14 Nov

How to find out the list of all applicable laws?

Compliance with all applicable laws is the standard requirement for businesses to operate the world over. Government and Regulatory bodies expect organizations to follow the law of the land and have the required authority to penalize if found guilty.

It is not very uncommon for organizations to insist that their vendors/ contractors should comply with all applicable federal, state, and local laws, rules, regulations, ordinances, and directives, and all provisions required. Considering this, it is important to organizations to fully understand the applicable statutory and regulatory compliance requirements and comply with them.

In India, the new Companies Act 2013 which has come into effect as of April 2014, under Section 134 (5) (f), clearly mentions that it is the responsibility of the board members of the company to device a proper and effective system to ensure compliance with the provisions of all applicable laws and that such systems are adequately monitored for its effectiveness.

So, how do we arrive at the list of applicable laws and compliance thereof for a given company?

The first step is to collect information about the company structure like public/ private/ listed, products/ services the company offers, industry sector & segment it belongs to, number of employees working, different locations the company operates from, factories run, type of transactions like those involving foreign exchange etc.

The second step is to analyse the information gathered and look at the general laws applicable based on various provisions as well as the corporate structure. General laws include laws like corporate laws, taxation laws, industrial & labour laws, property laws, intellectual property laws, information technology law, foreign exchange laws etc.

Next step is to look into sector & segment specific laws as different laws are applicable based on the sector/ segment. For example, for Banks, all laws applicable to Banking Industry have to be considered. Likewise, for a company in the petroleum sector, all laws applicable to petroleum industry should be looked at. Similarly for companies in pharmaceutical sector, cement industry, aviation sector, and telecom sector etc.… applicable laws need to be identified.

Once the list of all applicable laws is prepared, the compliances applicable needs to be culled out to form the company specific compliance library.

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