Why compliance governance is important

Do you accurately and efficiently incorporate compliance into your business? How much do you know about it and do you truly understand why it is so important?


According to the dictionary, “compliance” means obeying a particular law or rule, or acting to an agreement. Compliance (in a corporate or organisational environment), refers to following and complying with all relevant laws, policies, regulations, rules, and external and internal controls that the organisation must conform to.


According to Principal 13 in the King IV Code on Corporate Governance:

“The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes, and standards in a way that supports the organisation being ethical and a good corporate citizen”.


The King IV recommends that the governing body govern compliance, to set the direction for how compliance should be addressed within the organisation. The governing body must approve policies and procedures that articulate and identify laws, codes, and standards the organisation has adopted to follow. Whereas the governing body should delegate the responsibility of implementing and executing effective and efficient compliance management, they should still oversee and ensure compliance in the following:

  • An adequate understanding of compliance
  • A holistic view of how the applicable laws, standards, rules, and regulations relate to one another
  • Continuous monitoring of the regulatory environment, with suitable responses to changes and developments


Law-abiding and ethical conduct should be a standard within companies. However, compliance is still a topic of dispute despite the valid arguments made in favour of its relevance and necessity. Not complying incurs risk leading to financial, equity, and market losses, among others. As such, risk management and compliance are closely linked. As non-compliance may have damaging, devastating, and long-lasting consequences, the importance and relevance of compliance becomes a pivotal factor to consider.


As your business grows, so does the demand for compliance

A growing and expanding business incurs multiple extra areas of responsibility. Therefore, compliance becomes more complex, covering areas such as new employee appointments, dismissals, discrimination, harassment, health and safety, risk, wages, payroll, investments, benefits, transparency, equality – the list goes on. The way you run your business may need to change in many ways as new laws, guidelines, principles, and rules become applicable to you.


Improved safety and operations

Several rules and regulations ensure a healthier working environment, implemented to create a safer working space. Following safety and security rules and guidelines helps prevent injuries, fires, and general health risks of your work industry. The efficient management of health and safety regulations is vital for the continuity and profitability of your organisation – it is crucial to keep up to date with new ways to strengthen and safeguard your company’s operations.


Legal issues are reduced or avoided

Being compliant reduces the risk of penalties, fines, work hindrances, lawsuits, or the chance of business closure or failure. Certain non-compliances may lead to a warning, allowing you to correct your error; others may lead to costly sanctions and severe consequences. Certain sanctions are not limited to a single company but can affect the entire group. In cases like this, insurance does not offer any protection. One of the main aims of compliance is to avoid or quickly identify criminal behaviour and react to it appropriately to minimise any economic risk.


Increased public relations

The success of your business can sometimes depend heavily on your public image. Compliance allows the company to uphold a positive image and build consumer trust by stating compliance on its website, social media, and marketing materials. Being compliant allows you to state your company’s commitment to:

  • broad-based black economic empowerment;
  • physical health and safety;
  • mental health;
  • wellness; and
  • non-discriminatory practices based on race, sex, creed, or sexual orientation during your recruitment process.


Higher productivity and higher employee retention

Your employees’ happiness can directly affect the company culture and morale, impacting your business’s sustainability and continuity. Internal compliance to safety, wages, employee benefits, compensation, and employee protection (for employees to feel they work in a safe, professional, and discrimination-free environment) will create a positive atmosphere.  This will lead to increased employee performance and trust. If you do not take the necessary steps to ensure your employees’ protection, you may lose valuable assets to your company.


If you are fully compliant, the company reduces risks and expenses, increases productivity, and avoids losses. Besides, with the compliance of laws, the transparency of processes becomes a more consolidated reality, bringing greater confidence in the market. Your reputation and public image are reflections of your level of compliance.


At Okina Company Secretarial Services, we understand the importance of operational compliance and adhering to laws, regulations, and guidelines for the board. Contact us at info@okinasec.co.za to see how we may be of assistance.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *