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What is the main purpose of compliance?

main purpose of compliance

What is the Main purpose of Compliance?

Company compliance refers to the essential laws and regulations set by the government that an organization must follow. It is an integral part of your business operations, regardless of industry. Non-compliances create various hindrances for the company in the form of penalties and fines. To prevent such situations, it is of utmost importance to be aware and comply with the applicable compliances.

The main purpose of compliance

The main purpose of company compliance is to ensure that a company follows laws and regulations relevant to its industry and operations and to promote ethical and responsible behavior within the organization. Some of the essential benefits of filings company compliance are listed below:

Creates Transparency and Credibility

Proper compliance in the company as per the Company law is the obligation of every company. This regular compliance helps the company in raising its credibility. Proper compliances serve as a criterion for ensuring the credibility & transparency of the company.

Enhances the Public Confidence

Proper annual compliance enhances the Public and the client’s confidence that the company is regularly reviewing its operation.

Provides a Competitive Edge in the Market

Annual compliance gives a competitive advantage in the market. The company can use it as an advertising strategy in the business & assuring the investors or customers that the business has been conducted diligently.

Opens Investment Opportunities

For smooth functioning, every company needs investment, and investors only invest in those companies that are well-compliant and give them high returns. Before making any investment, an investor checks the financial records and status of the company before proposing. The companies need to fulfill all the compliances as regular compliance increases the company’s credibility.

Provides Active Status

Proper and timely compliances help maintain the active status of the company.

Ensures Accurate Data Collection

Annual Compliances by the Public Company ensure the Public that the data collected for the compliances are accurate and true.

Avoids Hefty Penalties

Noncompliances often result in hefty penalties and Fine. Proper annual compliances help in avoiding hefty penalties.

Building Trust

A company filing compliance and disclosing financial information on time is considered trustworthy by suppliers, vendors, and customers.

Transparency of Operations

Filing of compliances reveals the actual situation prevailing in company operations. Filing of compliances such as financial returns can tell about the company’s financial health.

Avoid any Legal Issues.

Non-filing compliances can give rise to legal consequences such as a notice from The Ministry of Corporate Affairs. Therefore one should file compliances on time to avoid any legal troubles.


It is easier for a company to get financial aid and market credit in case the compliances are timely filed than for a company whose compliances are inappropriate.