For their own benefit, executive boards ought to issue carefully defined rules of conduct. Compliance is an important topic both from a legal and media perspective.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: If company executives make overly lavish use of company funds this can quickly lead to trouble with the supervisory board or shareholders, and things don’t have to stop there; there may also be the threat of legal difficulties or damages claims.
In order to avoid this, companies should develop as detailed a compliance system as possible. The more precisely the rules are defined, the lower the risk of disputes arising at a later date. These rules apply to all of the company’s employees, but they can of course vary and distinguish between different positions within a company. It essentially comes down to appropriateness and transparency to avoid mixing business and private interests to the detriment of the company. Having said that, compliance is not only an issue for large companies but also small and medium-sized businesses.
A detailed compliance system facilitates adherence to contractual rules and statutory provisions so that criminal offences are not committed by employees within the company. This equally applies to the executive board or company management, which is simultaneously responsible for setting up a functioning compliance system. Without such a system, the company may incur significant economic losses and damages claims can emerge against the firm and its executive bodies, as the German Administrative Offences Act (Ordnungswidrigkeitengesetz) obligates companies to ensure that no statutory infringements arise from within the firm.
In order for a compliance system to be able to fulfil its function, its effectiveness should be regularly reviewed and, where appropriate, the system ought to be adapted. Setting up and structuring the content of a compliance system can pose a major challenge to businesses because various laws and regulations need to be observed in the process. Lawyers who are competent in the field of commercial law can be of assistance when introducing and reviewing a compliance system.
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