Lex Witness in a special session with Jayashree Swaminathan, CEO, Chess Management Services, a leading Legal Compliance Management Systems service provider in the country…
The word “Compliance” for any company would be either scary or easy going depending on the discipline of the organisation.
Generally “Compliance” operates at two levels.
In general terms, Compliance is a set of rules to be followed by any organisation.
It is very crucial for any organization to be complaint as it impacts the business. This results in increase of business and profitability. As there will be a gush of people who would want to get associated with such organisations be it prospective employees, vendors and investors. This will also reduce litigation costs substantially except the cheating and fraud cases.
We assisted a Japanese manufacturingcompany to reduce 50% of their budget for the legal department for the subsequent years.
“The most evident consequence of noncompliance is that it increases your risk of fines, penalties, work stoppages, lawsuits or a shutdown of your business unnecessary expenses related to travel, hotels etc. visiting various courts across India.” Jayashree Swaminathan, CEO, Chess Management Services
Compliance has come a long way in the last 5 to 7 years. The seriousness of the subject has taken a huge turn after the huge number of scams being busted across India and the increase in corporate litigation.
As an example the general perception in any corporate is, a company secretary’s KRA would be to handle the compliances related to companies Act and SEBI if listed in any of the stock exchanges.
Whereas the new Companies Act, 2013 clearly makes the company secretary responsible for any and every compliance which has to be adhered by the company. This also includes all the regional offices, plants and other facilities which the company is maintaining time to time for the smooth functioning of the organisations.
Generally every establishment has a planthead or a regional administrative head or the warehouse head, who would be required to sign a certificate of compliance and submit it to company secretary who presents the same to the audit committee and subsequently to the board.
The company secretary submits it on the assumption that every aspect of the law has been taken care of by the respective HODs. We need to bear in mind that the plant head is an operational person who is unaware of the legal implications. Hence he is bound to skip some important compliance or any important changes which has happened in his state recently. This could come as a shock to the company when the inspector visits or sends a show cause notice to the establishment.
Every employee in the organisation is responsible to adhere to various compliances, as the culture has to originate from the top management and hence it gets drilled down to the organisation.
The simplest example, an IT/ITES client ofours had their car parking in the basement has a “No Smoking” sign board clearly marked and still you will find employees taking their smoke breaks at the car parking. Since the company was compliance conscious they included this education as a part of their induction training and subsequent refresher trainings. They achieved two objectives, one they increased the productivity slightly and also reduced the intake of cigarettes for their employees.
The most evident consequence of noncompliance is that it increases your risk of fines, penalties, work stoppages, lawsuits or a shutdown of your business. Also unnecessary increase in non productive expenses to related travel, hotels etc. visiting t various courts across India.
This question comes from every client of mine and the simple answer to this is ‘be adamant and abide by the law in every aspect’.
Let me explain there are 75 types of fines which is payable by a normal citizen like you and me if we violate any traffic laws. We are expected to understand the traffic laws before driving and then a permanent driving license is issued. But have we ever read and understood them before applying for a license? That is the basic problem elsewhere.
The same goes for organisations, you need to read the law in totality and complete your application in all aspects before submitting the same which will help the government department to process it faster and timely.
Well I understand you next question which obviously be, even if a corporate does so,they are still not granted the required license?
Yes I agree with you and there are two solutions.
First, read the law to understand if there is any provisions for automatic approval timelines, for instance, when you apply or go for a renewal of a factory licence and you receive no communication from the authorities for 4 months, you are deemed to be granted the licence and start your production without getting a stamped licence.
Second, when the law does not state any timeline, then follow the RTI route and any department is bound to give you an answer or grant the license if there are no queries.
We have help 100s of our clients to go thru either of these two routes to get their licences.
Chess Management Services Private Limited is India’s first and most comprehensive Legal Compliance Management Systems service provider. Since 2000, Chess has acquired vast knowledge and experience inassessing and implementing comprehensive compliance management systems including Legal Compliance Management Systems, Litigation Management Systems and Notice and Contract Management Systems. Chess audits the legal function structure of a company and provides solutions for effective control over the legal function.
Chess helps organisations to remain 100% complaint at all times which is our prime motto and intern would like India to become a complaint country.
Chess’s auditors are trained to identify business processes and related legal compliances. They also visit the various units of a company and assess the compliance status, compliance structure and process and thereby pave the way for a comprehensive compliance management system.Chess’s auditors are trained to identify business processes and related legal compliances. They also visit the various units of a company and assess the compliance status, compliance structure and process and thereby pave the way for a comprehensive compliance management system.
The Legal Risk Assessment Services offered by Chess will apply to Legal Audits as much as it does for compliance systems study and implementation. As a result of this the corporate would know the gaps in their compliances and they can fulfil their gaps.
Chess goes a step ahead and installs a monitoring tool eLCM® which is free of cost which helps in monitoring centrally by the compliance officer or audit committee or the board.
eLCM® is a flexible web-based platform that automates your compliance management process. It lets you deliver role-specific information across organisations in a closed loop system to reduce risk arising out of non-compliances. It is comprehensive online legal compliance scheduling and management software which helps you assess, monitor, track and report on compliance efforts with unprecedented ease and efficiency. It enables business managers to plan and monitor all compliance related activities centrally.
Chess helps every client to keep pace with the plethora of changes in Indian Legal Infrastructure necessitated by growing trends of economic reforms based on de licensing and de regulation. In these circumstances the nature, context and contour of laws are changing on a regular basis. This poses great challenge to companies to constantly monitor and keep themselves abreast with new provisions of laws.
Chess has been the pioneer in setting up the Legal and statutory compliance Industry in India. Our objective is to make India a compliant country. We have a huge knowledge base and the various challenges faced by different industries trying to comply with various outdated laws.
We would try our level best to let the law makers take heed of the same and simplify various outdated laws for the benefit of the corporate and grow the compliance industry by many folds.
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