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The multiplicity of law, rules and regulations etc., have necessitated the introduction of a system to ensure legal compliances of laws and therefore every entity adopted legal compliance reporting system. Compliance with laws is highly critical, and the cost of non-compliance is more than the cost of compliance. Hence in this article, we shall discuss about this system in depth.
Table of Contents
In general, compliance refers to conforming to a rule such as specification, policy, standard or law. Regulatory compliance describes the objectives that organizations aspire to achieve in their efforts to make sure that they are aware of relevant laws, policies and regulations and also take steps to comply with these.
This system has two main objectives:
An in-depth compliance report helps organizations with a way to know how well they are shaping up with the industry standards, rules, regulations and laws set by the government and regulatory authorities.
The compliance reporting procedure includes compiling information on the company data and how it’s collected, controlled, shared and stored, internally and externally. Internal stakeholders, executives and third party auditors elicit the information from compliance reporting to make sure that the company is following law.
If the compliance reports prove the fact that organization works in good faith but suffers from non-compliance, then the regulatory authority may help the organization in its remediation efforts.
Overall a compliance report can become learning equipment for the organization for how to adhere to the standards and regulations, showcasing how to perform business processes in an optimal manner.
With stricter enforcement of laws and intervention from the court, it has become more significant than ever to have a robust legal compliance reporting system in the company.
Some of the key features of this system are as follows:
This is one of the crucial aspects of the Legal Compliance Reporting to timely initiate action against legal notices received by the company from lawyers, courts, tribunals etc. It means any notice of any nature received from any authority should be replied effectively and immediately without delay but after consultation with a professional.
Further, the legal and secretarial department of the company should have well experienced and professional employees who are abreast with various rules and regulations applicable to the company.
A company acts through its Articles of Association. It confers various authorities to its board of directors. Considering that a company is a legal entity and acts through its board, the authority to sign documents or agreements etc., shall be given through board resolution or authority letter.
An officer must confirm that he has the authority before he signs any documents on company’s behalf. Officers like CS or MD etc, have power of Attorney, and this authorizes them to delegate powers to other officers. In this case, he may delegate power to sign documents to different officers of the company.
An entity must ensure that it complies with all applicable laws, rules and regulations. This is due to the fact that the cost of non-compliance is more than the cost of compliance. A non-compliant company would face all sorts of penalties and litigations, which can adversely affect its sustainability and reputation. Therefore it’s imperative to have a sound legal compliance reporting system at place in the organization. Every department should dutifully co-operate with the secretarial and legal department of the company for adequate compliance with rules and regulations.
Read our article: Legal compliances for an Indian Start-Up
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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