The Importance of Developing a Compliance Culture

6 April 2009

Corporations, as legal entities, can commit offences. They can even commit offences where the offences have a fault, or “state of mind”, element.

Traditionally, corporations have been vicariously liable for the acts of their employees. More recently, however, they have become directly responsible for acts or omissions caused by their directors representing the organisation.

The law is continuing to evolve so that corporate culture is now an important factor in determining whether the fault element of an offence is met.

This means that, in order to avoid liability, management needs to take an active approach to ensuring that their company is complying with its legal obligations.

Drafting policies that articulate these obligations is not enough. The policies need to be implemented and internalised within the organisation. Management needs to take responsibility for creating and maintaining a compliance culture within the organisation.

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The Importance of Developing a Compliance Culture by Holley Nethercote Commercial Lawyers is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.5 Australia Licence.