Legal Compliance

Compliance Audit

  • Legal Compliance is increasing difficult not only in India but across the world.
  • Failure of adherence to legal requirements results in :
    • Disruption of business
    • Loss of reputation
    • Prosecution
    • Financial loss due to penalties
  • Progress Partners has, over the years, developed domain knowledge in the field and has specialised teams that work to check the Compliance Level in your organisation.
  • Our teams achieve the following to help the management know the status and be in a position to take adequate action :
    • Assessment of Legal Compliance status (level)
    • Identifying gaps in compliance
    • Identifying the risk levels
    • Working out the measures necessary for risk abatement
    • Reporting on the above to the Management

Scope :

  • Legal Compliance Audit
    • Annual
    • Quarterly
    • One-Time
  • Compliance Monitoring (on continuous basis)
  • Compliance Mechanism through specialised software
  • Training on Compliance
  • Review of Compliance Mechanism

Legal Requirement for Compliance – Companies Act, 2013

Sec 205 – Compliance Responsibility

  • Company Secretary to report to the Board about compliance with provisions of all laws applicable to the company

Sec 134 (5) (f) – Directors’ Responsibility Statement :

  • Annual Report to include a declaration that the company has devised proper systems to ensure compliance with the provisions of all applicable laws and they are adequate and operating effectively.

Clause 49 / Corporate Governance guidelines :

  • Requiring the Board to certify that structural Legal Compliance Management system is in place.
  • Board is required to periodically review reports prepared and steps initiated to rectify instances of non compliance.

Penalties for Contravention

Under Companies Act :

  • Contravention or Mis-declaration by Directors under Sec 134(5)(f)
    • Heavy Penalty, Persecution
    • Debarred from being director for 5 year

Under Other Laws :

  • Penalty under Factories Act – Occupier / Manager
    • Up to Rs. 500,000, Imprison-ment of 7 years for any offence
    • For continuing offense, liable for fine of Rs. 5,000 per day
    • Shop & Establishment Acts have similar provisions
  • Occupier’s Responsibility
    • Has to be a Director on the Board
    • Exempt by court only if he can prove another person actually responsible for the offence, committed without his knowledge, consent or connivance and that he has exercised utmost due diligence
  • Other Acts – Person Responsible
    • Persons in charge of and responsible to the company for the conduct of business is liable to persecution for any violation / offence