A regulatory framework in a company is a set of laws, rules, regulations, and other legal provisions that govern a specific activity or sector. That is, the set of standards that must be followed in a specific area, such as a company, a sector such as finance, or a public organization or institution.
Knowing what the regulatory framework is in a company is essential for proper management of the company.
It provides the basis on which the scope and nature of participation in the company is built and determined, based on a complex combination of statutes and legal regulations, so that the company's activities are carried out harmoniously and without incurring legal risks.
In today's post we will tell you about the importance of its implementation and compliance, as well as who should be responsible for its management.
The answer to the question "What is the regulatory framework in a company?" involves several nuances, mainly based on the fact that it is a set of regulations, rules and laws that apply to the activities and/or functions included in the corporate planning.
As we mentioned at the beginning, its identification in advance is essential so that actions are carried out harmoniously and without incurring any type of risk in a legal sense. It could be said that it delimits how and how far your company can go, allowing you to regulate the market, preventing the abuse of resources and preserving a certain economic balance.
However, its scope encompasses many more beneficial aspects, making an in-depth understanding of how it works of great importance.
Not knowing what the regulatory framework is in a company when entering into profit-making or commercial agreements poses a risk to the company.
Mandatory compliance
The rules that comprise it are mandatory for regulated subjects.
It is possible that you are unaware of certain legal regulations, or that you even consider that the existing ones do not apply to your company. But what would happen if they did apply? This could result in significant financial costs and legal problems that are perfectly avoidable.
Therefore, structuring the plans that your business will follow and defining a regulatory framework that adapts to it will avoid many problems, allowing you to comply with the parameters dictated by the law and without making mistakes. This, in turn, will lead you totake care of the integrity and reputation of the organization you manage.
Once you know what the legal framework is in a company, you must ensure compliance with it. To do this, you must establish the required procedures and policies to ensure that they are followed by employees, managers and partners.
Within this framework, there are two areas: the code of ethics and the external requirement.
The first can be voluntary and depends on what you decide especially for your company. However, the second is mandatory and you do not have the power to change it, and it is essential that you are informed of possible regulatory changes, instituting clear internal policies for this purpose.
Failure to comply with or exceed the regulatory framework in a company can result in various criminal consequences, which can result in fines of great economic value and even imprisonment in the most serious cases.
Hence the importance of ensuring that each of the people under your authority fulfill their role,always respecting the respective regulatory framework that applies to the proper management of your organization.
Although it is everyone's responsibility to adapt to the regulatory framework, there must be a team in charge of managing and supervising it. This team will be responsible for ensuring that the ethical and legal regulations imposed are applied, and must perform the following functions:
- Verify documentations: you will strive to ensure that the decisions made and the actions to be taken are ethically applied.
- Provide support to solve problems: you will support the different departments to be managed efficiently and objectively when solving problems.
- Provide the company with training: train employees in legal and juridical matters so that they comply with regulations and avoid any legal risk.
If you do not have the qualified professionals to do it, PKF Attest offers you a professional service in management of legal requirements for companies. You can count on us to overcome the regulatory challenges facing your company, receiving full advice throughout the process.
- You will prevent fiscal and legal inconveniences in the short, medium and long term.
- You will not obtain monetary expenses derived from non-compliance with laws.
- You will avoid legal problems that will damage the careful reputation created for the good of your corporation.
Examples :
Regulatory framework of the energy sector:
Defines the regulations and standards that govern the energy industry, such as consumer law, energy law, etc.
Regulatory framework of a public institution:
It includes laws and regulations that establish the guidelines to be followed by the institution.
