The beginning of new era of compliance has been
embarked with the enactment of Companies Act, 2013. The Act has introduced
several new concepts and has also tried to modernize many of the requirements
by introducing new definitions. Introduction of stringent provisions with heavy
penalties mandated the System of Compliance management in a company to ensure
the compliances of laws applicable on the company. The act cast duties on Board
as well on the Company Secretary to comply with all applicable laws. Secretarial
Audit and Compliance management will be effective tools for smart governance.
Compliance management is to be in built into the corporate system to avoid instance
of non compliance.
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Legal Compliance Systems (LCS)
The LCS may be defined as a method
by which corporate manage the entire compliance process starting from creating
an inventory of laws as applicable to the company till the implementation of compliance
of such law by the respective person/department. Broadly, it includes the
compliance search, actual compliance, compliance audit, compliance report, etc.
They must establish a compliance management system as a supporting system of
risk.
Needs of LCS