The Importance Of Compliance Framework For An Organization
Why a Compliance Framework is Essential for Organizations
The Compliance atmosphere in India has witnessed a sudden momentum and a number of old laws are now being replaced with new age laws. Some of the examples for the same are the Companies Act, 2013, Maternity Benefit Act, The Prevention of Sexual Harassment of Women at Workplace Act etc. There are various discussions held to revamp the labour laws too so that the law is contemporary and is more modern.
With the introduction of new laws and revamping of old laws, companies now have to operate as per the provisions of the Act. Companies also need to set a proper compliance framework that is in sync with all the laws that are applicable. To get a thorough understanding of the revamped laws, you can always get in touch with experienced corporate lawyers in Mumbai.
Let us now have a look at the reasons why setting up a compliance framework is necessary for the smooth operation of your company.
Complex and Stricter Laws
The nation has already taken a step towards E-Governance and Ease of Doing Businesses and with this, the laws too have become stricter. The government has also started to monitor the laws with just one single click. So, ignorance of the laws is no longer an excuse.
Penalties
Not only did the laws get stricter, the penalties too have increased. According to the Companies Act, the penalties can be imposed for non-compliance of provisions on the Officer who is in default. Likewise, if the company is not in compliance with the Foreign Laws, Tax laws etc, even then penalties are imposed. So, it gets important to comply or you will have to face penalties. Companies also need to have a good understanding of Labour laws and can hire a labour lawyer in Mumbai for the same.
Imprisonment
Not everyone is aware that there are more than 50 sections in the Companies Act that can result in the imprisonment of the founders or the directors of the company. There are numerous imprisonment provisions in the SEBI regulations, Tax laws, environmental laws and much more. So, it makes it important for any company to choose the best from the available corporate lawyers in Mumbai.
License Cancellation
Apart from penalties, the new laws like Information technology Act, GST, and others also carry a threat of cancellation of the business license. Also, as per the Section 205 of Companies Act 2013, the secretary of the company needs to report to the Board members about the compliance with the provisions of CA2013 and about the other laws that can be applicable to the company. So, this makes the board accountable for any compliance.
The above mentioned are just a few of the reasons why you need to have a compliance framework set up for your company. You can consult a corporate lawyer to help you with the better understanding of the same.