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Oct 17, 2025
4 min read
Compliance and ethics each influence how business entities function on a day to day basis. One is a mandatory set of operational guidelines, and the other refers to how an entity chooses to behave.
A business needs both ethics and compliance to function effectively. Let’s break down the differences between the two and offer some strategies on how to abide by them both.
What is the difference between compliance and ethics?
Before we outline strategies for how to remain in compliance while also following ethical principles, it’s important to define both compliance and ethics. They do have their similarities, but there are also key differences between them.
Corporate compliance refers to the act of complying with a series of laws, by-laws, rules, and policies that regulate how entities operate. Many businesses have positions akin to Chief Compliance Officers, who oversee compliance programs that include ongoing training and communications for all entity employees.
Meanwhile, ethics revolves around moral principles rather than legal mandates. Some companies even create business ethics standards that outline morally acceptable and unacceptable behaviors when conducting business.
Are there similarities between ethics and compliance?
Compliance programs are enacted based upon jurisdictional laws established by regulators in a geographical area where an entity operates. However, some would argue that company culture is where compliance begins.
Company culture is developed using a shared philosophy of ethics, values, missions, and visions. These principles can instill a recognition that compliance is not only a legal requirement, but also the morally correct thing to do as an organization. In that sense, compliance and ethics do complement each other and inform how entities continue to operate.
What role does corporate governance play in compliance?
Corporate governance is another integral piece of the Governance, Risk Management, and Compliance (GRC) program that informs legal entity management. Corporate governance refers to an entity’s internal checks and balances that help the business remain compliant.
Corporate governance is more beneficial than simply supporting compliance. Analyses of S&P 500 corporations found that companies with strong corporate governance policies and procedures outperformed those with weaker governance by up to 15%.
Therefore, it can be argued that implementing effective corporate governance policies supports compliance and ethics, but it can also influence growth for the business.
What are the effects of non-compliance for an entity?
Failing to implement strong governance policies risks placing your entity in a position of non-compliance. If your business breaks the law or fails to observe federal, provincial, or state regulations, you risk subjecting your entity to the penalties of non-compliance.
What’s an example of non-compliance? Fiscal mismanagement or fraud are prime examples of white collar crime and non-compliant activities. Often, financial fraud occurs due to a lack of organizational structure and governance within an entity. Lacking the authoritative executives and directors to instill those important checks and balances, unethical and illegal practices are free to occur.
How to establish compliance and ethics within your entity
So, what’s the best way to implement corporate compliance and ethics throughout your organization? Many businesses use legal entity management software to establish their compliance programs and implement effective corporate governance. These programs, by extension, reinforce company culture that adheres to moral and ethical principles.
Using entity management software, you can create the Articles of Incorporation for your company. Articles of Incorporation are legally binding documents that must be created when launching a new entity or a subsidiary under that corporate umbrella. The Articles of Incorporation are then shared with the proper regulators to officially launch your business.
Additionally, you can use entity management software to establish organizational charts that document the hierarchy of executive authority. Your legal and compliance teams can use these organization charts to ensure proper oversight and signatory approval on any pressing business matters are enacted to remain in compliance. Regulators can also use copies of these organization charts to speak with the named executives in the event of an audit or other regulatory procedure.
The best part of entity management software is that it streamlines the entire compliance process for your entire team. The platform is intuitive and designed with pre-built templates of crucial corporate documents. Your team can use these templates to construct corporate compliance documents in a fraction of the time it would take to create these documents outside the platform.
In summary, entity management software helps your team work smarter, faster, and towards the goal of fulfilling your business compliance and ethics requirements.
Oct 16, 2025
6 min read
Governance and compliance are two umbrella terms that are part of the global corporate lexicon. Many legal professionals use these terms interchangeably, but should they?
While there are many similarities between corporate governance and compliance, there are profound differences that distinguish the two. When discussing strategies to enforce governance and compliance, it’s important to understand the distinctions between these two frameworks.
What is corporate governance?
Let’s begin by defining corporate governance. As a practice, corporate governance refers to a set of internal policies and procedures that ensure a legal entity conducts itself in appropriate fashions. The entity’s Board of Directors is ultimately responsible for setting the corporate governance framework.
Corporate governance frameworks compile a series of ethical principles that guide how an entity’s leaders conduct their business. The purpose of a corporate governance framework is to ensure business leaders act in the best interests of their stakeholders. An entity’s key stakeholders include the employees, the shareholders, the customers, the suppliers, and any creditors to whom the corporation owes outstanding debts.
Examples of how to implement a corporate governance framework can include things like:
- Protocols to enforce accountability across the organization
- Transparent communication policies throughout the entity
- Reporting controls to enforce governance protocols
What is corporate compliance?
Corporate compliance is how a business entity aligns its own operating procedures with the laws and regulations that apply to the corporation. Corporate compliance frameworks are formalized policies to:
- Prevent violations of those laws
- Train employees on regulatory processes
- Implement compliance procedures
- Monitor and report on any violations of compliance protocols
The purpose of a corporate compliance framework is to minimize risk and prevent legal liability that threatens the integrity of the corporation. Failure to abide by these protocols leaves your entity at risk of financial calamity, similar to the collapse and bankruptcy of FTX that led to numerous criminal charges against senior leaders of that business.
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How are governance and compliance similar?
Governance and compliance frameworks both refer to rules of conduct and controls on operational behaviours. The purpose of both frameworks is to establish guidelines to conduct business and hold everyone in the organization to a high set of standards.
Governance and compliance are also essential pieces of any entity’s Governance, Risk Management, and Compliance (GRC) agenda. As a concept, GRC was first established by the Open Compliance and Ethics Group (OCEG) in 2002. GRC is an integrated system that enables organizations to operate at principled performance.
How are governance and compliance different?
Now we get into the key distinctions between the two frameworks. Here’s what you need to know about the disparity between governance and compliance. These insights will help inform how GRC protocols are implemented throughout your organization.
Ethics vs. the law
The most important difference between governance and compliance is the legality of each framework. Corporate governance is a series of ethical principles that determine how key stakeholders of a business entity operate from day to day. Corporate compliance is bound by the law and jurisdictional regulations that enforce how a company must operate to avoid incurring criminal or financial penalties.
Internal policies vs. external mandates
This is another key distinction between governance and compliance. Corporate governance refers to the policies and procedures created within the organization by key stakeholders like executives, directors, or shareholders. These are internal rules and regulations that enforce business ethics and operational procedures across the organization.
Corporate compliance is a set of laws and regulations dictated by governments and regulatory bodies within the jurisdiction where an entity operates. Compliance guidelines are established by external authorities. The onus is on the entity to establish protocols that ensure the corporation remains in compliance with those established laws.
Optional vs. obligatory
Most legal entities choose to create corporate governance frameworks to abide by an ethical set of principles. However, corporate governance remains an optional policy. While it is highly common, there’s no mandate that forces companies to adopt corporate governance frameworks.
On the other hand, corporate compliance is a legally binding obligation. Corporations must follow the letter of the law in order to conduct their business and engage with customers. Failure to follow the laws will result in civil or criminal liabilities levied against the corporation.
Long-term planning vs. short-term remedies
Corporate governance can be as much of a strategic playbook as it is an ethical set of operational guidelines. An effective governance framework can form the basis of a long-term strategic plan that helps drive the growth and evolution of the business as a whole.
Corporate compliance is also part of a long-term strategy. However, if there are changes to jurisdictional laws or by-laws, the company must adapt with quick fixes or remedies to remain in compliance with the laws. Often, compliance is more of a reactive stance to these regulations.
How to ensure governance and compliance with entity management software
Now that you have a better understanding of the differences between governance and compliance, what’s the best way to establish both frameworks to help protect the interests of your business entity?
Entity management software is one of the best resources to both establish and enforce effective corporate governance and compliance. Entity management platforms are built by legal professionals for legal professionals, including compliance officers whose mandate is to enforce protocols that keep the corporation in compliance with the laws.
Entity management systems are designed to automate workflows and streamline the process of enforcing governance and compliance. Establishing governance and compliance frameworks requires an arduous amount of administrative and clerical work to create effective protocols. Entity management software saves invaluable working time by streamlining the workflows.
These platforms also have built-in compliance modules that walk your legal team through all the necessary steps to establish governance and compliance frameworks. You can establish a structured org. chart, calendars, workflows, and other regulatory templates. The platform intuitively highlights any errors, statutory non-compliance, and date-based compliance tasks that may be lacking.
Governance and compliance are important requirements for any business entity. Using an intuitive entity management platform, you can ensure your corporation abides by these frameworks and functions at the highest standards of excellence.
Oct 16, 2025
5 min read
Entity management, risk management, and compliance management are not corporate practices that people think about when forecasting revenue and profitability. However, there’s more profit to be made through legal operations than you may think.
A corporate compliance program helps organizations adhere to the laws and regulations of the land. In-house legal staff and compliance managers are responsible for enforcing compliance protocols that are designed to protect the interests of the corporation.
Here’s how the people responsible for managing corporate compliance programs can actually improve your organization’s bottom line and boost productivity.
Who are the compliance managers?
As many as 60% of corporations have an in-house Chief Compliance Officer and a team of compliance managers that report to the CCO. Additionally, most organizations have a Chief Legal Officer and a team of paralegals who help manage legal records for the corporation. Some companies are fortunate enough to have both departments operating in-house.
It’s these teams of hard-working professionals who protect the legal and financial interests of the corporate entity. Given the right resources and support from the global entity, these professionals can make their own contributions to the corporation’s bottom line.
How do compliance managers protect corporate interests?
Compliance managers maintain diligent records that document all the different elements of the corporate compliance program. These include things like:
- Documented policies and procedures
- Proper training protocols
- Whistleblower protection programs
- Minute book management practices
- Auditing and reporting policies
- Compliance enforcement protocols
- Non-compliance investigative procedures
Compliance managers and paralegal staff often use legal entity management technology to meticulously compartmentalize all legal and compliance records. These platforms are intuitive, helping compliance and legal managers save valuable working time while completing all clerical and administrative compliance tasks.
Why use entity management to maintain compliance?
Entity management software helps your legal and compliance teams follow federal regulations like the Corporate Transparency Act. The purpose of these federally regulated legislative policies is to enforce corporate compliance and crack down on white collar crimes.
Globally, corporate compliance requirements ensure transparency and accountability is upheld by legal entities that operate in multiple jurisdictions. That’s why it’s so important to give your compliance managers the resources they need to be as detailed and thorough with corporate recordkeeping as possible.
Entity management software provides a single source of truth for all corporate entity data and minute book documentation. If federal regulators request an audit of your corporate data, your compliance managers can open the entity management platform and provide instant answers to any pressing questions from regulators.
Additionally, entity management software like MinuteBox has a built-in compliance module. The module helps your legal and compliance teams monitor organizational charts, calendars, workflows, and other templates for any errors, statutory non-compliance, and date-based compliance tasks. These automated workflows help your organization follow the jurisdictional letter of the law so that you always remain in compliance.
How compliance managers support corporate profitability
Now that you understand how compliance and legal managers operate, how does that translate into an impact on the corporation’s bottom line? Here are several ways that your legal and compliance teams directly impact corporate profitability.
Reduce risks and costs of cybersecurity breaches
Creating a single source of truth for your corporate compliance program allows your team to monitor any risks of non-compliance. Your compliance managers can identify and squash any internal operational problems that risk violating compliance policies. This can even extend to external-facing operations when dealing with customers or vendors.
Additionally, a compliance program includes cybersecurity measures to protect sensitive corporate data. Entity management software like MinuteBox is protected by biometric and hardware key authentication solutions, protecting all sensitive data from anyone without authorized access to the platform. This approach helps compliance managers mitigate any cybersecurity risks, such as hacking or malware that could compromise corporate security.
Minimize non-compliance financial penalties
Companies that violate compliance laws are subjected to significant penalties from regulators. In some cases, these penalties can amount to tens of millions in fines that must be paid to the federal or provincial/state governments.
In extreme cases, violations of compliance protocols can result in jail time for senior executives of the corporation. The ongoing saga with FTX Founder Sam Bankman-Fried is a stark warning for other companies to respectfully follow compliance protocols. Bankman-Fried is currently facing multiple charges of fraud and conspiracy to misappropriate billions of dollars in FTX customer and investor money.
Maintaining a rigid compliance program allows your compliance managers to minimize the risk of incurring similar extreme penalties. By enforcing compliance policies, your compliance and legal teams can potentially save millions of dollars in operating expenses.
Strengthen your corporate reputation
Finally, by enforcing a corporate compliance program, legal and compliance managers reinforce the standing brand reputation of your corporation. Customers and vendor partners will choose to do more with your corporation if they can trust that your organization respects compliance laws.
By maintaining this responsible reputation, your corporation can create new business opportunities that bolster revenues and increase profitability. Reputation is everything in business, and your compliance managers will protect that reputation from crumbling within.
Are you ready to transform your legal and compliance teams into departments that directly contribute corporate profitability? Join the MinuteBox revolution and use your entity management platform to enforce compliance and maximize profits.