Q.34: Kindly help us understand the following queries:

1. Activities a compliance officer is supposed to do?
2. What are his roles and responsibilities?
3. What we as a company should expect of a compliance officer or check with him and at what frequency?

Response:

According to Section 20 of the IA Regulations

An investment adviser which is a body corporate or a partnership firm shall appoint a compliance officer who shall be responsible for monitoring the compliance by the investment adviser in respect of the requirements of the Act, regulations, notifications, guidelines, instructions issued by the Board.

In contrast,

According to Section 2(1)(ss) of the IA Regulations

Principal officer shall mean the managing director or designated director or managing partner or executive chairman of the board or equivalent management body who is responsible for the overall function of the business and operations of non-individual investment adviser

Therefore, with regard to Compliance Officer:

• He is an internally designated person with main role of ensuring legal compliances. Further, certain regulators may insist on declaring the compliance officer to be reached out by them.
• He shall initiate and ensure all necessary registrations, remittances, if applicable, filing of returns, maintenance of necessary records and as may be necessary, representation with any authority for audit / inspection.
• He is expected to ensure the following:
  • Implement and manage an effective legal compliance program;
  • Develop and review company policies.
  • Assessments and Monitoring – Ensure internal audits / external audits and also ensure the audit observations / reported deviations are addressed.
  • Assess company operations to determine compliance risk.
  • Ensure all employees are trained / made aware on the latest regulations and processes.
• As the company may decide, based on its scale and nature of operations / risk perception related to compliances,
  • On a periodic-basis (could be fortnightly / monthly / quarterly / yearly), the Compliance officer shall report on the status of compliances and action to be taken.
  • On need-basis, as and when there is an exigency, compliance officer shall bring it to the knowledge of Principal officer and other concerned and ensure resolution.

Accordingly, he shall advise the management on the company’s compliance with laws and regulations through detailed reports.