The compliance movement in russia: What is driving it?

Abstract

The introduction of compliance management systems is becoming more and more important in Russian companies. Initially limited to anti-corruption compliance and driven by foreign extraterritorial legislation, corporate leaders are now considering the benefits of enhanced risk management systems. From a corporate law perspective, the driving force behind this is the business judgement rule. Corporate leaders should be encouraged to take reasonable entrepreneurial risks without fearing liability. Therefore, by adopting compliance and risk management systems corporate leaders will be able to exculpate themselves when business decisions go wrong and losses are suffered. But the question is who will be the driving force in the Russian corporate context: the executive director or the board of directors? This paper examines two strands of domestic compliance regulation: anti-corruption compliance and the 2014 Code of Corporate Governance. It shows that while there are grounds for the possibility that in Russia the executive directors will be the drivers of compliance, the greater likelihood is that the board of directors will be collectively responsible. Important incentives for the day-to-day management of the companies will therefore most likely be missed.