Compliances That Are Making Businesses Look Over Their Shoulders

As compliances evolve and new ones come to light every day across the globe, they keep adding to the woes of organizations who need to map them and align their businesses to these laws so the business can flourish in a compliant manner. Some of the popular compliances that have in-house counsel on their toes have been data privacy and data protection. There are also many other aspects that need a constant watch when doing cross-border business.

Our Panel comprising of Mamta Rani Jha, Partner & Head of Litigation, Inttl Advocare; Farhat Ali Khan, Managing Partner, Century Maxim International; Akshay Nagpal, Partner, Saraf and Partners; and moderator: Snigdhaneel Satpathy, Partner, Saraf and Partners looked into these aspects during the roundtable at the BW Legal World Global Legal Summit on May 22 at The Lalit.

Some of the highlights of the discussion lead by Snighdhaneel Satpathy’s on risks that businesses face and the way they can find their way through various compliances are as follows:

1. Onerous compliances: Grant of Patents that takes 10-12 years and remains valid for 20 years is a concern for most organisations, shared Mamta Rani Jha. Compliances like disclosure of related patents to be made within six months of applying for the Patent to the controller, where a patentee files for a patent in 40-50 countries is a dated compliance adding to the woes of businesses these days. Any failure to comply leads to invalidating the patents. According to Jha this provision has outlived its non-internet era and is reduced to a cumbersome compliance that solves no purpose in today’s time when data is easily accessible over the internet and such compliances could be lessened by the authorities.

2. Filing annual forms for working of patents. It has now been clarified through judgments that imports too will attract these compliances.

3. IT compliances: Intermediaries need to appoint nodal officers, grievance officers, and maintain a data centre in India. It is a challenge for intermediaries to follow these compliances when they operate in a number of jurisdictions across the globe. If they were to have a data centre in each country of operations, this will be looking at 24*7 monitoring around the world adding to their costs tremendously.

4. Anti-Money Laundering (AML) Compliances: As Farhat Ali Khan puts it, lawyers have taken an important role in dealing with the issue of AML where the consequences are extreme. The consequences are not only on the companies if they fail to make compliances. It also takes in its folds the directors, the shareholders and even money laundering officers that are appointed by the company and the beneficiaries. If any proceeds of crime whether it is a financial service firm or a non-designated financial service provider, they all are required to follow strict and severe measures of the provisions of law related to AML. The moment there is any format of money laundering it could be a mechanism to fund financed terrorism activities in different parts of the world. Therefore, there is a huge responsibility on companies while dealing with this subject. 

5. Creating the mindset and culture of compliance: “The foundation of compliances is where you understand which compliances are applicable to a particular company. And there needs to be simplicity of thought process there,” says Akshay Nagpal. Many a time it is seen that certain agencies will throw an entire statute book on the company stating everything needs to be compliant without any focus on what are the critical compliances to be made. It is thus very important for GCS or chief compliance officers to be able to prioritize the key compliance rules that need to be complied by the organisation before dealing with the entire gamut of them. In the MSME segment or start-ups, the focus is only on product growth, and business and compliance often take a backseat. So, creating a mindset and culture of compliance is important. One way of doing it is that it's a top-down approach. If the top management does bring this up in town halls, it percolates to the others. Secondly, there should be trainings organized within the organization to keep everyone on the same page with critical compliances. 

Full panel discussion is available here: http://bwlegalworld.businessworld.in/video/BW-Legal-World-Discusses-Legal-Compliances-for-Businesses/26-06-2022-3931/