Compliance Management is the process of ensuring that a company and its stakeholders follow the laws applicable to their organization. Compliance Management is of great importance as it ensures the best practices available for compliance – adherence. Every transaction or organizational action can trigger the applicability of various compliances which makes it practically difficult to remember all such events and their impact under various applicable statutes. Compliance Management helps to avoid huge damage to the goodwill of the Company which further helps these organizations to build consumer’s trust and keeps unnecessary legal hassles away. Some of the examples of non-compliance are, non-compliance of the regulatory norms and non-adherence to product specifications by some public sector companies for which the Insurance Regulatory and Development Authority of India imposed a penalty of Rs. 31 lakhs, RBI imposed a penalty of Rs. 1.75 crores on four public sector banks for non-compliance with provisions of directions issued by it on Know Your Customer norms and opening of current accounts, non- filing of the necessary forms with Registrar of Companies under Companies Act, 2013, etc. Non-compliance may lead to disqualification of the person responsible, attract penalties and in some cases may even lead to imprisonment of the person responsible and may also lead to cancellation or suspension of license or registration. There is a list of penalties for non-compliance under Companies Act, 2013 which are even more stringent as compared to Companies Act, 1956. Due to the increasing non-compliance, the Government has sanctioned prosecution in 366 cases for non-compliance with Corporate Social Responsibility norms under the Companies Act, 2013 during the 2014-2015 period. National Stock Exchange imposed hefty penalties on over 250 companies for non-compliance with listing regulations laid down by SEBI. Hence Compliance Management is of great importance in any kind of business which brings peace of mind and avoiding it could be a very costly affair.
November 8, 2019