Corporate Compliance

The subject of compliance plays an important role at more and more companies, and not just since the recent bribery and corruption scandals at Siemens. Ever more laws create more and more obligations with more and more risks that make dedicated compliance management urgently necessary.

In business jargon, compliance describes the totality of the measures for dealing and complying with internal and external requirements and rules from the perspective of a company. The governing entities (board of directors, supervisory board, chief executive officer) as well as all employees must ensure that the company is organized in a careful manner in conformity with the law.

Legal requirements such as KonTraG and the German Corporate Governance Code explicitly require compliance. Even international law, as in the USA SOX or Article 41 of the EU Financial Statement Auditors' Directive (so-called EuroSOX), places considerable demands on the company, which are to be fulfilled in the context of compliance. In addition to this legal consideration, compliance also has an ethical dimension: As such, self-imposed rules, internal guidelines or moral principles are to be respected and fulfilled through proper behavior.

These compliance guidelines and standards require new approaches and innovative instruments in order to effectively support the ever more complex corporate processes, and to reduce risks. Successful compliance management makes the provision of an internal control system essential.

Contract management forms the foundation of a company's commercial activities and should therefore be part of such a monitoring system. An obligation to implement a compliance process focused on contract management can be inferred from the corporate organization obligation for the company's governing entities. The execution, administration and analysis of contracts is part of the daily work of many departments and thus also part of the potential for risk that arises from contracts in many configurations.

With respect to how an IT-based contract management system like LCM - Legal Contract Management can effectively support compliance in the company, see for example our international customers such as Henkel AG & Co. KGaA, Bayer MaterialScience AG or Carl Zeiss AG. LCM covers applicable international general legal frameworks and regulations such as SOX or European directives from EU Governance, for example. This ensures not only the protection of assets and the prevention, reduction and detection of errors and irregularities, but also the reliability, completeness, timeliness and reliability of financial reporting and the ability to audit the current contractual relationships.