Embed Size (px)
Citation preview
12/12/2014
CORPORATE COMPLIANCE MANAGEMENT
(CCM)
“Governance
Initiatives
& Accountability”
Systematic - Well Organized
Governed - Compliance
Valued - Building Value
Corporate Compliance Management (CCM)
Time has come.. The complianceis not merely a legal compliancebut it is a NECESSITY Now…………
Begin the New Era of
Corporate Compliance
Management
Corporate Compliance Management (which
starts with Clause 49)
Clause 49 of Listing Agreement: in the year 2003
“ The Board shall periodically review compliance reports of all laws
applicable to the company, prepared by the company as well as steps taken by
the company to rectify instances of non-compliances.”
Now
Companies Act 2013
COMPLIANCE OF ALL APPLICABLE LAWS IN ACT
Section 204 of Companies Act, 2013: Secretarial Audit for every Listed
Companies and Public Companies (as per Rule 9):
Having Paid up Capital of Rs. 50 Cr or moreTurnover of Rs. 250 Cr or more
COMPLIANCE OF ALL LAWS
Company Law
Economic and Commercial Law
Tax Laws
Capital Markets and Securities Laws
Industrial, Labour and General Laws
Secretarial Audit, Compliance Management and Due Diligence
Corporate Restructuring, Valuation and Insolvency
Banking Law and Practice
Capital, Commodity and Money Market
Insurance Law and Practice
Intellectual Property Rights - Law
International Business-Laws
ALL APPLICABLE LAWS– SYSTEM PART
Adequate System and Procedure
ALL APPLICABLE LAWS– AUDIT PART
Now Secretarial Auditor has to provide their Audit Reportin Form No.- MR -3 and to certify that Company iscomplying the provisions of :
Companies Act
SCRA
FEMA
Depositories Act
SEBI Regulations:
Takeover Code
Buy Back
Delisting
UTP
ICDR
ESOP
Issued Debt Fund
Secretarial Standard
Listing Agreement
ALL APPLICABLE LAWS– AUDIT PART
Non Compliance
Observation
Audit Qualification
Reservation
Adverse Remarks
PREPARATION FOR IMPLEMENTING COMPLIANCEMANAGEMENT SYSTEM
The Board of Directorsof the Company has toensure that forcompliance of all theapplicable laws on theCompany there will be asystem within theCompany.
IMPLEMENTING EFFECTIVE COMPLIANCE MANAGEMENT SYSTEM
WHAT IS COMPLIANCE OF ALL LAWS?
Compliance of all laws
Not just any other compliance ………………
COMPLIANCE OF ALL LAWS
Product
Profile
Factory
Location
Sector
Segment
Transaction
Employees
HOW CORPORATE COMPLIANCE MANAGMENT WORKS ???
GENERAL LAWS (APPLICABLE TO ALL COMPANIES)
Taxation
Laws
Corporate
laws
Industrial &
Labour Laws
10 or more 20 or more 25 or more 100 or more 1000 or more
Property
laws
(Based on Number of employees)
EVENT BASED LAWS
Consumer Laws
Intellectual Property
LawCustom Tax Law
Foreign Exchange
Management Law
STRUCTURE BASED LAWS
Public SectorUndertakings
Private LimitedCompanies
Unlisted PublicCompanies
Listed PublicCompanies
Different Corporate Structures
SECTOR SPECIFIC LAWS
E-commerce
Manufacturing Trading Service
SEGMENT WISE LAWS
Media And Entertainment
Infrastructure, Power And Telecom
IT Solutions
IT Enabled Services And BPO
Textiles
Tourism And HotelCapital Market And Its Intermediaries
Engineering and Construction
FMCG
Agriculture AndFood Processing
Capital Goods
Drugs, Pharma And Healthcare
Banking And NBFC
Financial Services
STATE WISE LAWS
Environmental Laws
Labour Welfare Act Shops and Commercial
Establishment Act
Industrial Laws
National Festival Holiday Act
DIFFERENT GEOGRAPHICAL LAWS
Global
Operations
CASE STUDY – CEMENT INDUSTRY
Understanding The Company
CEMENT INDUSTRY
• Public Limited Company
• Listed Company – BSE, NSE
• Manufacturing & Trading
• Exporting Company
• 10,000 No. of Employees (Approx.)
• Units Located at Bhubaneswar, Rajnagpur
Identification of Applicable Laws
– Cement Industry
On the basis of General Corporate Information – Public
Company, Listed at BSE, NSE
•Companies Act, 2013
•Income Tax Act, 1961
•SEBI (Insider Trading) Regulations, 2009
•SEBI (Substantial Acquisition of Shares & Takeovers)
Regulations,
2011
•Listing Agreement
Identification of Applicable Laws
– Cement Industry
On the basis of Sector – Manufacturing and Trading
•National Environment Policy
•Environment (Prevention of pollution control) Act,
1986
•Central Excise Act, 1944
Identification of Applicable Laws
– Cement Industry
On the basis of Type of Industry – Cement
•Cement (Quality Control) Order, 2003
•Limestone and Dolomite Mines Labour Welfare Fund
Act, 1972
•Mines and Minerals (Development and Regulation) Act,
1957
•Mineral Conservation and Development Rules, 1988
•Metalliferous Mine Regulations, 2012.
•Explosives Act, 2008
Identification of Applicable Laws –
Cement Industry
On the basis of No. of Employees
•Employees’ Provident Funds & Miscellaneous Provisions
Act, 1952
•Factories Act, 1948
•Payment of Gratuity Act, 1972
•Industrial Dispute Act, 1947
•Employees State Insurance Act, 1948
•Payment of Wages Act, 1936
•Minimum Wages Act, 1948 & Minimum Wages (Central)
Rules, 1950
Designing the Corporate Compliance
Management System
What to Focus on?
Careful division of Consequences of Non-Compliances
of Applicable Laws under the following broad heads:
Criminal Consequences;
Loss of Reputation, and
High Penalties
“The exercise of good governance
can ensure that compliance is
aligned with the company’s
business objectives and risk
management strategies. In this way
compliance can add real value and
not just be a cost to the
organisation.”
Satyam Vada Dharmam Chara
- Taittariya Upanishad
“Forever speak the truth and follow the dharma”
Truth : Disclosure of Actual State of Affairs
(Transparency in operations and transactions)
Principles of Corporate Excellence
Fairness to all stakeholders
Mutual Trust, Transparency and Togetherness
Unrestricted Communication and Continuous Feedback
Sharing Knowledge, Success Stories and Experience
Sharing Happiness and Concerns
Helping Each Other – Round the Clock
Fairness to all stakeholders
Mutual Trust, Transparency and Togetherness
Unrestricted Communication and Continuous Feedback
Sharing Knowledge, Success Stories and Experience
Enhanced Trust and Confidence of all
Stakeholders
EMPLOYEES
INVESTORSCUSTOMERS
SUPPLIERS
GOVERNMENT AND
REGULATORS
SOCIETY
Growth
Growing Revenues
Growing Profits
Growing Market Value
Widespread Goodwill and Brand Reputation
Access to Global Markets
Better Access to Human Capital
Ready Market for New Products
Widening Customer Base
WINNING
EMPLOYEES
GROWING
INVESTORS
DELIGHTED
CUSTOMERS
TRUSTED
SUPPLIERS
SATISFIED
GOVERNMENT AND
REGULATORS
HAPPY
SOCIETY
Leading to…
Environment
Civil SocietyBusiness Society
SUSTAINABLEDEVELOPMENT
Corporate Value without Compliance – The Past
COMPANY
• Loss of reputation & recognition in International Market
• Loss of Moral Fibre of Corporations
• Loss of Investors Confidence
• Difficulty in further raising of capital
• Investor Complaints
• Regulatory hurdle
• Difficulties in Business operations
• Penalty , Imprisonment and Criminal liability on BOD
• Degradation of reputation of BOD
PRACTICES:
• Lacking of proper Compliance Mechanism in the
Company
• Unawareness about latest regulatory
development and Laws
• Lacking of expertise knowledge on Compliance
of All Laws
Corporate Value without Compliance – The Past
Corporate Value without Compliance and its Result
..…Only the culture of
strict adherence to good compliance
can keep a company
ahead on sustainable basis , bring in
larger profits…
Secret behind building foundations
Cost Involved in CCM
Cost of Compliance
Cost of Non-Compliance
Corporates may consider CCM as a costly tools but it is
a mechanism though which Company can assure about
well Compliant Company and avoid the high cost of
non-compliance including but not limited to penalties,
loss of investor confidence and negative goodwill.
Thus, Although a lot has been done, but a lot needs to be done.
“It is not enough to take good decisions
and make good choices. It is necessary
to take heed and comply with applicable
laws in order to grow right”
THANK YOU
Corporate Professionals Capital Private LimitedD-28, South Extension –I, New Delhi-110 049
Ph: +91.11.40622200; Fax: +91.11.40622201; E: [email protected]
Pavan Kumar VijayManaging Director
