What an Investor's Diligence Team Reads in Your Statutory Compliance Register

1. The Request Founders Underestimate

Sooner or later, a diligence checklist lands with a line reading "evidence of compliance with applicable labour and employment laws". Founders often answer with a folder of challans. A folder proves that some payments were made. It does not tell the investor which obligations exist, who owns them, which have failed before or what stands between the company and the next failure.

2. What Diligence Teams Look For

Experienced reviewers read compliance for patterns, not for perfection. They look at whether the company knows what it owes, whether it has an owner for each item and whether failures are visible to management. A company with two past late filings and a clear record of what it changed afterwards reads better than a company claiming a spotless record that cannot be evidenced.

Contractor labour draws particular attention. Under the Contract Labour (Regulation and Abolition) Act, 1970, a principal employer can carry liability for specified contractor failures, so a company that deploys contract workers across sites is asked how it checks contractor remittances.

3. What a Good Register Shows Them

A compliance risk register answers the reviewer's questions in one document. Each row names an obligation, a location, an owner, a score, a control and the evidence that the control ran. A site-by-act heat map shows at a glance which location and which Act carry the highest residual risk. A history of score changes shows that the company reviews its exposure rather than filling the register once for the diligence exercise.

Key risk indicators add the forward-looking half. Days to the nearest licence expiry, contractors with proof overdue and registers waiting for approval tell a reviewer the company is watching the numbers that predict problems, not just reporting the ones that happened.

4. What a Register Should Never Hide

Do not remove an inconvenient row before sharing the register. A late filing, a lapsed licence that was later renewed or a notice that was answered belongs in the notice history for that row, with what changed afterwards. Reviewers find these items elsewhere, and a register that omitted them loses credibility on every other row. Also avoid scoring that is uniformly low. A register where nothing is above Medium invites the question of whether anyone challenged the scores.

The four Labour Codes took effect on 21 November 2025, with detailed rules still being notified. Reviewers now ask how a company tracks that change. Tagging each row with its legacy Act and the Code that subsumes it is a simple, visible answer.

5. Preparing Before the Term Sheet

Three actions pay off long before a data room opens. Build the register with anchored scoring scales and evidence fields. Run a contractor audit on every site that uses contract labour. And make sure score changes are approved by a second person, so the history reads as management control and not as editing. The detailed field list, scoring anchors and indicators are in the Iztty guide to the compliance risk register.