What is CP?
CP (Compliance Program) is a law-abiding system operated to abide by fair trade laws and regulations. The program is designed to prevent the loss/damage of the company by preventing employees from violating laws and to improve corporate values and competitiveness.
※ What are fair trade laws and regulations?
They refer to the following various laws and regulations enacted to promote competition and maintain fair trade order: Monopoly Regulation and Fair Trade Act, Act on Clause Regulations, Fair Labeling and Advertising Act, Fair Subcontracting Act, Act on Installment Payment Transactions, Act on Sales by Visiting, and Act on Consumer Protection in E-commerce.
Usefulness of CP
1. Prevention of firm’s losses/damages arising from violations of laws and image enhancement
If the CP is successfully operated, the company can prevent or minimize monetary burden including fines, lawsuit expenses, and compensation for damages due to the Fair Trade Commission’s investigation and resulting punishment. It can also avoid corporate image decline caused by the punishment.
The successful operation of the CP can contribute to the promotion of internal and external reliability as well as enhancement of corporate social values for the long term. It can also improve customers’ trust in companies, thereby making contributions to a firm’s financial structure improvement.
2. Shaping a fair trade compliance culture
The active operation of the CP enhances employees’ law-abiding consciousness; it can become an opportunity to internalize such consciousness and also establish a fair trade compliance culture for various business partners.
It can contribute to the establishment of transparent trading order with diverse partner firms including subcontractors.
3. Contribution to the establishment of fair trade order
Companies make efforts to comply with fair trade-related laws and regulations considering the ever-changing business environment through CP operation.
As a result of such effort, unnecessary administrative waste according to ex-post excessive punishment of the government is reduced, so a virtuous circulation through which capabilities can focus on better policy development and system improvement can be realized.
Eight major factors for adopting CP
1. Preparation and execution of CP standards and procedures
Necessary standards and procedures should be executed so that employees can clearly recognize job-related fair trade laws and regulations and practice them.
2. CEO’s commitment to and support for law compliance
The CEO should publicly express his/her commitment to abide by the policy of the fair trade laws and regulations and vigorously support CP operation.
3. Appointment of compliance manager in charge of CP operation
The top decision-making body including the board of directors should appoint a compliance manager and assign responsibility for the effective operation of the CP.
4. Compliance manual preparation and use
The compliance manual is prepared under the responsibility of the compliance manager, and it contains the fair trade laws and regulations and CP standards and procedures.
The manual should be prepared in the form of document or electronic file that all employees can easily access and use.
5. Continuous, systematic compliance education
Effective education should be regularly conducted for employees in fields having high possibility of fair trade violations regarding compliance with CP standards, procedures, and fair trade laws and regulations, including top management (CEO) and purchase and sales departments.
6. Establishment of an internal monitoring system
A rationally planned monitoring and audit system should be established and operated to prevent or detect any violations early.
The monitoring and audit results should be regularly (at least twice a week) reported to the top decision-making body including the board of directors.
7. Punishment of employees violating fair trade laws and regulations
The company regulations prescribe the punishments corresponding to the level of violations against the employees responsible for the violation of fair trade laws and regulations.
Upon finding a law violation by an employee, active response should be made, and prevention should be carried out to prevent any similar violation.
8. Effectiveness evaluation and actions for improvement
For the CP to be continued and operated effectively, the inspection and evaluation on CP standards, procedures, and operations should be performed, and the resulting actions to improve them should be taken.
CP rating system
1. Goal of rating
By objectively and fairly rating the CP system operation performance, the problems of the existing CP operation can be identified, and actions can be taken accordingly. This can consistently contribute to the firm’s law compliance management.
2. Incentives by CP rating
Rating (valid period: two years) Exemption from ex officio investigation Order to announce publicly Awarding the evaluation certificate Fair Trade Commission Commissioner’s Commendation AAA (most excellent) 2 years Exemption ○ Upon acquiring it for two consecutive years AA (excellent) 1 year and 6 months Reduction ○ Upon acquiring it for two consecutive years A (relatively excellent) 1 year Reduction ○ - B (moderate) - - - - C (insufficient) - - - - D (very insufficient) - - - -