1. Running head: CORPORATE COMPLIANCE PLAN 1
Corporate Compliance Plan
Fredrick Harris
Law/531
January 15, 2011
Professor Teresa Knox

2. CORPORATE COMPLIANCE PLAN 2
Corporate Compliance Plan
Riordan Manufacturing is an international plastic manufacturing firm that specializes in
plastic container parts for automobiles, beverage drinks, and fan parts with projected revenue in
excess of $46 million dollars annually. Riordan Manufacturing is wholly own by Riordan
Industries thatis based in strategic locations throughout the US and China with expansion and
recent acquisitions. In the meantime, Riordan Manufacturing has proposed in moving their China
operation from Hang Zhou province to Shanghai within the next five years. However, before
Riordan Industries can make this move there are two areas that have to be done first prior to
leaving;
1. Is this move allowable that were established in the negotiations contract that are
in compliance with the local laws
2. Does this move support terminating the local employees without using an
Alternative Dispute Resolution (ADR)
Riordan Manufacturing have to settle claims from the local nationals of terminating their
employment with breach of contract and needs to settle without going to court. The alternative
method is an Alternative Dispute Resolution to appease all the local nationals and settle forth.
The technique is “Only by appraising both their own and the other party’s substantive and
relationship priorities can negotiators effectively choose a negotiation strategy” (Lewicki,
Saunders, Minton, & Barry, 2003, p. 123). The negotiation bargaining strategy is referred to as a
win-win negotiation, mutual gains bargaining, and interest based bargaining. This ADR
negotiation strategy for Riordan Manufacturing simplifies that both parties “tend to believe that
mutual agreements are reached by being inventive, collaborative, and persistent in searching for
substantial joint gains and the creation of value, relative to no-agreement possibilities”(Lewicki,

3. CORPORATE COMPLIANCE PLAN 3
Saunders, Minton, & Barry, 2003, p. 124).The relocation to Shanghai, China will clearly cause
some conflicts with the outgoing workers and welcoming to the incoming employees of
Shanghai. Those employees who cannot make the transfer will eventually become disgruntled
employees and cause strife and uneasiness before the manufacturing plant close. The
international law firm of Litteral & Finkel should work closely with Lowell Bradford, the chief
legal counsel of Riordan in maintaining discipline and acting accordingly to those who invite
vandalism and retaliation acts.
Enterprise Liability
Enterprise liability with Riordan Manufacturing with their local vendors and suppliers
can disrupt future operations and plans with their decision to move and close down production.
Riordan abrupt decision to cease operation will affecttheir contractual obligation that is with
several vendors and suppliers. The old contracts that were written with agreements and
operations have to be re-written to avoid losses and not to lose suppliers for future benefits and
shipments. The re-written of new contracts need to have clarity of purpose, time, specification
and must address the changes the company is undergoing. The new development with Riordan
and local vendors and suppliers can avoid risks, minimize liabilities and yet continue their
business relationship despite these new changes. Moving the manufacturing plant to a new
location does not resolve Riordan of its duties to contract out of liability due to change. Because
Riordan Manufacturing is such a large company and deals with so many complexities in its
operations, the need for renewal of contracts is necessary for protection of workers and
consumers. The renewal of contracts helps to avoid and diminish the need for misinterpretation
on both side as well as handling complex exchange relationship and ethical problems to
overcome inequities that could be viewed upon local nationals.

4. CORPORATE COMPLIANCE PLAN 4
Product Liability
Product liability is the philosophy of law that “governs the body of legal rules in civil
lawsuits for losses and harms resulting from a defendants furnishing of defective goods” (Mallor,
Barnes, Bowers, & Langvardt, 2007, p. 432). Riordan Manufacturing starting up new operation
in Shanghai, China, and integrating new suppliers and vendors into their operation can create
new legal problems for the company in itself.Switching suppliers and hiring new inexperience
employees can cause Riordan Manufacturing not to meet federal regulation standards and
international standards with their products. The chief legal counsel should ensure all of Riordan
products are in full compliance with standards and regulations concerning all their products that
are sold and manufactured to avoid tort liability and strict liability lawsuits. These standards
should be of good practice and faith and consist of the following three fundamentals:
design a product for which there is no reasonable safer alternative design
manufacture the product as it was designed and without manufacturing defects. I
incorporate appropriate warnings and instructions to avoid risks that could not be
eliminated through reasonable alternative design.
As soon as Riordan introduces new suppliers into their operation, they should hire an
independent testing company to ensure all products are in compliance before products are sold to
consumers and to ensure safety awareness is paramount among their employees. All testing
results should be equal to or surpassed of the industry standards along with federal and
international inspection standards. Federal regulations should be used as a basis for minimum
standards and when regulations are not warranted where products are sold; those products should
also meet the minimum federal standards to avoid tort liability. In protection of the company and

5. CORPORATE COMPLIANCE PLAN 5
board of directors, Riordan should identify and appoint a production manager to oversee all
procedures, preliminaries of product design, and product to witness credible production in design
and manufacturing. This processensures shortcoming and oversight are corrected, and procedure
reviews are proactive within the company chain of concern. The most important role of the
production manager is that he is the tip of the sphere to contact government officials in case
defects or recall violations. This method helps to maintain good relations with local government
officials and maintain credibility with outside agencies and media. The last fundamental of
production that Riordan Manufacturing should invest in with the new plant is making certain that
all new suppliers and vendors meet regulatory compliances and conduct a background
investigation to ensure all new suppliers and vendors can meet those expectations.
International Law
International law is important both to nations and businesses and has many unique
features.
1. “There is no single legislative source of international law.
2. There is no single world court that is responsible for interpreting international
law.
3. There is no world executive branch that can enforce international law”
(Cheeseman, 2010, p. 849).
International law regulates the govern affairs between individuals and businesses in
foreign affairs and is important for Riordan Manufacturing because the company is closing one
plant and relocating to a new one. The international legal firm of Litteral & Finkel, which
represent Riordan Manufacturing, has to ensure the Chinese government will accept approval of
the new proposal and plans because China is a country with complex laws governing foreign

6. CORPORATE COMPLIANCE PLAN 6
businesses. Some of the legal procedures that have to be in place are trade restriction and tariffs,
environmental and manufacturing regulations, and taxes. International law has three primary
sources that composeof its existence: International treaties, custom, and general principles of
law. Any violations of Chinese law that occur either by Riordan Manufacturing or its employees
has to be handled by their international law firm of Litteral & Finkel.
Tangible and Intellectual Property
Intellectual property for Riordan Manufacturing needs to be secured and protected prior
to the company move to their new plant to avoid the possibility of stolen equipment and
tangibles such as the case in the United States v. William (Coca-Cola employee tries to sell trade
secrets). Their property rights includes their plastic manufacturing documents, copyrights to their
beverage bottles, trademark secrets to automobile parts, and patents on their fan parts. Any
equipment that is leased to vendors and suppliers for equitable distribution in manufacturing
parts needs to be return under contractual agreementand inventoried. Riordan Manufacturing also
has intellectual rights to “employees whose work cover inventions, programs, formulas, software
or applications, and intangible ideas which the company profits from” (US Department of
Justice, 2004).
Legal Forms of Business
Riordan Manufacturing next major decision in relocating to Shanghai, China is toidentify
what type of legal form of business they will institute or manage in their development. Moving
from the Hang Zhou province to Shanghai will definitely bring new risks such as customer needs
selection, technological challenges and financial growth with higher taxes, managerial
development, and employee-team working environment complexities. When a business or
company venture into forminga legal form of business there are several types to choose from, the

7. CORPORATE COMPLIANCE PLAN 7
most common are;Sole Proprietorship, General Partnership, Limited Liability LimitedPartnership
(LLLP), Limited Liability Company (LLC), C-Corporation and S-Corporation. Business owners
need to pick the structure that best meets their needs and financial situation. Depending on the
type of business established and the risk and liabilities the product will provide, determines
which form is best. However, once the company is formed, the next step is to shield your
personal assets from business debts and claims and provide the company with personal liability
protection. The best choice for Riordan Manufacturing is to convert to a C-corporation because
of their overseas business location.
Fig. One
As a C-corporation company Riordan Manufacturing will be an independent legal and tax
entity, which is separate from the owners who has control and managerial duties. The main
principle to being a corporation is the owners do not use their personal tax returns to pay tax on
corporate profit, the corporation pays these. Also asa corporation, Riordan would be reorganized
with ownership “shares of stock that are assignable and freely transferable by sale, pledge, or
gift” (Cheeseman, 2010, p. 558). The important function of a corporation is the company cannot

8. CORPORATE COMPLIANCE PLAN 8
be put in prison; the penalty is usually a fine, loss of license, or sanction. The latter portion of a
corporation is the company is managed and run by a board of directors elected by the
shareholders as a method of governance in day to day operations.
Governance
Corporations and businesses need protection in today’s economy from misuse, scandals,
Ponzi schemes, embezzlement, and fraud from investors and shareholders regardless whether
they are individuals, governments, or banks. Assurances have been put in place by the U.S.
Congress to eliminate some of these risks and implement control by enacting and passing the
Sarbanes-Oxley Act of 2002 (SOX). This act requires improvements in corporate governance
rules, eliminate conflicts of interest, instill confidence in investors and when “publicly traded
companies issues their annual financial reports, they also must issue reports on their internal
control systems”(Cherrington, Dunn, & Hollander, 2005, p. 432). Internal control systems are
activities performed to minimize or eliminate risks with policies and procedures. These controls
activities consist of five interrelated components of the COSO framework that are; control
environment, risk assessment, control activities, information and communication, and
monitoring.
According to the Committee of Sponsoring Organizations of the Treadway Commission
(COSCO) two important documents used in the development of current enterprise risk
management (ERM) and control philosophies aretime of consumption and cost.The key factor to
identifying and controlling risk to help prevent operational losses is applyingthe benefits in
controlling the risk that outweigh the cost of the control while balancing efficiency and
effectiveness. The example below clarifies the relationship between higher the opportunities
become, greater the risk in potential losses.

9. CORPORATE COMPLIANCE PLAN 9
Fig. Two
Riordan Manufacturing best compliance with the Sarbanes-Oxley Act of 2002 should be
to ensure that strong internal and external control measures are put in place to represent ethical
financial reporting and implement independent auditor’s committee participation to the Security
Exchange Committee (SEC), board of directors, and other regulators for assurances. The boards
of directors are elected by shareholders and are responsible for formulating policy decision for
the corporation and the panel of board members can consist of one or more individuals whose
number of initial directors is correspondent to the articles of incorporation. The board of
directors usually represent an inside and outside director where the inside director is an officer of
the corporation and the outside director sits on the corporation board. The directors and officers
of a corporation are held to certain fiduciary duties, which are obedience, duty of care, and
loyalty owned to their shareholders anytime decisions are made on behalf of the company.
Riordan implementation of enterprise risk management along with corporate governance
guidelines to establish a business framework is their foundation for future success in China.

10. CORPORATE COMPLIANCE PLAN 10
References
Barnes, A., Bowers, T., Langvardt, A., & Mallor, J. (2007). Business Law: The Ethical, Global,
and E-Commerce Environment (13th ed.). New York, New York: McGraw-Hill
Barry, B., Lewicki, R., Minton, J. & Saunders, D. (2003). Negotiation: Readings, Exercises, and
Cases (4th ed.). New York, New York: McGraw-Hill.
Cheeseman, H. (2010). Business Law: Legal Environment, Online Commerce, Business Ethics,
and International Issues (7th ed.). Upper Saddle River, New Jersey: Prentice Hall.
Cherrington, J., Dunn, C., & Hollander, A. (2005). Enterprise Information System (3rd ed.). New
York, New York: McGraw-Hill.