Investing in compliance
Nearly every business operates in a regulated industry. There are rules that your business must abide by, whether your company is regulated by federal, provincial, or municipal agencies. At some point, your business must decide what its priorities and values are. It can be a difficult balance to maintain revenue streams while trying to expand or diversify your business.
Regardless of whether your business is a start-up or has proven the test of time, compliance is key. The failure to comply with the applicable regulations can bankrupt your company. Not every company can operate unlawfully but take over the market in such a way that regulators have no choice but to accommodate them, as Uber did. Most companies fear, as they should, the fallout of non-compliance. Consider the following options a board of directors may have to consider when making a significant business decision which could engage a potential incident of non-compliance:
1. Delay production of over-the-counter pharmaceutical products while awaiting federal approval of the medication, resulting in lost revenue of approximately $5 million; or
2. Proceed with production while awaiting federal approval, knowing that agency will licence the medication anyway and gain significant market share.
If you chose option two, your business is now on the brink of collapse, mired by lawsuits, investigations and a loss of confidence from consumers. These decisions are always easy in hindsight. However, these decisions are often made without the benefit of strategic legal advice from lawyers who understand the risks and rewards of proactive compliance and the pitfalls that can come with non-compliance.
Proactive compliance is critical, not just because it helps protect the business from any incidents of non-compliance, but because it also builds the essential foundation for establishing due diligence, in the unlikely event that the business, directors, officers, or shareholders are charged with regulatory offences.
The reason compliance is key is because the issue will be what steps, leading up to and at the time of the event, did the company take to prevent the commission of the offence. After-the-fact compliance or simply reacting to issues as they occur is insufficient. A small investment now can save your business in the future.
Proactive compliance doesn’t have to be expensive, time-consuming, or ground-breaking. Sometimes it is as simple as having standard operating procedures and policies in place. In other cases, it can involve capital expenses to improve machinery or equipment to exceed safety standards.
Compliance can be complicated. In some cases, the industry “standard” itself may be insufficient. For example, in R. v. Maple Lodge Farms, the Ontario Court of Justice questioned whether the industry standard to protect chickens against harsh weather conditions was sufficient despite the policies and procedures in place.
Don’t be left to navigate these issues on your own or simply react to them once it’s too late. Sometimes companies believe they are protected because they have in-house counsel or expert advisors, but they may not specialize in compliance or regulatory offences.
The lawyers at Damien Frost & Associates LLP can help your business ensure that it adheres to the applicable regulations, standards, and laws of your industry. We can provide you with strategic legal advice and representation when dealing with regulatory agencies, regardless of whether you are currently under investigation. Invest in your businesses’ compliance to protect against future investigations or prosecutions, which can carry significant fines and periods of imprisonment. Call our office today to discuss how we can help you.