Cor­po­rate gov­er­nance

Each month, the man­ag­ing partner of Gov­er­nance Creed, Jan Bladen, takes us through one of the top 10 rea­sons good boards fail and how to im­prove your chances of sur­vival

Gulf Business - - CONTENTS -

Why good boards fail: part 6

PRIN­CI­PLE 6: COM­PLI­ANCE

Com­pa­nies need to com­ply with per­ti­nent rules, laws and reg­u­la­tions which should be recog­nised not only for the re­spon­si­bil­i­ties and du­ties they im­pose, but also for the le­gal safety and en­ti­tle­ments ob­tained.

The board and its in­di­vid­ual mem­bers are ac­count­able for the cor­po­ra­tion’s adop­tion of and com­pli­ance with ap­pro­pri­ate laws and any ad­di­tional non-bind­ing rules, codes and stan­dards with which the cor­po­ra­tion has cho­sen to ad­here to. The rep­u­ta­tional im­pact of non-com­pli­ance with rules, laws and reg­u­la­tions is high and, as such, one of the core re­spon­si­bil­i­ties of the board is to en­sure the cor­po­ra­tion’s com­pli­ance. Prac­ti­cal com­pli­ance can be ob­tained by: a) Pin­point­ing the ap­pli­ca­ble rules, laws and reg­u­la­tions. b) En­sur­ing that the board col­lec­tively un­der­stands the le­gal re­quire­ments. c) En­sur­ing that the board is kept up to date on evolv­ing rules, laws and reg­u­la­tions, which can be achieved as part of a board’s con­tin­u­ing ed­u­ca­tion pro­gramme. d) En­sur­ing that the ex­ec­u­tive im­ple­ments a com­pre­hen­sive com­pli­ance and mon­i­tor­ing pro­gramme. e) En­sur­ing that reg­u­lar com­pli­ance au­dit re­ports are in­cluded for re­view by the board. f) In­clud­ing com­pli­ance check­points in op­er­a­tions as well as com­mu­ni­cat­ing and in­still­ing eth­i­cal con­duct into the cor­po­rate modus operandi. h) Re­tain­ing a com­pli­ance of­fi­cer re­spon­si­ble for es­tab­lish­ing a com­pli­ance func­tion. i) Pub­licly dis­clos­ing how the cor­po­ra­tion’s com­pli­ance has been achieved, how ef­fec­tive it has been and any sig­nif­i­cant fail­ures lead­ing to penal­ties and lessons learned.

The rep­u­ta­tional im­pact of non­com­pli­ance with rules, laws and reg­u­la­tions is high and, as such, one of the core re­spon­si­bil­i­ties of the board is to en­sure the cor­po­ra­tion's com­pli­ance

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