Compliance is a big part of setting up a business

With new penalties coming in for non-compliance to business standards, and with over half of companies admitting they are not ready for the new European regulations going live in May 2018 what chance does a new business have of hitting the ground running? What exactly must they do to fall in line with the new rules and avoid heavy fines? Compliance standards for businesses are divided into internal and external requirements. These are the actions needed to be initiated by the corporation or limited liability company (LLC) by the directors, shareholders, members and managers.

Although they are the most commonly overlooked, internal requirements need to be properly documented as part of company records, and they may need to be presented when facing a lawsuit or when selling the company.

Corporations have the toughest requirements internally, and they also need to hold annual director and shareholder meetings, update and initiate new laws, issue stock to shareholders, and note all transfers of stock.

Meeting regulatory requirements

As Compliance becomes increasingly important to the running of business, banks, and services everywhere, new companies will need the advice and experience of professionals with the knowledge and expertise to meet all the regulatory requirements. With general data protection regulation coming into force this year and applying to all, companies who hold and process the personal data of EU residents which becomes compromised, face big fines for non-compliance. Even at this late stage many firms are not up to scratch, and any new company needs to get to grips with matters quickly.

Big companies with corporate law teams are prioritising compliance issues for companies with Europe's General Data Protection Regulation (GDPR) starting on 25th May 2018. The GDPR is creating opportunities for business that are new and makes it easier for worldwide companies to trade throughout the European Union. GDPR compliance will ensure companies scrutinise data-handling processes and analyse and get to grip with customer data types.

The company legal team is responsible for all the data privacy, and The EU see compromised data privacy as a violation of human-rights. Companies have had nearly two-years to conform and new companies would do well to learn about the regulations and how they apply to them. Privacy experts say that data protection authorities will have the massive task of finding examples of non-compliance if they want to penalise offenders, but surely no company old or new would want to fall foul of the regulations knowingly? Only by having a well-established network across Compliance candidate pools, and compliance recruitment agencies, and by headhunting, identifying, and meeting new talent can a new company hope to gain access to such experts, and stay on the right side of the law.

What happens if the company does not comply?

Many companies are not ready for the legislation, so most start-ups will be at a disadvantage. A study conducted by the International Association of Privacy Professionals (IAPP) looking at 244 privacy professionals in 2016 and showed that over 90 per cent of privacy professionals in organisations had started preparations. However, a survey in 2017 showed that 54 per cent of companies are not GDPR ready.

When the new rules come into play failing to comply could cost companies a great deal of money. Penalties vary depending on the severity and nature of the offence, but big companies could face tough measures like fines of €10 - 20 million, or 4 per cent of global revenue which could be even more. New company's wishing to be GDPR ready, need to appoint a data protection officer which is a requirement under the new regulations. This includes all public authorities or those involved with regular, systematic monitoring of large amounts of data.

The UK is preparing itself for when the GDPR kicks in in May and expects tougher fines and harsher regulations to be seem across all industries. GDPR regulation for small businesses that have been trading for a while or are brand new must address issues of minimum wage as huge fines have been handed down for non-compliance. It is always best to be informed, so knowledge of the 8 principles of the 1998 data protection act, the consumer protection act, and whether professional indemnity insurance is required is essential whether the business is just starting out or an industry leader.

By: Laura Skinner

Danos Associates are global-leading legal professionals with key expertise in business compliance and risk. They work with firms to ensure legal and regulatory compliance.

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Article Tags: compliance recruitment agencies , legal and regulatory compliance

Submitted On Feb 17, 2018. Viewed 17 times.

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