Corporate compliance is the way that a company ensures that it is following all the laws and regulations that apply to their business. This generally involves the design, implementation, and monitoring of policies, trainings, procedures and practices. Corporate compliance programs are grounded in creating formal policies to prevent violations of laws, training personnel on relevant regulations, implementation of compliance procedures and monitoring for violations. Without any of these elements, your company is open to serious risk and legal liability. If you do not yet have a formal corporate compliance program, it may be a good idea to speak with a corporate compliance attorney about developing a plan.
Vital Internal Compliance Instruments
In order to have a successful corporate compliance program, there must be standards and controls that ensure compliance by every employee. There are three vital internal compliance instruments that achieve this: a Code of Conduct, standards and policies and specified compliance procedures.
- Code of Conduct. A company’s Code of Conduct sets the compliance tone from the top of the company down. It should set out the ethical principles of your business and detail general principles by which officers, management and employees conduct operations.
- Compliance Standards and Policies. Compliance standards and policies detail the expectations and rules for each of the key compliance areas.
- Compliance Procedures. Compliance procedures establish the daily requirements and practices through which the compliance standards and policies are implemented, followed and enforced.
Key Areas of Concern for Corporate Compliance
Your company’s compliance standards, policies and procedures must clearly address all the key areas of concern for regulatory compliance. The following are some of the most common compliance areas that need to be addressed by U.S. businesses.
Any company with publicly or privately traded securities must be sure to comply with SEC regulations and other securities laws in order to avoid consequences. This includes making appropriate disclosures, using proper accounting procedures and releasing appropriate financial reports.
No company can carry out anti-competitive behaviors. Compliance procedures to comply with antitrust laws must address vetting potential mergers and acquisitions properly, as well as avoiding any activities that could been seen to limit the market or restrict trade, such as price-fixing.
Any company that advertises, sells products to the public, or otherwise interacts with consumers must ensure that they treating the consumer fairly. Some important areas of concern for FTC compliance include advertising, e-commerce practices, fraud, and financing and loan practices.
Environmental Laws and Regulations
Not only must every company adhere to government standards and environmental regulations, but they must also comply with all state and local environmental laws. The most common issues in environmental compliance include pollution, waste management, energy management and water use.
All companies operating abroad must carefully comply with the Foreign Corrupt Practices Act, which prohibits bribery abroad. Policies must ensure that no foreign employees or agents are permitted to issue bribes and that all financial accounting procedures are clear.
Any successful corporate compliance program must have sufficient compliance training programs in order to ensure that all employees are made aware of their responsibilities to follow compliance standards, policies and procedures. The appropriate officers, employees, contractors and third parties must be made to understand all relevant laws, regulations, corporate policies and prohibited conduct. They must also be informed of how to report any potential violations. In the case of a regulatory violation, your company’s training program will be heavily scrutinized to determine who will be held responsible, so it is vital that every company have robust training policies and procedures.
Compliance Monitoring and Auditing
It is impossible to enforce compliance objectives—or even know if compliance policies are being adhered to at all— without compliance monitoring and auditing. Monitoring programs must be in place to assess compliance in real time, quickly detect problems and correct violations. The goal of a corporate compliance monitoring program must be to identify and address gaps in compliance on a consistent basis. Auditing, on the other hand, is designed to review the overall picture of your company’s compliance programs on a quarterly or yearly basis to find anything missed by the monitoring programs.
Are there other areas of corporate compliance that my company may need to worry about?
Yes. Corporate compliance is a wide area of legal concern for any company, and the regulatory standards that apply to any particular company will vary widely depending on your industry, market and products. If you are concerned about your company’s compliance needs, it may help to speak with a corporate compliance lawyer.
Do all companies need a corporate compliance program?
Yes. No matter your size, reach, or industry, all companies need at least some semblance of a compliance program in order to ensure that you are complying with all relevant regulations and laws.