Usually a startup in India is associated with an entity floated by young and dynamic entrepreneurs, especially with people from Technology of Engineering background with an aim to address and solve a pressing issue or to introduce a novel service or product, in the market.

Matters relating to compliance are alien to them and they focus more on the growth and revenue model rather than investing early in a proper compliance management system.

Need for Compliance system for Start-ups

An early adoption of Compliance indicates the Founder’s vision of Long Term sustenance and brings a greater confidence with Investors. Also prompt adherence to Compliances helps the Founder protect his Ideas and business. An easy example is the IP (Intellectual Property) laws, adherence to which ensures their unique ideas/business are protected by seeking a Copyright or Patent.

A Compliance System is almost must for a Funds seeking Startup, as they will have to encounter continuous Due Diligence. Having a System in place ensures that they can raise capital with a lesser Turn Around and thereby paves the way to manage their Cash Flows well.

Snapshot of Typical Compliances for a Startup

A typical start up entity engaged in a IT/ITES sector may have to abide by Compliance pertaining the Law Areas like Corporate, Direct Tax, Indirect Tax, Environment, Health & Safety, Labour & Information Technology. On a conservative approach this should create 500+ compliance obligations in a year. This number shall increase with respect to its specific business activities, the reach, the kind of resources employed, assets and its ownership.

How Complius® can help in Establishing a compliance system for Start-ups

A proper and effective compliance system for Start-ups can be set up, with participation of all the concerned stakeholders.

Complius® enables end to end compliance obligation mapping starting from identifying the legislations applicable to the entity to ensuring all appropriate obligations being mapped to relevant users, with an inbuilt ability of the product to provide management with real time status of compliance obligations.

A typical Complius® implementation includes

• Multiple location site visit by Compliance professionals
• Identification of laws and regulations applicable to the start-up entity, based on Geographies in which it is operating, nature and type of Business activity carried on by the entity etc.
• Segregation of applicable obligations from the identified laws and regulations.
• Assignment of applicable risk parameters to each of the obligations.
• Identifying and assigning these obligations to appropriate stakeholders.
• Conduct training sessions on importance and need for an effective compliance system, including usage of Complius®.
• Address queries raised by stakeholders if any, regarding obligations assigned to them, including providing supporting documents and materials.
• Enable entities to track their internal policies.

Post Implementation support and tracking

• Regularly review and update compliance obligations and stakeholder assignments.
• Review compliance proofs by qualified professionals.
• Ensure documents confirming proof of compliance against specific compliance obligations are retained and stored.
• Time bound separate auditor access that enables reducing cost and be audit ready anytime .

Implication of non compliance

A start up being an entity with few resources, requires them to multi-task and ensure compliance with all obligations including liaison with multiple regulatory authority, which in certain cases, where proper and effective compliance systems are not in place, inevitably leads to start-ups ending up paying penalties, fines and interests or in certain cases runs a risk of imprisonment of Directors or officers

A start up being an entity with few resources, requires them to multi-task and ensure compliance with all obligations including liaison with multiple regulatory authority, which in certain cases, where proper and effective compliance systems are not in place, inevitably leads to start-ups ending up paying penalties, fines and interests or in certain cases runs a risk of imprisonment of Directors or officers.

If you have any questions regarding the implementation of a compliance system or compliance related to your company, you can drop a mail to sales@quantlegaltech.com and get a Free 10 minutes consultation from our experts.

If you are looking for a comprehensive compliance management tool to put your compliance system on auto-pilot, you can visit: https://quantlegaltech.com/product/complius/ and get detailed information on the features and other specifics.