How do you ensure Regulatory Compliance for your Startup?

The Securities and Exchange Commission suspended 32 companies between 2007 to 2016 for non-compliance with applicable laws and regulations. The Nigerian Stock Exchange imposed penalties of over N200 million on companies listed on the Exchange that were in default of filing financial statements after the regulatory due date.

Regulatory compliance is not a “should have” but a “must-have” for all companies whether big or small, startup or not. It is imperative that companies comply with applicable laws and regulations because failure to do so will result in penalties and sanctions levied against them.

Welcome to another edition of our monthly newsletters🤩🤩. Today, we’re discussing measures you can put in place to avoid the risk of regulatory non-compliance.

Ensuring compliance is a key priority for startups. This could involve keeping on top of industry regulations, making sure your business operates within the bounds or permits of the law or just ensuring that internal procedures maintain efficiency and obligations of policies. Understanding the responsibilities governmental or industry policies place on your business is an essential first step towards keeping your startup compliant.

When you assess the value of a project or put together a strategy for a product or service, it is important to ensure that you make adequate plans and put systems in place to ensure regulatory compliance. According to a General Data Protection Regulation (GDPR) Report, 60% of startups that breach compliance laws are never able to get back in the ecosystem. Additionally, being compliant and seen to be compliant boosts operations and ensures brand recognition and loyalty among regulators, customers and users.

Some simple steps to make it easier to enforce regulatory policies and procedures, and ensure compliance include:

Stay on track with changing laws and regulations

You should know that compliance is a continuous process of changing laws and regulations, identifying the areas in which it impacts your startup, changing policy, and implementing policy change. Make sure to identify which laws and regulations apply to your startup and stay on top of changes. Regulatory changes evolve and they are dynamic. Every startup needs to be proactive in staying abreast of all regulatory changes which affect or has the likelihood of affecting the business and industry they operate in. One practical way to do so is to subscribe to industry news sources.

Communicate changes with your users or customers

Any regulatory framework that will cause a change in the mode of rendering services to your customers should be communicated to them. Be direct in explaining the regulatory changes and how it affects your mode of operations. An inadequate or weak link in communication can affect customer retention of a startup. An example of such impactful regulation is the Central Bank of Nigeria’s suspension of BVN verification by non-banks.

Documentation of compliance processes

Keep a record of compliance processes and measures to ensure that they are implemented. You could also create a compliance matrix detailing the regulatory return, the internal and external deadlines and the officer in charge of ensuring that the regulatory return is made. It is important to monitor changes in order to measure their importance to the services you render and how they can be implemented.

Have a Compliance audit report

A compliance audit report is a written report that focuses on a business' observance of different mandatory or statutory laws, rules, and regulations. The document reviews adherence of a startup to regulatory guides. You can request an annual compliance report from your compliance officer or the team in charge of that.

Train your employees about the regulatory changes

Compliance programs or training for your employees will prevent poor conduct and ensure proper governance in your organization. This helps to minimize risk and look for potential gaps in existing practices compared to the new requirements. This could mean training the product designers to ensure that the KYC processes are followed or the finance officers to ensure that applicable returns are filed.

Most importantly, have a team (internal or external) that is in charge of ensuring compliance. Without a dedicated team or person coping with fast-moving regulatory changes can become difficult and, in some cases, impossible.

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