"Core to good corporate governance is compliance with the laws of the land. This assists companies in their endeavour towards being a good corporate citizen," says Sai Chandravadhan, general manager, Chess Management Services Pvt Ltd.

According to him, Chess Management Services goes a step beyond of legal audit. "We do not conduct legal audits but offer legal compliance management service - a management service on a legal platform - through establishing standards for systems and processes that ensure compliance."

The assessment of an organisation's present statutory compliance status is only the first step in conducting a gap analysis. "Our emphasis is on enabling companies acquire the skill-sets and systems to ensure continued compliance thereby reducing the risk exposure," he remarks. Excerpts

Could you briefly explain the process involved in legal audit/legal compliance certification activity?
The legal compliance certification is a five-step process, each following the other. The first step is to define the key responsibility area and mapping the flow of compliance activities between departments and thereby determine the key responsibility area. This mapping removes any ambiguity in compliance.

Training the company officials by domain experts, normally a third party service provider, follows this. The third step is to install controls for compliance and assessment of the same through third parties. The management's commitment to compliance is measured through external standards. And, finally, a company is issued the legal compliance certification.

How many legal audits have you done till date?
We have completed between around 60 legal compliance-management exercises till date in the last three years. This service, however, can be used for different purposes and our clients have found different reasons for engaging us.

The number of legal audits you do per month/year?
We are capable of handling two or three projects per month. The project is divided into several stages, each stage complementing its antecedent. For example, we do a preliminary study of the company through which we map the quantum of compliance requirements applicable to the company laterally and vertically. Each such stage is timed, and comprehensive in itself and still capable of being used as an add-on for augmenting the entire project.

How many legal compliance certificates have you issued?
Well, till now only one unit has been certified as having systems and processes to address legal compliance requirements. This is not to say that most companies do not have processes to address compliances, however, these processes are mostly lopsided, addressing only some laws and ignoring many. On the other hand, our standards conform to Indian legal requirements and also international norms. We see legal compliance as a result of a system and unless the system is both efficient and effective as per our standards, there is no certification.

Like ISO quality standards certification, does your company conduct mid-term or yearly audits for certificate renewal ?
Yes. There is a yearly assessment and renewal / upgradation of certification. Where upgradation is needed, the client needs to fall within the protocol based on internationally accepted business practices.

What is the trend you see for legal audit/legal compliance certification?
The long term trend of the market as opposed to the short-term fashion must be visualised. What the community perceives as the key requirement to transact with companies is the cornerstone to determine trends.

Companies like Microsoft changed from ESOPs to direct stock grants because the scams in the US have shown that a tool to equate the gap between employees and shareholders ended up eroding the value of the shareholders. The long-term trend was towards granting direct stocks for purposes of transparency.

It is inevitable that long term trends will become the law. That is the way it has always been. From this viewpoint, it is clear that companies will find value in being certified as having systems that address compliance. This satisfies long term trends and is a proactive approach to law.