Download - EquiCorp- Legal Compliance Services

EquiCorp AssociatesAdvocates & Solicitors

www.equicorplegal.comwww.equicorplegal.com

Legal Risk - Prologue

Legal risk refers to risk from uncertainty due to legal actions or uncertainty inthe applicability or interpretation of contracts, laws or regulations.

Legal risk can be a particular problem for institutions who transact businessacross borders with exposure to uncertainty relating to the laws of multiplejurisdictions, but also ambiguity as to which jurisdiction will have authorityover any particular legal issue (as applicable).

Legal risk in a common-law system might arise out of almost any aspect ofinternational or national public, private or formal law. The source of the legalrisk could be any aspect of the law applicable to a institution.

Its the risk associated with the impact of a defect in the documentation on cashflow or debt service within financial services rendered.

Legal risk is a form of enterprise risk in which a organization is exposed to legalaction where the offence can be either civil i.e. compliance defaults, breach ofcontract etc or criminal i.e. cheating, breach of trust, deceit etc.

Legal risk refers to risk from uncertainty due to legal actions or uncertainty inthe applicability or interpretation of contracts, laws or regulations.

Legal risk can be a particular problem for institutions who transact businessacross borders with exposure to uncertainty relating to the laws of multiplejurisdictions, but also ambiguity as to which jurisdiction will have authorityover any particular legal issue (as applicable).

Legal risk in a common-law system might arise out of almost any aspect ofinternational or national public, private or formal law. The source of the legalrisk could be any aspect of the law applicable to a institution.

Its the risk associated with the impact of a defect in the documentation on cashflow or debt service within financial services rendered.

Legal risk is a form of enterprise risk in which a organization is exposed to legalaction where the offence can be either civil i.e. compliance defaults, breach ofcontract etc or criminal i.e. cheating, breach of trust, deceit etc.

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Understanding Legal Risks ~ Non Compliances - BusinessImpact

ComplianceAreas

Risks of Non-Compliance

Direct TaxCompliance

• Imposition of penalty• Prosecution of directors

Indirect TaxCompliance

• Cancellation of licenses• Withdrawal of tax benefits• Stoppage of operations

Labour lawCompliance

• Imposition of penalty• Prosecution of directors/occupier• Employee dissatisfaction

The sudden increasein the regulatoryenforcement in Indiahas catapultedcompliance risk ontop of the boardmanagement and theregulatory regime inIndia continues to becomplex requiring regularinteractions with multipleregulators.

Legal Risk Management Services Overview

Expertise of Indian lawsand Regulation

Legal Structuring &Advisory

Government Approvals &Liaisoning

Negotiation &Documentation

Labour lawCompliance

• Imposition of penalty• Prosecution of directors/occupier• Employee dissatisfaction

Environment, Health& Safety laws

• Stoppage of operations• Imposition of penalty

Corporate LawCompliance

• Imposition of penalty• Vacation /Prosecution of directors/seniormanagement


The sudden increasein the regulatoryenforcement in Indiahas catapultedcompliance risk ontop of the boardmanagement and theregulatory regime inIndia continues to becomplex requiring regularinteractions with multipleregulators.

Legal Compliance AuditsObjectives

To identify the level of compliance of an organisation

Identify the compliance risk

Enable the management to take steps to make the organisation compliant with laws andregulations

NonCompliance

Audit Report

EquiCorp’s Legal and Compliance Audit

1. Identification of Regulatory scope and laws thatapply to Company

2. Location visit

3. Interviews and discussions with Management

4. Issue of Audit Report

5. Follow up and remediation

Company

Documents

NonCompliance

Audit Report

ACTIONSRemediation of non

compliance

EquiCorp’s Legal and Compliance Audit

1. Identification of Regulatory scope and laws thatapply to Company

2. Location visit

3. Interviews and discussions with Management

4. Issue of Audit Report

5. Follow up and remediation


Legal Compliance Report Non-Compliance Summary - a list of all items where the unit is not compliant,

forming a primary report to client

Register List – a detailed listing of all registers / notices / abstracts to bemaintained / displayed, the status of each, to allow easy follow up.

Criticality is reported in the following terms:

Critical - Possibility of unit being shut down.

Serious - Heavy Penalty, criminal offence, imprisonment

Minor – Let of with warning and mild fines.

Technical - Wrong format / documentation easily corrected

Non-Compliance Summary - a list of all items where the unit is not compliant,forming a primary report to client

Register List – a detailed listing of all registers / notices / abstracts to bemaintained / displayed, the status of each, to allow easy follow up.

Criticality is reported in the following terms:

Critical - Possibility of unit being shut down.

Serious - Heavy Penalty, criminal offence, imprisonment

Minor – Let of with warning and mild fines.

Technical - Wrong format / documentation easily corrected


UnderstandingLegal Landscape

Diagnostic ofexisting

compliancemanagement

system

MappingCompliance

Responsibility&regular updationof compliances

Compliance Management Services

Diagnostic ofexisting

compliancemanagement

system

Assistance insetting up of

statutorycomplianceframework

Detailedcompliance

reviewsincluding review

for sectorspecific laws

MappingCompliance

Responsibility&regular updationof compliances

Legal Risk Advisory Services

Completion:

Board & Shareholder ResolutionsStatutory filings

Monitoring Regulatory Compliance

Structuring:Determine the tax efficient & legal compliant structure for

grants and fundsMarket Entry Strategy

Instruments for the implementation of the agreed terms

Due Diligence:Investor’s Perspective

Risk AssessmentLegal& commercial affairs of the company

Documentation:Term SheetAgreements

Legal Advisory and Opinion


Acts covered (examples)

Factories Act, 1948 Shop & Establishment Act (state acts)

Payment of Wages Act, 1936 Maternity Benefits Act, 1961

Minimum Wages Act, 1948 Gratuity Act, 1972

Equal Remuneration Act, 1976 ESI Act, 1948

Payment of Bonus Act, 1965 Apprentices Act, 1961

Provident Fund & Misc Provisions Act,1952

Employment Exchanges (CompulsoryNotification of Vacancies Act), 1959

Hum

an R

esou

rces

(HR

)

Provident Fund & Misc Provisions Act,1952

Employment Exchanges (CompulsoryNotification of Vacancies Act), 1959

Contract Labour (Regulation & Abolition) act,1970 Trade Unions Act, 1926

Workmen Compensation Act, 1923Private Security Agencies RegulationAct, 2005

Prevention of Sexual Harassment(Guidelines)

Industrial Disputes Act, 1947

Labour Welfare Act (state acts)

Hum

an R

esou

rces

(HR

)


Acts covered (examples)Electricity Act, 2003 Environment Protection Act, 1986

Petroleum Act, 1934 Water (Prevention and Control of Pollution) Act, 1981

Explosives Act, 1884 Air (Prevention and Control of Pollution) Act, 1981

Boilers Act, 1923 Water Cess Rules, 1977

Legal Meteorology Act, 2011 Hazardous Waste Handling & Management Rules,1989

Essential Commodity Act, 1945

BU

SIN

ESS

Micro, Small & Medium Enterprises Devel. Act,2006 Central Excise Act, 1944

Central Sales Tax Act, 1956 State VAT Acts

Customs Act, 1962 (export and importdocumentation) Service Tax Act, 1955

Income Tax Act (payment of Tax, TDS) Foreign Exchange Management Act

Negotiable Instruments Act, 1881Industries (Development & Regulation)Act, 1951

Information Technology Act, 2000 Motor Vehicles Act, 1988

Competition Act, 2002

TA

XE

S &

MIS

C


Benefits and Obstacles to Legal /Compliance Audits

Benefits

In-house legal team is costly to maintain.

High attrition rate leaves gaps in In-house team and creates problems in audit.

In-house team, where present, is generally busy with the urgent legal matters.

A external audit team is given preference in terms of time and attention then the in-house team.

A external audit team will give independent and fair report.

Benefits

In-house legal team is costly to maintain.

High attrition rate leaves gaps in In-house team and creates problems in audit.

In-house team, where present, is generally busy with the urgent legal matters.

A external audit team is given preference in terms of time and attention then the in-house team.

A external audit team will give independent and fair report.

Possible Challenges Fear of audit resulting in Non-Cooperative attitude of units.

Manipulation of records & Concealment of facts.

Fear on confidentiality of data.

Controlling and preventing mistakes / non-compliances between audit periods.


Do you operate in regulatedsectors and/or face multipleregulators?Do you know the extent of

legal compliance across youroperations?Do you deal in large and

complex contracts?Do you have compliance

management system that canstand regulatory scrutiny?Is your legal and compliance

framework cost-effective?


Do you operate in regulatedsectors and/or face multipleregulators?Do you know the extent of

legal compliance across youroperations?Do you deal in large and

complex contracts?Do you have compliance

management system that canstand regulatory scrutiny?Is your legal and compliance

framework cost-effective?

Consult the Experts-ECA

Legal Compliance Audits & Legal Risk Managementservices.Legal Compliance Report including non-compliancesummary including review for sector specific laws.Complete Diagnostic of existing compliancemanagement system.Establishment of compliance strategy, compliance riskand governance framework. Regular updation of compliance management system.For further details contact us at

[email protected]/ +91 9958709189

Legal Compliance Audits & Legal Risk Managementservices.Legal Compliance Report including non-compliancesummary including review for sector specific laws.Complete Diagnostic of existing compliancemanagement system.Establishment of compliance strategy, compliance riskand governance framework. Regular updation of compliance management system.For further details contact us at

[email protected]/ +91 9958709189
