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Regulatory Compliance in the Business World

Regulatory compliance is a type of regulatory risk that is an important part of running a business. It involves an organization's adherence to laws, regulations, rules and specifications relevant to its business processes. It regulated a wide arena of monitoring and implementation processes. These processes can become complex and tedious depending on the industry and its workings. 

The Importance of Regulatory Compliance

Reducing Risk, Greater Efficiency and Increased Reputation
Compliance work often involves identifying and analyzing. It regulates effective action to be taken which is ensured through monitoring. Corporate affairs require efficiency and hence, Regulatory compliances are one of the modes to attain the same via revising, checking, looking and correcting the work numerous times by guaranteeing efficiency and reduces the risk. It, in turn, results in increased reputation.

Modes for achieving Effective Regulatory Compliance:

  1. Control Directory Compliance:

    To Simplify, Directory is a file system with a cataloguing structure containing various references to the other computer files. This Directory management could be upheld by database innovation which helps in introducing some excellent substance that will help in solving challenges faced in the executive world.
     
  2. Ontological alignment:

    In this method executives focus on the understanding of compliance management concepts to provide compliance management solutions in the organization.
     
  3. Modeling Control:

    This method aims at understanding the basis of right or wrong while keeping up an understandable working space and following the compliances work. It focuses on establishing a model having goals and determination in order to encourage the improvement of business forms along with control targets.
     

Process Model Enrichment and Compliance Enforcement and Monitoring

Process model enrichment is the capability to improve venture models. The implementation of controls and continuous monitoring of the work is a key part of this general technique. This results in compliance efficiency. 

Laws for regulatory compliance for a firm or organization in India:

  1. The Companies Act, 2013:

    The Companies Act, 2013 regulates the registration and  Formation of the Company (Section 3), It also guides the Necessary details for the Execution of Bills of Exchange, Promissory Notes, Ensuring proper details for public offerings etc.In this legislation the punishment for non-compliance to CSR is imprisonment up to 3 years and fine Ė a minimum of Rs 50,000/- and a maximum of Rs. 25,00,000/-.
     
  2. The Workmenís Compensation Act, 1923:

    This legislation aims at providing proper and adequate compensation to workmen and the non-compliance by organisations can result in severe punishments.
     
  3. The Forest (Conservation) Act, 1980:

    This legislation aims towards controlling air pollution by preventive measures and sanction. Organizations also need to comply with these directions, the non-compliance  of the same results in the action  taken against them under S.40 of the Act.

There are several other legislations that the companies have to comply to, they are the Environment Protection Act, 1986; Water (Prevention and Control of Pollution) Act, 1974, the National Environment Tribunal Act, 1995; Storage and Import of Hazardous Chemical Rules, 1989, the Public Liability Insurance Act, 1991, Hazardous Wastes Rules, 2008, The Trade Union Act, 1926; The Industrial Disputes Act, 1947; the Maternity Benefits Act, 1961; The Contract Labour (Regulation and Abolition) Act, 1970; the Payment of Gratuity Act, 1972; the Equal Remuneration Act, 1976, etc.

Challenges of Regulatory Compliance:

  1. Staying aware of the regulatory changes

    If organisations fail to understand or keep track of amendments, it results in neglect of compliance work which negatively affects the consistency and efficiency of the business. The changes in compliance rules and regulations also need changes in the compliance plan and the business strategy to be aware of ongoing regulations. Thus, sometimes it creates overburdening which results in non-compliance affecting regulatory compliances.
     
  2. Transparency and Accountability

    Transparency and accountability is the most vital task to be maintained by any organisation to gain trust and accountability. Thus various framework of associations is made within a business to keep up the consistency and regulate right establishments, procedures, and controls.
     
  3. Educational Barriers

    It is important to hire properly trained and knowledgeable workers in the compliance work, however, many a time lacks of training and experience results in unawareness of the working method which leads to non-compliance of work.
     
  4. Data protection and cyberattacks

    Cyberattacks disturb the entire framework of the work leading to full disintegration of the information causing extreme harm to the organisation. Fraud, monetary misrepresentation and loss of information etc. are some essential worries for organizations. 

Conclusion
It is important to have proper coordination among the people working together in an organization to attain complete effective regulatory compliance. Thus, it is fragile, sensitive and risky to be involved in every business. Non-Compliance with regulations can cause severe legal and financial loss to an organisation. Hence it is the responsibility of the organisation to adhere to the legislations made for the functioning of our legal system among the corporations at large.

References:
  1. Regulatory compliance, available at https://searchcompliance.techtarget.com/definition/regulatory-compliance
  2. Regulatory Compliance: Definition, Types & Examples,https://legalbeagle.com/13720404-regulatorycompliance-definition-types-examples.html
  3. Hereís Why Regulatory Compliance Is Important, available at https://reciprocitylabs.com/heres-regulatorycompliance-important/
  4. The risk of policy failure: challenges for regulatory compliance, available at https://www.oecd.org/gov/regulatory-policy/1910833.pdf

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