Gabriela de Ávila Machado
Lawyer at Marcos Martins Advogados
We already know that the term Compliance comes from the English “to comply with”, meaning to be in compliance with, in this case, the law.
In Brazil, when we say the word Compliance, we automatically link it to the Law on Crimes against the National Financial System, the Law to Combat Money Laundering Crimes and Law 12846/2013– the Anti-Corruption Law .
But more recently, the definition of Compliance goes beyond anti-corruption and the banking market.
Today, integrity programs include compliance with environmental, regulatory, consumer, antitrust and personal data protection standards, among others.
But an interesting point is the provision for solutions to conflicts of interest. Many companies already have a specific mention in their code of conduct about resolving these conflicts and it is usually put as follows: the client’s interest comes first, followed by the company’s interest, which in turn is followed by the partner’s interest and, finally, we have the employee’s interest.
According to the IBGC (Brazilian Institute of Corporate Governance), corporate governance is “the system by which companies and other organizations are directed, monitored and encouraged, involving the relationships between shareholders, board of directors, management, supervisory and control bodies and other stakeholders”.
We often talk about the 8ps of corporate governance, which encompass the basic principles that every organization needs to have in order to sustain itself and progress. Good governance practices transform the principles into objective recommendations, which are aligned to optimize the organization’s values.
In other words, corporate governance is a set of measures that seek to strengthen the company – aligning the interests of the organization with the interests of the agents involved (partners, directors and employees) and also with the interests of the supervisory bodies and legislation in force.
And of course, without compliance with the law, there is no question of the company continuing, which will end up deteriorating in the eyes of the market.
Compliance interferes in the company’s activities, defining internal policies and adapting activities to external legislation. And corporate governance is broader: in addition to regularizing the company’s practices in accordance with the market, it also aims to avoid conflicts of interest between shareholders and guarantee the organization’s credibility.
In other words, compliance and corporate governance complement each other – one can’t live without the other. They have the same goal: to maintain the ethics, integrity and health of the organization, with a focus on the longevity and continuity of the company.
For an effective Compliance program, the following pillars are necessary:
1. Support from senior management
2. Risk assessment
3. Code of Conduct and Compliance Policies
4. Internal Controls
5. Training and communication
6. Whistleblowing channels
7. Internal investigations
8. Due Diligence
9. Auditing and Monitoring
In parallel, the IBGC puts forward the following as basic principles of Corporate Governance: Transparency, Fairness, Accountability, Corporate Responsibility. We have also seen doctrines that set out 8 other pillars of Corporate Governance (also known as the 8ps)
- Ownership – the company’s capital structure
- Principles – which principles govern the company
- Purpose – what the company’s purpose is
- Role – what is everyone’s role within the company?
- Power – power must be exercised ethically, neutrally and without self-benefit
- People – there can be no company without people
- Practices
- Perpetuity
It can therefore be seen that the principles of governance, as well as being fundamental to the organization of the company, are essential in demonstrating the company’s commitment to integrity, ethics and morality. In this way, the absence of a well-structured integrity program, based on the pillars indicated, leads to the risk of an ineffective governance structure.
The Integrity Program can be an important ally for a company’s Governance structure.
We believe that companies that manage to include both governance and compliance areas in their structure present a more transparent image to the market and also to their employees and collaborators.
Below are some good governance and compliance practices:
- It is necessary to understand the company’s objectives, so that it is possible to define its mission, vision and values;
- Draw up a code of conduct based on the company’s objectives;
- Ensure that your employees know their responsibilities and the importance of their roles;
- Have an appropriate process for distributing responsibilities without conflict of interest;
- Training and communications are essential to disseminate the need to comply with all the standards set by the company in its code of conduct and other policies. These trainings and communications will be the basis for the company to be able to spread an ethical, moral image of an organized and transparent company to the market and to its employees;
- Have a suggestion channel and a complaints channel. This will help the company to identify the risks to which it is subject, and will make employees and customers more a part of the company;
- Meetings with stakeholders are also important to comply with the principles of transparency and accountability.
