Corporate legal review is an important aspect of the proper functioning of your business. According to some social scientists, every entity is like an organism. Since every organism or functioning body needs maintenance and health checks, so does a business. A corporate legal review is essential to see the level of compliance with loss and regulations, to ensure the smooth functioning of a corporate body in future and to find any loopholes or news for improvement.
Foreword:
- Corporate legal reviews are essential for ensuring subsequent legal compliance efforts.
- Such reviews enhance organizational communication and increase awareness about shared compliance problems.
- They are also helpful in shifting the managers' focus towards current and upcoming regulatory requirements.
- These reviews provide information about any undesirable practices and improve and revise compliance standards.
Prerequisite for an effective corporate legal review
- Corporate managers should provide explicit support for the review of corporate law compliance and ethical codes of conduct.
- Corporate managers should also be willing to follow up on the audit findings.
- Such willingness should be depicted through written statements that they should distribute to employees and managers.
- The statements will enhance support for audit practices and encourage cooperation with the auditing team. They will also garner support for the reforms suggested by the review.
- Corporate legal review uncovers new opportunities.
Exploration
Reviews are not just about risk mitigation. Rather, they have a very positive impact on exploring new streams of revenue. When we look at this aspect, we analyze the attention a business gives to various laws, including the overall intellectual property laws, and we can discover new streams of income that the business did not previously know existed.
Illustration
The company may have been giving away valuable intellectual property without any monetary consideration. An effective review would suggest getting a return from the customers by licensing the property to them. Therefore, you may have lost a lot of money by not claiming payment concerning the infringement of patents, property rights, or trademarks, which is actionable under the law.
Environmental opportunities
It is also possible that some very easily accessible carbon credits are within the corporation’s reach, but it has not been able to benefit from them. So, the review can suggest certain policies and give recommendations for the adoption of particular practices that not only reduce the carbon footprint but also allow a corporation to benefit financially and in terms of public reputation by more effectively complying with environmental regulations.
How to Undertaker review
- Defining the scope
The Corporation, in consultation with the experts, outlines the objectives of the audit and what it compasses.
The concerned department also highlights which functions and domains of the organization need a review.
- Collecting data
The data the team collects includes
- Documents
- Records
- Contracts
- Policies
- Agreements
- Permits
The team can also collect any other information regarding any department of the establishment under review.
- Review of the legal framework
A comprehensive investigation of the applicable laws, including national, local, and international, takes place, and the first goal is to see whether the corporation is complying with them.
The review team also looks at any other regulations and laws, including the new environmental laws, that may be of concern.
- Gap analysis
The review team looks for any gaps between practice and legal requirements. It also looks at any new laws that may become applicable in the near future and may lead to risks.
- Risk identification
The review looks at various risks that may arise, including legal risks as well as financial, reputational, and operational risks. The purpose is to suggest remedial measures so that if any change in financial practices, operational structures, or organizational workings is needed, they may be taken beforehand to avoid any complexity in the future.
- Looking at external developments
The review should also consider what legal changes have occurred or are likely to occur soon.
A company may have a multiyear review cycle, but it should also have a yearly review. Policies should also include more frequent updates.
The review should also look at any external legal development that may have compliance implications for the company.
- Benchmarking against other companies
It is also an effective way to get sufficient compliance information from other companies by considering their compliance programs. Often, companies are willing to share information on compliance programs.
External validation and comparison also help you better understand your own plans and policies and ascertain whether to investigate the reasons for any lapses.
Assembling the assessment
Most of the assessments end up in a spreadsheet. The data tabulation attempts to quantify the company’s risks and overall valuation by establishing a measurable ranking.
However, too much Reliance on numbers is not advisable.
Highlighting various kinds of risks
The two most likely dimensions of risk are likely risk of impact and severity of impact.
For instance, the quantification of risk and its variety of impacts can be analyzed as:
- Financial impact
- Physical harm to the public or employees
- Size of potential fine or damages
- Reputational risks
- Morale loss
- Stock price decline
- Sensitivity to a particular type of risk, and so on
Concluding Words
This short reading gives you an overview of what a corporate legal review looks like and what considerations you should take into account.
Corporate legal review is all about ensuring the smooth functioning and compliance when it comes to your business, while exploring opportunities. So, it’s a sea of ideas and actions that you can keep exploring to follow the best practices and introduce new ones. This short reading may have been helpful in your basic understanding of a corporate review. For more information, you should consult our legal experts.
Categories
Type your comment...
Name
Email
Looks good.
Please type something to post a comment.
Please enter your name.
Please enter a valid email address.