Legal compliance is the process by which an organisation adheres to laws, rules, policies, guidelines and procedures that regulate business practice in a particular jurisdiction.
It involves not only knowing and understanding the legislation that applies to the organisation, but also being able to demonstrate that the organisation’s operations are in conformity with the applicable regulatory environment.
While legal compliance has largely been seen-to-be-done within the private sector, it is within the public sector where there has been significant turmoil.
However, over the years, there have been progressive steps taken by successive Kenyan government regimes and regulatory bodies to enhance the levels of legal compliance and corporate governance (system of rules, procedures and principles that dictate the management of an organisation) within the public sector.
Values and principles
For instance, on July 23, 2013, President Uhuru Kenyatta established ‘The Taskforce on Parastatal Reforms’ to among other things identify and address governance challenges faced by State corporations, propose practical measures towards actualising values and principles enshrined under Articles 10 and 232 of the Constitution of Kenya, 2010 and provide recommendations for reforms for improved management, governance and oversight of State Corporations.
Mwongozo code
The outcome of this task force was ‘Mwongozo – The Code Of Governance for State Corporations’ that is the policy document by the government that seeks to incorporate the principles of corporate governance in the management and governance of State corporations.
Mwongozo was issued by the President as Executive Order No. 7 and is applicable to all State corporations, government owned entities (GOEs) and semi-autonomous government agencies (SAGAs).
The importance of conducting compliance assessments through legal audits (internal and independent/external – the latter being a statutory requirement for public entities) and regular compliance checks cannot be overstated.
Organisations, whether in the public or private sector, have, over the years, increasingly invested resources in establishing or enhancing internal compliance capabilities via compliance departments and/or sections engaging in-house legal counsel.
Positive impact
Legal compliance and corporate governance are intertwined and one cannot be said to genuinely exist without the other.
Robust legal compliance in turn leads to strong corporate governance, which has a positive impact on an organisation’s business by helping significantly to manage risks, streamline processes/activities, ensuring legality of operations and eventually improved business performance.
To comply is to live….and to live is to comply.
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Note: The results are not exact but very close to the actual.
