Compliance For Entrepreneurs

Compliance For Entrepreneurs

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business-compliance

Due to increasing laws, entrepreneurs are faced with growing regulatory compliance in business. These legal requirements create obligations but also provide certain rights and protection.

All businesses, small or large, are required to comply with legislation (passed by government), regulations (prescribed by regulatory bodies) or industry best practices.

Compliance legislations that govern businesses

Compliance requirements range from registration of businesses and business names, licensing, workers compensation, tax and unemployment compensation, and intellectual property protection, to industry specific requirements such as compliance with professional bodies.

There are six main types of laws that govern business:

  1. Entity Regulations such as the Companies Act and Close Corporation Act
  2. Customer and Information Protection such as Consumer Protection Act and POPI Act
  3. Human Resources such as Labour Relations Act and Basic Conditions of Employment Act
  4. Tax and Security such as Income Tax Act and National Credit Act
  5. Intellectual Property such as Copyright Act and Patent Act
  6. Industry Specific such as Import and export controls, B-BBEE Act and Codes of Good Practice.

Where does the onus lie?

It’s the business owner’s responsibility to determine which legislation and regulations apply to their business, and then to comply.

While it’s not the responsibility of regulatory bodies to inform businesses of applicable legislation and regulations, industry watchdogs are generally willing to provide the required compliance information to businesses.

Which legislations apply to your business?

1. Product and services: What problem are you solving?

Assess the service or product offering of your business and determine what specific legislation applies to it.

For example, if you are producing goods for sale to consumers you are required to comply with the Consumer Protection Act (CPA); if you have employees you are required to comply with the Occupational Health and Safety Act (OHSA); and if your product involves your Intellectual Property, you must comply with the relevant legislation to protect it.

2. Organisational Design: What are your daily activities?

Determine the functions of your business and the strategies you have in place to manage them. These include finance, sales, marketing, branding, human resources and operations. Each function is associated with legislation.

Laws such as the CPA and OHSA are important, but it is also important to consider industry specific standards, such as import and export regulations, health and safety, and transformation requirements. If you are producing and selling a product, consider various packaging and labelling requirements that are determined by Acts and industry standards.

3. Operations: How do you perform your activities?

Consider operations, systems and procedures. Examine input, output and production processes. Industry standards and certain Acts will apply and create requirements that need to be complied with.

Inputs such as raw materials may require import controls; production may include labour laws or information controls; and distribution may require export controls or consumer protection legislation.

4. Stakeholder management: Who are the participants?

Consider the various players involved in all aspects of your business, from customers and shareholders to employees. Ensure you include government bodies such as SARS and the Department of Labour in your consideration.

Governance, industry best practice and labour laws, such as the Labour Relations Act, will apply. 

5. Putting it together: Establish a simple compliance universe

Prepare a simple framework and checklist of applicable laws, regulations and industry best practices. List basic guidelines and policy on how to adapt your business, update the framework at least annually.

Regardless of the size of your business, compliance with legislation, regulations and industry best practices is key.

Monisha Prem
Monisha is a corporate advisor, admitted attorney at M. Prem Inc, and author with over 14 years deal-making experience. Monisha litigated for several years before joining an investment banking firm specialising in mergers and acquisitions. Monisha has owned and operated several businesses, is passionate about business development, commercial and corporate law.