Companies Act Requirements

Legal due Diligence & Compliance

Indian businesses are required to comply with several acts and rules in a complex regulatory environment. The compliance ranges from labour, Companies Act, FEMA, industrial, environmental, taxation, etc.
This requires several compliances and returns to be filed and completed on time as per various regulations. Non-compliance can attract litigation, penalty and prosecution.

Companies Act Requirements

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Companies Act 2013 has also placed key responsibility on Board of Directors to design, implement and oversee effectiveness of compliance program. Further management ensures effective and efficient implementation of program.

Section 134 (5) (f) requires “the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.”

Companies Act 2013 thus mandates the Board of Directors of the Company to give a declaration in Annual Report under Director Responsibility Statement that, the Company has its legal compliance process in place and the same is running effectively to ensure that the Company is regularly complying with all the laws applicable for its business operations.

Approach to Legal Compliance & Due Diligence

Identify relevant process owners and educate on relevant compliances

  • Identify personnel, process owners and reporting managers for compliance on relevant rules and laws
  • Educate process owners for compliance responsibility along with relevant dates for completion of work

Check compliance of act & rules by continuous monitoring

  • Check for compliance as per checklist for various acts, rules and regulations
  • Supporting documentary evidence is produced and validated for compliance

Understand business and applicable rules and law

  • Understand business, mode of operation, location, business verticals
  • Perform general assessment and applicable acts, rules & regulations on business

Assess and scoping impact of applicable acts & rules on business

  • Perform risk assessment for applicable acts and rules
  • Understand impact (penalty and prosecution) of deviations from applicable laws
  • Prepare a checklist of compliance for applicable regulations

Report on overall compliance program and deviations

  • Prepare report on deviations and mitigation plan for compliance program
  • Periodically communicate results to management and board of directors

Compliance Advantages & Deliverables

  • Dashboard for compliance health check
  • Minimize risk of non-compliance
  • Robust and effective compliance program
  • Ensure accountability from stakeholders
  • Provide compliance assurance to management
  • Minimize risk of penalties, fines and interest
  • Avoid litigations
  • Team of experts to deal in relevant areas

Compliance acts include:

  • The Employees Provident Fund & Miscellaneous Provisions Act, 1952
  • The Private Security Agencies (Regulation) Act, 2005
  • The Employees State Insurance Act 1948 (ESI)
  • The Contract Labour ( Regulation & Abolition ) Act, 1970
  • The Employees Compensation Act 1923
  • The Maternity Benefit Act 1961
  • The Minimum Wages Act 1948
  • The Payment Of Bonus Act 1965
  • The Water Prevention and Control of Pollution Act 1974
  • The Apprentices Act 1961
  • The Factories Act 1948
  • The Equal Remuneration Act 1976
  • The Labour Welfare Fund Act 1986
  • The Income Tax Act 1961
  • The Shop & Establishment Act
  • The Payment Of Gratuity Act, 1972
  • The Payment of Wages Act 1963
  • The Professions , Trades, Calling & Employments Act
  • The Drugs & Cosmetics Act 1940
  • The Insecticides Act
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