Tricia Lu, law clerk, co-authored Corporate Compliance Practice Guide: The Next Generation of Compliance Chapter 46, “Board of Directors’ Oversight of Compliance: The Compliance Committee Option.” This chapter provides a comprehensive guide on the duties that directors of public companies have for compliance oversight. It summarizes the origins of these duties, which are derived from multiple sources of authority, including case law, provisions of the Sarbanes-Oxley Act of 2002, the listing requirements of the national securities exchanges, the DOJ Federal Sentencing Guidelines for Organizations, and the more informal standards that govern the exercise of prosecutorial discretion.
The chapter emphasizes the importance of an effective compliance program and suggests various ways boards can organize their oversight functions, including through audit, compliance, or risk committees. It aims to help boards ensure robust compliance programs to mitigate legal and regulatory risks and describes practical ways to approach oversight to fulfill their responsibilities.