There have been several times in the last two decades when the ethical behavior of organisation has been the center of attention. This may be due to lack of knowledge on the issues related to compliance. Compliance is all about internal control processes. The board should also ensure that compliance plays a significant role in both strategic plans and product development. Compliance should not be something that is retro-fitted to products, reorganization, and similar decisions. It should be a part of the DNA of the organization as well as design and decision-making process.
Corporate governance norms in India are in a constant state of refinement, in search of a balance between voluntary and mandatory approaches. Equally, the very concept of corporate governance is at a threshold in India where regulations attuned to Indian conditions require a deep understanding of underlying factors and issues before expecting compliance from corporations. Good governance has always been an important element in human interactions and in an increasingly uncertain global climate has now become an imperative. Corporations today wield immense economic power (sometimes greater than the GDP of some countries), and based on this economic power, considerable political power as well. It is not surprising that there is an increasingly intense demand to regulate corporations all over the world. This has led to a flurry of laws, regulations and compliance parameters in practically every country.
However, there are no set and final answers; the quest for good governance is a matter of on-going debate to arrive at practicable solutions both for internalising the goals of governance at every level of the organization and for implementing the regulations that are already in force.
India has a complex set of Central Government and State laws that businesses need to comply with. Researching the applicable laws, keeping up with changes and implementing necessary compliance procedures is time consuming and expensive.
IICA has identified that the main reasons for non-compliance are:
- The high cost of compliance
- Lack of knowledge of the laws
- Lack of systems within enterprises to monitor legal compliance
- Perception of compliance as an unnecessary burden
- Lack of uniform enforcement
In order to deliberate on the challenges in staying legally compliant in India especially for small and medium enterprises, the IICA has accordingly organised a one day long conference on Corporate Governance titled as “INSPIRING CONFIDENCE IN INDIAN BUSINESS”. A galaxy of eminent and experienced speakers with an objective to bring awareness and to provide solutions to address the challenge will address the gathering.
As part of the MoU between IICA and Intel a Legal Compliance Manual (LCM), has been developed. This has been developed as a generic manual, applicable to companies working in similar businesses and has been extended to include adjacent areas such as Factories Act compliances which apply to a vast number of companies in India.
The IICA version of the LCM will not cover all types of businesses but it will assist a substantial number of them to quickly learn about compliance obligations without incurring costs. The LCM will be provided with the caveat that it may be continuously updated to include new areas.
It is noteworthy that the IICA along with Thought Arbitrage Research Institute (TARI) and Indian Institute of Management, Calcutta (IIMC) have in 2011 entered into a collaborative arrangement to conduct a comprehensive study on the state of Corporate Governance in India covering four fundamental aspects of governance in India using quantitative and empirical research techniques.
The study should be of interest to companies, policy makers, analysts and academics alike and is titled” State of Corporate Governance in India- Policies to Reality”