corporate compliance management (ccm) : a systematic approach

A Systematic Approach

Corporate Compliance Management

15.12.2007

Coverage

About ‘C+M’ of CCM?

Compliance Management

A framework to maintain and build community

confidence

to ensure that we meetagreed standards of ethics, behavior

and responsibility.

HOW TO IMPLEMENT AN EFFECTIVE COMPLIANCE MANAGEMENT

SYSTEM ???

. By Designing effective & user friendly Compliance Management System

. To lay down strong foundation for Good Governance

Elements of Effective Compliance Program

Customization of …..

At One Place

Professional needs to

Analyze & Understand

Management Structure &

Information Flow

COMPANY POLICIES

OPERATIONAL PLANNING AND EXECUTION

DIR A DIR B DIR C DIR D DIR E

BOARD OF DIRECTORSBOARD OF DIRECTORS

CORPORATEPLANNING

LEGALFINANCE AND

ACCOUNTSHUMAN

RESOURCESCORPORATE

COMMUNICATIONPRODUCTION

AND OPERATIONSMARKETING

INFORMATION TECHNOLOGY

DEPARTMENTS IN A COMPANY

EXTERNAL STAKEHOLDERS

INVESTORSINVESTORS

GOVERNMENT AND REGULATORS

GOVERNMENT AND REGULATORS

SOCIETYSOCIETY

SUPPLIERSSUPPLIERS

CUSTOMERSCUSTOMERS

LENDERSLENDERS

Company Secretaries to understand their role

Coordinate between various departments and all stakeholders,

Ensure compliance of all applicable laws and

Develop mutual trust between various stakeholders

COMPANY POLICIES

OPERATIONAL PLANNING AND EXECUTION

DIR A DIR B DIR C DIR D DIR EBOARD OF DIRECTORS

CORPORATEPLANNING

LEGALFINANCE AND

ACCOUNTSHUMAN

RESOURCESCORPORATE

COMMUNICATIONPRODUCTION

AND OPERATIONSMARKETING

INFORMATION TECHNOLOGY

DEPARTMENTS IN A COMPANY

EXTERNAL STAKEHOLDERSCOMPANY

SECRETARY

INVESTORSINVESTORS

GOVERNMENT AND REGULATORS

GOVERNMENT AND REGULATORS

SOCIETYSOCIETY

SUPPLIERSSUPPLIERS

CUSTOMERSCUSTOMERS

LENDERSLENDERS

CS is the Principal Officer of the Company

Role of Company Secretary??

TO TO CHANGECHANGE

THE THE MINDSETMINDSET

Company Secretary is primarily responsible to coordinate with COMPLIANCE OF ALL LAWS

Therefore, WE ARE ANSWERABLE……

What is Compliance of all laws??

Compliance of all laws

Not just any other

compliance ………………

HIDDEN KHAZANA for all

STAKEHOLDERS

INVESTORSINVESTORS

GOVERNMENT AND REGULATORS

GOVERNMENT AND REGULATORS

SOCIETYSOCIETY

SUPPLIERSSUPPLIERS

CUSTOMERSCUSTOMERS

LENDERSLENDERS

Company

Professional

Right Proportion = Creating difference

Understand your company

Proper Identification & Evolution of applicable laws

Analysis of applicable laws

Assessment

Public SectorUndertakings

Private LimitedCompanies

Trusts And NGOs

Coop Societies And Producer Companies

Municipal Boards

Semi-governmentOrganisation

Unlisted PublicCompanies

Listed PublicCompanies

Different Corporate Structures

UNDERSTANDING AT MACRO LEVEL

Media And Entertainment

Infrastructure, Power And Telecom

IT Solutions

IT Enabled Services And BPO

Textiles

Tourism And Hotel Capital Market And Its Intermediaries

Engineering and Construction FMCG

Agriculture AndFood Processing

Capital Goods

Drugs, Pharma And Healthcare

Banking And NBFC

Financial Services

Different Industries

Global Operations

Indian Operations

Different Geographies

Time has come.. Corporate compliance is not merely a legal compliance but it is NECESSITY Now …………

Preparation for ImplementingCompliance Management

System

Understanding the Company - Company’s History & Background

- Capital Structure & Evolution

- Promoters & Group Companies

- Management & Administration buildup

- Financial Soundness & Debt Structure

- Risk Management & Protection - Licenses & Approvals

THE THREE STEP PROCESS

Step I : IDENTIFICATION

Step II : EVALUATION

STEP III : ASSESSMENT

•General application of laws.

• Sectoral applications

• Industry / Segment applications

• Geographical applications

• Number of Employees

• Transaction applications

IDENTIFICATION PROCESS

Evaluation: Preparation at home

Evaluating the applicable laws after due identification process

As for instance:

A Company has its operations of exports which further Involve lots of foreign exchange transactions.

Identification: FEMA, 1999

Evaluation : FEM ( Exports of goods & services) Regulations, 1999

Assessment Process

Further improvements Implication of Compliance System Effective Usability Bridging the gap of Compliance in

letter & Compliance in Letter & spirit

EXPLAINING THE PROCESS

TEXTILE INDUSTRY

• Manufacturing & Trading

• 1000 workers

• Export process

• Polluting Unit

• Unlisted Company

• Surat based

IDENTIFICATION, EVALUATION & ASSESSMENT AT ONE PLACE…

Identification of applicable laws

General Laws

• Companies Act, 1956

• Income Tax Act, 1961

Area Specific

• All laws applicable to Particular State

Sector Specific

• Central Excise Act

• Value Added Tax Act

International Transaction

• FEMA , 1999

No of Employees

• Factories Act, 1948

• Payment of Wages Act, 1936

•Contract Labour (regulation & abolition) act,

1970

Subjective

• Air (Prevention of Pollution Control) Act, 1981

•Environment (Prevention of pollution control) Act,

1986

Taxation Laws

Corporate laws

Industrial & Labour Laws

10 or more 20 or more 25 or more 100 or more 1000 or more

Property laws

General Laws(Applicable to all companies)

(Based on Number of employees)

Listed Company

Un-listed Company

Public Company

Private Company

Govt. Company

On the basis of Status of the Company

Intellectual Property

Laws

Foreign Exchange

Laws

Custom Tax laws

Event Based Laws

Manufacturing Trading Service

Insurance

Tourism

PowerFMCG

Banking

Pharmaceutical

Entertainment

IT enabled services & BPO

Industry Specific Laws

Automobiles

Computers

Aluminium Products

Cables

Cement

Cigarettes

Breweries & Distilleries

Sector Specific Laws

Maharashtra PunjabGujarat

Labour Welfare Act

National Festival Holiday

Act

Shops and Commercial

Establishment Act

State Wise Laws

Compliance Timings: Evaluation

Compliance Timings

Fixed / Regular Event Based

The assessment process:

Identify the gap between the present compliance system and the results of evaluation

process

Simplification: The Next MoveDeveloping Compliance Management Tools

Law wise

Period wise

Developing Compliance Management Tools..contd

Triggering date & time

Triggering information input Organisation type, Capital deployed, Business typeOrganisation type, Capital deployed, Business type

Product profileProduct profile

Effective Usability

Newsletters & Magazines Discussion e-Groups Software carried automatic

updating options Attending seminars & workshops Newspapers & Business News

Channels Regular visits at Authority’s

website

Developing Compliance Management Tools..contd

Effective Usability

Unsystematic Compliance

System… the aftermath

CURRENT PROFILE

80% 20%

TRADITIONAL ROLE STRATEGIC ROLE

Form Filing

Registers& Returns

Good Compliance

Risk Mitigation

Corporate Governance

PRESENT FACE

ChecEChecklists

Let IT works for you………….

Compliance Tool by PWC

Compliance Tool by PWC

complianceonline.com by Metric Stream

bizfilings.com

Compliance Tool by Corporate Professionals

Striking Features of CCM Tool

Coverage of more than 200 Act, Rules, Regulations, Guidelines, Circulars & Notifications effecting the compliance requirement of a Company

Covers all Industry Specific & Location based laws

Real Time updations by Expert Professionals located all over India

Customization of Checklist according to the applicable laws to your Company

Rights/option to create a complete system of compliance management Creation of Different Users to comply with

different laws Fixation of dead lines for compliance by each

user

Creation of Three Tier Hierarchy for compliance Reporting System

Alerts at different levels as the last date of compliance comes closure

Alerts & Reminders by way of mails & messages

Features of CCM Tool

Online support in the form of Query Box

Facility of getting Opinion on any of the Topic of Compliance from Eminent Professionals of the field on our panel

Discussion Forum & Archive of Topic-wise Discussions

Library of Forms of all laws covered

Features of CCM Tool

Reporting of Compliance & Non-Compliance On Real-time Basis On Quarterly Basis Archive of Quarterly Compliance Reports

Risk Assessment of Non-Compliances Reporting of Consequences segregated in

High, Medium & Low financial & Other Risks

Features of CCM Tool

How it works??

Compliance Organisation Structure

Low

High

All Rights availableCompliance Officer

CEO

Corporate and Securities Law Department

Labour and Industrial Law Department

Taxation Department

Executive Executive

Executive Executive

Executive Executive

Compliance Reporting

Assignment Task 1 Task 2 Task 3

LISTING AGREEMENT Submit CG

Compliance Certificate

Submit Shareholding

Pattern

Submit Financial Results

Complied/ Not Complied

Not Complied, because I was

out of town and I forgot to

delegated work

Level 2 Securities Law DepartmentMr. R Sharma

Proof of Compliance attached

Proof of Compliance attached

Compliance Report

Compliance Scheduler

Title Notice by Occupier

Form No

------

Due Date

At least 15 days before he begins to occupy or use

Title Shareholding Pattern

Form No

Fixed Format

Due Date

Within 21 days from the end of each Quarter

IncomeTax

Factories Act

CompaniesAct

Listing Agreeme

nt

Today This Week This Month Select Period

Title Return of Income

Form No

ITR-6

Due Date

On or before 31st October of the assessment year

Title Appointment of Director

Form No

Form 29 &

32 Due Date

Within 30 days of appointment

Compliance Scheduler

Alerts & Notifications

Compliance

Due DateLevel III

(Executive)

Level II(Department Head)

Level I(Complia

nce Officer)

CEO

Submit CG Compliance Certificate

15/04/2007

05/04/2007,

08/04/2007, 11/04/2007,

14/04/2007,15/04/2007

Submit Shareholding Pattern

21/04/2007

11/04/2007,

14/04/2007, 17/04/2007,

20/04/2007,21/04/2007

Submit Financial Results 23/04/2007

13/04/2007,

16/04/2007, 19/04/2007,

22/04/2007,23/04/2007

Note: Reminders in case of Non Compliance

Assigned To Mr. SumitReminder Date

Reminders

Forms Library

Download

Compliance Statistics

No status37%

Not Complied

Complied

52%

Status on the

basis of

information

provided

11%

Penalty Risk Classification

Significance Type Probability

I year prosecution

High Urgent Moderate

Fine of Rs. 1,00,000

High Not Urgent

Moderate

Fine of Rs. 1,000

Low Avoid Low

High RiskModerate RiskLow Risk

Risk Assessment & Analysis

Risk Reporting

USING COMPLIANCE SYSTEM

80% 20%

STRATEGIC ROLE TRADITIONAL ROLE

Corporate Compliance

Risk Management

Form filing

System Driven

organisation

Registers & Returns

Checklists & Modules

IT based Compliance System can change the face……

Advantages of Corporate Compliance

Easy Quantification of risk Establishing Risk appetite Identify and prioritize controls Multitude of Compliance

obligations. Building Strong Foundations Extended Confidence to Investors Gaining Competitive Edge Good Compliance System leads

to Excellence in Operations

Effect of Technology

Easy Compliance

Impossible Non- Compliance

Company Secretary is like back bone

of any Compliance Management System

to any organisation and with its

Proactive Approach & Intelligence

make an organisation front runner in its field…

Good Corporate governance

Reduces Risk

Higher Profits

Higher Valuation of Company

RESULT OF GOOD CORPORATE COMPLIANCE

MAKING YOUR COMPANY DIFFERENT & LEADING TOWARDS EXCELLENCE

Happy Company

Happy Management

Happy Investors

Happy Customers

Happy Regulators

EXCELLENCE PAYS…

A Solution for Today and Beyond……

Corporate Compliance Management

Conclusion is … Make Your Company

GOOD GOVERNED COMPANY