Compliance Burden and Challenges Faced by Compliance Officers in India


Posted September 3, 2020 by Avantis

Compliance Burden and Challenges Faced by Compliance Officers in India. Key Challenges faced by Compliance Officers in India.
 
Organizations in India are facing greater scrutiny than ever. In FY 17-18, 226,000 shell companies were de registered. Avantis has found that such an approach to Compliance Management could be costly and ultimately, dangerous, for any business, its shareholders, and its employees. Prosecutions for non-compliance can impact business in a variety of ways, from direct fines, enforcement orders and even prison sentences for directors.

In addition, the government barred over 300,000 directors of companies that have defaulted on statutory compliances from serving on boards of other companies to improve corporate governance and compliance. Bank accounts of approximately 210,000 were frozen after they were struck off the ROC. Prime Minister in his Independent day speech noted that over 400 bogus firms were found to be operating from a single address. Section 248 of the Companies Act allows the removal of companies from the register on various grounds, including having been inactive for extended periods.

In addition, the economic environment has been challenging, budgets are tight, and any expenditure is keenly scrutinized. It is tempting for companies to dismiss spending on Compliance Management as overheads or non-business expenditure. However, Over the past year, enforcement activities around India have seen a marked increase. Effective Compliance management is becoming a necessity for businesses which operates in an increasingly global environment where previously it may have been a luxury.

In-house availability of expertise
A mid or large sized business in India is typically structured as a group with entities, sub-entities, SPVs, JVs, Factories, Corporate Offices, Warehouses, Regional Offices, among others. As a result, they operate in multiple states, cities, Zila Parishads and Gram Panchayats. They need to comply with central, state, and local government regulations. The number of licenses, registrations, returns, registers, challans for such an organization can be mind numbing.

Management of all the applicable compliances need deep functional expertise. Therefore, organizations in India lack the depth and the breadth of required expertise to effectively manage all their compliance.

Accurate list of Applicable Acts and Compliances
The number of acts and applicable compliances for an organization in India range from a few hundred to a few thousand. These compliances span across seven different compliance categories, 1000+ Acts, 58,000+ compliances and 3,000+ possible filings. Compliance officers do not have one list of all applicable compliance for their business. In addition, businesses are highly dynamic and constantly add capacity, markets, and equipment. They form new JVs, SPVs and grow inorganically via M&A. All such events affect applicability of compliance for their business.

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Issued By Sandip Patil
Phone +91 8893594595
Business Address Avantis Regtech Pvt. Ltd. 9th floor, Amar Avinash Corporate Plaza,
11 Bund Garden Road, Near Inox Theatre, Ghorpadi, Pune, India
Country India
Categories Legal , Marketing , Software
Tags compliance burden in india , compliance management , compliance management software , government compliances in india , statutory compliances
Last Updated September 3, 2020