Learn about compliance

FOLLOW: INDUSTRY AND GOVERNMENT LAWS

It is a mandatory regulatory component of running a business.

There are many surprises entrepreneurs encounter when they embark on their entrepreneurial journey, but none more so than the amount of compliance issues that they have to deal with. Most entrepreneurs are not adequately prepared for this and to their defence, it’s seldom that business coaches or books talk about business compliance. Most of the rhetoric in entrepreneur books is motivational, product-, strategy-and market related, as well as on how to raise capital.

The irony of it all is that after achieving success by following the myriad of principles taught in entrepreneur books, you can lose it all by simply not being compliant.

I will be the first to put up my hand to say that compliance issues are boring, onerous and at times too costly. But the reality is that compliance is part of the national business framework and unfortunately it isn’t a choice but a mandatory regulatory component of running a business. What is compliance? Compliance is the act of abiding with both industry regulations and government legislation that has been established to govern business activities. To simplify it, we can divide compliance into three categories.

First and foremost there’s government legislation. In this group we find statutory bodies, laws and acts such as the Companies Act, Income Tax Act, Broad-based Black Economic Empowerment (B-BBEE) Act, Employment Equity Act, Labour Relations Act, Protection of Personal Information (Popi) Act, among others. These laws speak directly to businesses. We are all familiar with business tax required by Sars or Companies and Intellectual Property Commission annual returns, as stipulated by the Companies Act. But how about the requirement to comply with B-BBEE, the Labour Relations Act and not to forget the recently-added Popi Act?

Second are industry regulations. For example, if you wish to list on the stock exchange, the Johannesburg Stock Exchange has listing requirements that you must comply with, such as publicising your audited financial statements. Another example applies to the construction industry: you are required to obtain a Construction Industry Development Board (CIDB) grading that determines the level of construction work you can bid for.

Finally there is stakeholder compliance. Entrepreneurs are well too familiar with the requirements imposed on them if they wish to do business with certain companies. In many cases, business-to-business clients will ask you for tax clearance, a B-BBEE certificate, company profile etc. So too if you desire a line of credit from a supplier or your bank: they might each have their respective requirements of which non-compliance will render your efforts futile.

In today’s business environment compliance is a mandatory function amid a host of imposed regulations. The cost of non-compliance in any area of your business can have dire consequences, both legally and financially.

Munya Duvera is CEO at Duvera Elgroup

JSE has listing requirements you must comply with