Regulatory compliance is a type of regulatory risk that is an important part
of running a business. It involves an organization's adherence to laws,
regulations, rules and specifications relevant to its business processes. It
regulated a wide arena of monitoring and implementation processes. These
processes can become complex and tedious depending on the industry and its
The Importance of Regulatory Compliance
Reducing Risk, Greater Efficiency and Increased Reputation
Compliance work often involves identifying and analyzing. It regulates effective
action to be taken which is ensured through monitoring. Corporate affairs
require efficiency and hence, Regulatory compliances are one of the modes to
attain the same via revising, checking, looking and correcting the work numerous
times by guaranteeing efficiency and reduces the risk. It, in turn, results in
Modes for achieving Effective Regulatory Compliance:
Control Directory Compliance: To Simplify, Directory is a file system with a cataloguing structure
containing various references to the other computer files. This Directory
management could be upheld by database innovation which helps in introducing
some excellent substance that will help in solving challenges faced in the
Ontological alignment: In this method executives focus on the understanding of compliance
management concepts to provide compliance management solutions in the
Modeling Control: This method aims at understanding the basis of right or wrong while keeping
up an understandable working space and following the compliances work.
It focuses on establishing a model having goals and determination in order
to encourage the improvement of business forms along with control targets.
Process Model Enrichment and Compliance Enforcement and Monitoring
Process model enrichment is the capability to improve venture models. The
implementation of controls and continuous monitoring of the work is a key part
of this general technique. This results in compliance efficiency.
Laws for regulatory compliance for a firm or organization in India:
The Companies Act, 2013: The Companies Act, 2013 regulates the registration and Formation of the
Company (Section 3), It also guides the Necessary details for the Execution
of Bills of Exchange, Promissory Notes, Ensuring proper details for public
offerings etc.In this legislation the punishment for non-compliance to CSR
is imprisonment up to 3 years and fine a minimum of Rs 50,000/- and a
maximum of Rs. 25,00,000/-.
The Workmen's Compensation Act, 1923: This legislation aims at providing proper and adequate compensation to
workmen and the non-compliance by organisations can result in severe
The Forest (Conservation) Act, 1980: This legislation aims towards controlling air pollution by preventive
measures and sanction. Organizations also need to comply with these
directions, the non-compliance of the same results in the action taken
against them under S.40 of the Act.
There are several other legislations that the companies have to comply to, they
are the Environment Protection Act, 1986; Water (Prevention and Control of
Pollution) Act, 1974, the National Environment Tribunal Act, 1995; Storage and
Import of Hazardous Chemical Rules, 1989, the Public Liability Insurance Act,
1991, Hazardous Wastes Rules, 2008, The Trade Union Act, 1926; The Industrial
Disputes Act, 1947; the Maternity Benefits Act, 1961; The Contract Labour
(Regulation and Abolition) Act, 1970; the Payment of Gratuity Act, 1972; the
Equal Remuneration Act, 1976, etc.
Challenges of Regulatory Compliance:
Staying aware of the regulatory changes If organisations fail to understand or keep track of amendments, it results
in neglect of compliance work which negatively affects the consistency and
efficiency of the business. The changes in compliance rules and regulations
also need changes in the compliance plan and the business strategy to be
aware of ongoing regulations. Thus, sometimes it creates overburdening which
results in non-compliance affecting regulatory compliances.
Transparency and Accountability Transparency and accountability is the most vital task to be maintained by
any organisation to gain trust and accountability. Thus various framework of
associations is made within a business to keep up the consistency and
regulate right establishments, procedures, and controls.
Educational Barriers It is important to hire properly trained and knowledgeable workers in the
compliance work, however, many a time lacks of training and experience
results in unawareness of the working method which leads to non-compliance
Data protection and cyberattacks Cyberattacks disturb the entire framework of the work leading to full
disintegration of the information causing extreme harm to the organisation.
Fraud, monetary misrepresentation and loss of information etc. are some
essential worries for organizations.
It is important to have proper coordination among the people working together in
an organization to attain complete effective regulatory compliance. Thus, it is
fragile, sensitive and risky to be involved in every business. Non-Compliance
with regulations can cause severe legal and financial loss to an organisation. Hence
it is the responsibility of the organisation to adhere to the legislations made
for the functioning of our legal system among the corporations at large.
- Regulatory compliance, available
- Regulatory Compliance: Definition, Types & Examples,https://legalbeagle.com/13720404-regulatorycompliance-definition-types-examples.html
- Here's Why Regulatory Compliance Is Important, available at https://reciprocitylabs.com/heres-regulatorycompliance-important/
- The risk of policy failure: challenges for regulatory compliance,
available at https://www.oecd.org/gov/regulatory-policy/1910833.pdf