Businesses fail for a variety of reasons, and one reason in particular is because businesses and their owners do not make decisions about ownership, financing, or corporate governance and regulatory compliance. While relatively innocuous in the moment, cumulatively, the failure to address these issues can dictate the success or failure of a business.

Corporate governance and compliance is paramount to ensure that a business not only grows, but also to ensure the survival of a business. Failure to follow corporate governance and compliance laws can result in significant civil penalties or even criminal penalties. In this regard, every business should institute internal controls and mechanisms to ensure that the business set is set up for optimal success.

Department of Justice on effective corporate compliance programs

At a recent workshop for corporate compliance and ethics, Marshall L. Miller, Principal Deputy Assistant Attorney General for the Justice Department’s Criminal Division, provided some salient remarks on effective measures that businesses should take to ensure effective corporate governance and compliance.

While Mr. Miller remarked that one type of compliance program does not fit all companies and that companies must tailor compliance programs to manage their risks, there are, however, certain characteristics that any successful corporate compliance program must have. These common characteristics include:

  • A high-level of commitment from the company’s leadership toward corporate compliance, “even when it runs up against profits.”
  • Sufficient resources to ensure appropriate stature within a company. A compliance policy is worthless, if not backed by commitment and resources.
  • Periodic evaluating and updating of a company’s compliance policies.
  • Compliance must be incentivized; violations must be disciplined, including terminating those responsible for misconduct.
  • The ability to uncover misconduct and the individuals responsible, meaning an effective system for investigating employee reporting of ethics and compliance violations.

As Mr. Miller discussed at his workshop, a corporate governance and regulatory compliance program, however, is effective only to the extent that a company and its leaders want to investigate and prosecute any internal misconduct. Otherwise, Mr. Miller aptly stated that a company compliance policy is in name only and is not worth the paper it is written on.

Contact a California corporate compliance attorney

If you have any questions regarding effective corporate governance and regulatory compliance, Janathan L. Allen, APC’s corporate compliance attorneys can provide you with the information to protect your business. Our attorneys have significant experience counseling businesses on accounting and tax compliance issues, state and federal securities laws, entity formation and maintenance, mergers and acquisitions, public and private equity or debt offerings, and various other businesses transactional and planning issues.

Our firm is based in San Diego, California, and we have several offices located throughout Southern California. Visit one of our offices or call our attorneys today to see how we can help ensure that your business is set up for optimal success. We offer a free initial consultation.

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