, keeping records, having a foolproof framework policy, retaining evidence, etc.
Why compliance is important?
Be it any business or company, legal compliance is of utmost importance. A company or a business enters into several contracts with its clients. An agreement is signed between them where both of them agree to some terms, conditions, and clauses.
Both the client and the business are automatically bound by the legal requirements of the contract. And at the same time, they are bound to ensure compliance with the rules, laws, regulations, and standards. Why is legal compliance important? When there is no legal compliance, the company might need to bear expensive litigation costs. Also, it might cause harm to the reputation of the business.
What is legal compliance certificate?
A legal compliance certificate is a written document that sets certain conditions for an individual or company to meet. The main purpose of this certificate is to obtain permission to conduct business transactions as per compliance requirements.
What are the legal requirements of compliance?
- To ensure that the business complies with all the rules and regulations of the jurisdiction in which it operates.
- Implementing internal compliance systems following rules and processes.
- Education, proper training, and communication on how to handle compliance issues.
- Using Investigations and remedial measures to monitor and audit the compliance systems
How to ensure legal compliance?
Ensuring legal compliance is not so tough if you know the basics well and follow the rules thoroughly.
Some of the steps you can take are:
1. Staying on track with changing laws and regulations
Compliance is not something permanent. It changes and evolves with time. So as a business owner, you need to constantly stay updated with the changing laws and regulations in the areas your business operates. Companies need to change their policy accordingly, implement them and monitor that people in the organization follow them thoroughly.
2. Order employees to follow the compliance procedure
Every organization has to ensure that its employees adapt the compliance policies in their daily workflow. The employer should make an effort to properly communicate all the compliance policies to the employees and train them to adopt them.
3. Schedule regular internal audits
To ensure that all the rules are being complied with, regular internal audits are a must. You have to audit the financial, operational, technological, and regulatory aspects of the organization.
4. Use a proper compliance software
To reduce the risk of human errors in the following compliance, use proper legal compliance management software with built-in tools for organizing documents and generating audit trails. Equity management software stores all the subsidiary-related information and allows uniform implementation of processes and procedures.
5. Legal compliance procedure
Company secretaries, in-house counsel, and legal operations team brainstorm together to form a solid compliance framework for companies. But how is a legal compliance policy drafted?
Here is a legal compliance checklist for you:
1. Knowing the regulation
Research of the rules and regulations of the industry in which the company operates is the primary step. Accordingly, the company needs to form a legal compliance plan that fulfills all the laws in that jurisdiction. Some legal aspects may include Environmental responsibilities and ESG, Cybersecurity, Tax law, Advertising regulation, Financial and accounting requirements, etc.
2. Clarifying the reporting duties
Based on which area and industry your company operates in, reporting requirements do vary. Go through the terms of the industry organizations, ethical bodies, etc. your company is a part of. Check if they require an annual or quarterly report.
3. Update your policies regularly
Legal and compliance requirements get renewed now and then. Businesses need to constantly monitor any change in the law in an area they operate in. Companies need to make sure that their policies are up to date with these laws. Conduct an annual review session every year to check this with a few spot checks.
4. Check your company’s records
An essential part of compliance is record keeping. Your company’s compliance or legal team should keep quality records of everything necessary for a successful legal compliance evaluation. The record should also be easy to access all the time. Businesses need to drive strong entity governance by evaluating legal compliance regularly.
5. Keep in check the non-legal requirements too
A company needs to ensure that they are following both the legal procedure and the non-legal criteria. Companies need to check if all their operations are following ethical guidelines.
Make sure your company is following the licensing, funding, or tenancy rules in their respective agreements. Also, if your company has signed up for any new industry codes of practice, make sure all the rules are being complied with too.
6. Communicate compliance rules with employees regularly
Compliance policies are of no use if the employees are not aware of them. Businesses have to ensure that every employee at every level, be it a manager or a clerk is aware of the compliance requirement that affects their respective duties. Companies have to regularly schedule education programs and training to educate everyone about the rules. Also organizing regular check-ups is a must.
7. Organize regular compliance checks
Compliance includes much more than checking up on the employees if they are following rules. Businesses need to constantly monitor if automated filings are in place and if the current processes are correct. Also, review the regulations and deadlines regularly. Easy accessible real-time data makes the entire process much simpler.
Complying with every rule and regulation is not a very easy task for any organization. Most businesses hire specialized persons to look into these matters and save the legal cost. However, once you follow all the points we have mentioned, you can get it right for your business.