You can only own a car if you have all the necessary paperwork that declares you fit to drive the car on the road and that your car is fit to be driven on the road, failing which results in a penalty. The same goes for a business. To run your business successfully you need to work under the law and follow certain rules and regulations. This act of working in accordance with the law is called compliance.
We, at KGMC, have been providing Compliance Services in India for the last 11 years since our inception in 2010 and here in this blog, we will walk you through the necessary information about the corporate compliances.
- What is corporate compliance?
- Our Compliance Services
- Importance of compliances
- Types of compliances
- How to plan a compliance
- Necessary statutory compliances in India
What is Corporate Compliance?
Compliance, simply, means adhering or conforming to a rule. In the business space, every company has to work in accordance with the set policies and standards and follow certain rules and regulations in order to maintain propriety or morality. This practice is known as corporate compliance.
Like seat belts in cars are for our own safety, these rules and laws are for our company's safety and success and should not be considered as a liability or a burden. A company can function effectively only if it and all its people are sincerely supporting both external and internal compliances.
Our Compliance Services in India
Our Compliance Services in India help you manage all the necessary compliances for your company without you being worried about its complexity and processes. We have Compliance Specialists in your particular sector who are updated with all the policies and standards and aid you in completing your company's compliance norms.
Why is compliance important?
Compliance is important for the well-being and success of your company. Why would anyone work with a company which does not have legal certificates? Why would anyone buy from a company which is not transparent to its customers? By opting for our compliance services in India you will get expert assistance in completing certifications and maintaining compliances that will be beneficial for your company for the following reasons:
- Market's Confidence- by maintaining all the compliances well, you can win the market's confidence thereby enjoying a better response from the market. The market will always support you in your new product launches, service upgradations, and if you enter into other niches.
- Company's Reputation- no doubt, company's reputation plays a large role in defining company's success. By complying with the rules you and your company will establish a reputation among competitors, in the market.
- Employees' Loyalty- by complying with the Minimum Wage Act, Prevention of Sexual Harassment at workplace act, The Employee Compensation act, etc. you can create a better culture at the workplace which will help you gain your employees' loyalty. This also helps in employee retention and fast-forward the growth as your team grows with time and become expert in their work. It saves you from the setbacks that companies face when an important employee leaves it.
- Customers' Trust- customers are the one that keeps a company running. Your foremost goal must be to achieve your customer's trust which can be accomplished by complying with the laws and securing customers' data. Once you win their trust you can do long-term business with them and can build brand advocacy too.
- Business's Transparency- this may sound like a threat to you but businesses, to prove their authenticity, show their transparency in the market. Managing all your corporate compliances timely can help you in validating your authenticity.
Compliance requirements can be broadly categorized into two types: External Compliances and Internal Compliances. Each plays an important part in making a company conduct its operations properly.
External Compliances
Those compliance requirements that are enforced by the state or federal authority on a company are called External Compliances. The states in which you incorporated or conduct your business are concerned in defining these compliances. Some external compliances are submitting annual reports, filing tax requirements, requirements under The Labour Act, etc.
External compliances are further segmented into two: Statutory Compliance and Regulatory Compliance. Both of these statutory and regulatory compliances have been stated in the ISO / FDIS 9001:2015 QMS standard.
- Statutory Compliances- These are the laws and rules passed by the state or central government.
- Regulatory Compliances- These laws are passed by some regulatory body set up by the state or central government.
Internal Compliances
The compliances that are expected by the state government from certain business organizations are called Internal Compliances. These are created and sanctioned within the company by Senior Professionals and are followed by everyone in the company. Some internal compliances are setting up a Board of Directors, conducting regular meetings, distributing stocks to shareholders, etc.
How to prepare a compliance plan?
Properly planning compliance is as important as following it. To make your employees follow the requirements you need to include these essentials while planning compliance.
Leadership
Set up an authority that governs and makes all the internal rules and policies. Internal compliances are build-up on the foundational ethics of the company. The leadership should be followed by everyone from senior management to the employees.
Policies and Procedures
Policies and procedures should be devised that clarify the lawful measures that have to be adopted by the company and its people. Concerning the possible risk, you should introduce certain practices that help in tackling or reducing those risks. It should also introduce strict actions against violations.
Effectual Communication
Effectual communication should be practiced within the company to make your compliance plan successful. All the employees should be fully aware to note any abnormal activity that can be a violation of set policies and procedures and immediately communicate it with the senior management or the compliance officer or firm.
Training and Education
Educating your employees about the set policies and regulations and training them about how to comply with those policies are very essential to make your compliance program successful. Conduct semi-annual or annual training and education sessions in your company to teach everyone to work in alignment with the required procedures.
Auditing and Monitoring
Frequently audit your compliance plan and monitor the results. Determine the setbacks or areas of concern and set your plan accordingly. Regular auditing ensures that all the compliances are being followed as determined and helps in making your compliance plan effective and successful.
Statutory Compliances in India
Statutory Compliances in India, as already stated above, are made by the governing bodies to ensure equality and justice for the employees in the company. Thus, the question of not complying with the rules does not even arise.
Statutory compliances in India clearly state some basic rules about minimum wages, TDS, ESI and PF, gratuity, and other perks thereby settling the cases of conflicts between the company and its employees facilitating a cooperative environment.
Failing in complying with statutory laws can put a company in trouble such as heavy penalties, shattered reputation in the market, loss of employee loyalty. Thus, it is always advised to account for all the transactions of the company and comply with all the statutory laws. We are providing an updated checklist of all the necessary statutory compliances in India below for you.
Statutory compliances in India checklist
- The Minimum Wages Act-1948
- The Payment of Wages Act-1936
- The Labour Welfare Fund Act (LWF) 1965
- The Child Labour (Prohibition & Regulation Act), 1986
- The Contract Labour (Regulation & Abolition) Act - 1970 (CLRA)
- The Maternity Benefit Act-1961
- The Payment of Bonus Act-1965
- The Equal Remuneration Act-1976
- The Apprentice ACT, 1961
- The Employment Exchange (Compulsory Notification of Vacancies) ACT-1959
- The Industrial Employment (Standing Orders) ACT 1946 - Model Standing Order Only
- The Industrial Establishment (N&FH) ACT 1963
- The Employees State Insurance Corporation Act - 1948 (ESIC)
- The Employees Provident Funds and Miscellaneous Provision Act - 1952 (EPF)
- Shops and Commercial Establishments Act (S&E)
- The Professional Tax Act (PT) 1975
- The Payment of Gratuity Act-1972
- Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) ACT, 2013
- The Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) ACT, 1979
- The Employees Compensation ACT-1923
- The Industrial Disputes ACT 1947
- The Trade Unions Act, 1926
KGMC's Compliance Services in India covers all the above-stated laws and executes required methods to comply with them.
Managing all the corporate compliances in India is really necessary and challenging. Hence, opting a good Compliance Management Service Provider would be extremely beneficial for your company.
We, at KGMC, take care of every procedure that must be followed for all the compliances to secure our partner company from any unwanted legal situation. Contact us for more insights.