Please note that this pertains to South African Legislation, the King Requirements, and Best Practice.
Today we are having a look at the compliance requirements with the various Laws, Rules, Codes, and Standards.
Let me just say from the beginning that whilst I understand that most people have a problem with the number of rules and regulations that we have to contend with, the reality is that there is no little office somewhere where people have been employed solely to make up and write laws to make life as difficult as possible for us. The reality is that generally speaking the laws are written to right an actual transgression and that usually the transgressions come from the Corporate world. The reality is that often the laws were written to protect us from our own stupidity.
– Firstly, of course, we need to identify the laws and the regulations and their relevant obligations that are applicable to your business. Please remember that there are also non-binding rules and standards that would also apply.
Non-binding rules and standards, although not legally binding is often based on ‘best practice’ requirements and are therefore really useful.
Clearly, some research needs to be done to see what has to be done (not negotiable) and some that you can use if you want to (negotiable).
– It is necessary to ensure that not only do the members of the Board understand the requirements both for the legal requirements and the ‘non-bonding’ elements but that they need to be advised on the changes as and when they are updated or when new laws are promulgated.
– The implementation of compliance policies and to ensure that there is regular monitoring with regard to the compliance of policy through regularly updated governance structures must take place. This item should also be included on the agenda for all general Board Meetings.
– The compliance risk should be properly and adequately managed through the risk management process that has been approved and adopted.
– It is important to ensure that the compliance is encapsulated into all the operations and processes as well as the culture and ethical conduct of the business and throughout the organization. Employees need to be trained on the new/updated requirements and where applicable “other” stakeholders may also require training or, at the very least, guidance.
– Appointing a Compliance Officer or establishing a compliance type function (e.g. internal audit and risk departments) to ensure that there is management of risk and compliance where possible is beneficial.
– It is important to have ‘compliance’ issues on the agenda for Board Meetings, to ensure that Directors are not only aware of the new legislation that has been promulgated into law but also how the compliance thereto, will affect the day to day running of the business.
– Having all of the above is fantastic! However, that said, if there are no consequences and if there are no fines or penalties imposed on repeat offenders then, of course, the effectiveness of the compliance will come into question.
I am pretty sure that you are now starting to become aware of the many factors and facets of becoming a Director.
Next time we will look at a few more.