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
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