You are currently viewing Importance of Corporate Compliance

Importance of Corporate Compliance


Last Updated on July 4, 2023 by Kanakkupillai

Corporate Compliance

Corporate compliance is crucial for the efficient functioning of organizations. However, with new amendments introduced by company laws, it has become more challenging for companies to comply with all the necessary provisions. A successful organization adheres to important legal requirements outlined by the country’s laws, particularly labour laws that emphasize the provision of benefits schemes and bonuses to employees while also prohibiting activities that go against the company’s memorandum. This article aims to highlight the significance of corporate compliance.


Corporate companies must comply with the regulatory framework established by industrial authorities, government entities, and international bodies. Following this framework is not only essential for legal compliance but also for ensuring the efficient functioning of the organization.


Companies need to adhere to anti-corruption laws. Compliance with these laws strengthens internal structures, helps control members’ and shareholders’ actions, and prevents fraudulent activities. Failure to rectify fraudulent acts within the organization can significantly damage the company’s reputation, which is difficult to regain once lost.


In the modern era, companies protect employees’ data. However, safeguarding personal data poses risks, so companies must handle it cautiously. Compliance with regulations like the General Data Protection Regulation (GDPR) is necessary to protect individuals’ data.


Corporations have a legal obligation to ensure the health and safety of their members. In emergencies, they must provide safety measures and beneficial schemes such as the Provident Fund (PF).


a) Changing legal landscape: The continuous changes in legal amendments pose challenges for companies as they must adapt to new requirements. Companies must have a team of legal experts who can keep them informed about various amendments to the company laws and ensure compliance.

b) Foreign jurisdictional changes: When multinational companies establish branches in different countries, complying with the legal requirements of each country becomes a challenge. Companies need to tactically handle these situations and ensure compliance with the specific legal provisions in each country.

c) Foreign direct investment regulations: Foreign investors interested in investing in India, for example, must follow Foreign Direct Investment (FDI) guidelines, including sectoral caps, entry requirements, and compliance procedures.

d) Goods and service tax: The Goods and Services Tax (GST) is a new payment method that replaces multiple indirect taxes with a defined tax structure. Organizations must comply with various provisions of the GST, such as filing GST returns and availing of Input Tax Credit (ITC).


Corporate compliance is essential for the success of any organization. However, the main challenge lies in staying updated with the latest amendments. To overcome this challenge, companies should consider hiring legal experts who can provide knowledge and guidance on the compliance requirements that must be followed.


Why is corporate compliance important?

Corporate compliance is vital as it ensures the efficient functioning of organizations, helps maintain a good reputation, and ensures adherence to legal obligations and regulations.

What are some common challenges corporations face in complying with regulations?

Some common challenges include coping with changing legal landscapes, adapting to foreign jurisdictional changes, complying with foreign direct investment regulations, and navigating the requirements of new tax systems such as the Goods and Services Tax (GST).

How can companies handle the challenges of corporate compliance?

Companies can overcome compliance challenges by hiring legal experts who can provide insights and updates on legal amendments, strategizing compliance measures for foreign jurisdictions, and ensuring adherence to sector-specific guidelines and regulations.


G.Durghasree B.A.B.L (Hons)

G Durghasree B.A.B.L (Hons) is a registered trademark attorney with extensive experience as an Advocate for a period of 8 years. She possesses expertise in trademark law, including trademark filing and trademark hearings. Additionally, she is skilled in contract drafting and reviewing, providing legal advice and opinions, particularly in the areas of Company Law, Insolvency and Bankruptcy Code (IBC), and Goods and Service Tax Law (GST). Her experience encompasses both litigation and non-litigation aspects of these laws.