Good corporate governance begins with the behaviour and ethics of a company’s leadership team. A factor often cited in governance failures is a poor ‘tone at the top’. Beyond overseeing and asking the right questions of management regarding an organization’s ethics and compliance efforts, the board has a significant role to play in building and promoting an ethical culture.

Clause 49 of the listing agreement for stock exchanges in India requires that the board lays down a code of conduct for all board members and senior management of the company and that this code of conduct be posted on the website of the company. It also requires that all board members and senior management personnel affirm compliance with the code on an annual basis and the annual report of the company contains a declaration to this effect signed by the CEO.

One of the important tools of ensuring a culture of ethics and compliance is a whistle blower policy. In its simplest form, whistle blowing involves the act of reporting wrongdoing within an organization. A whistleblower policy should be approved by the board of directors. Successful whistle blowing procedures require strong leadership from the board and senior levels of management to develop a culture in which all employees are encouraged to raise their concerns without a fear of retaliation.

The difficulty with implementing a culture of good corporate ethics and compliance is not so much in the resolution of issues as it is in identifying issues in the first place. In today’s complex business environment, where there are countless shades of gray but little undiluted black and white, it is a challenge to foresee and deal with all situations that may present an ethical dilemma.

 

Independent Directors

Role of independent directors in corporate governance practices

The benefits of the having independent directors on the boards of companies has been immensely fruitful in terms of implementation of principles of good corporate governance such as ethics and compliance amongst  industries in India.

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Posted with permission from the Institute of Company Secretaries of India, copyright 2009.

Independent directors, The gatekeepers of corporate governance

Companies, management and directors should realize that compliance is not a check-the-box exercise. The spirit and not just the letter of the law should be followed. The document suggests that the actions of the independent directors should demonstrate ethics, integrity, honesty, and transparency.

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Posted with permission from the Institute of Company Secretaries of India, copyright 2009.

Dig Deeper

Ethics and compliance, A value based approach

Recent incidents of corporate frauds in India have raised the ante for ethical behavior and effective enterprise wide compliance programs companies and their leadership that adhere both to the letter and the spirit of the law may realize substantial benefits. This paper discusses our five-phase approach for assisting you in creating or enhancing an ethics and compliance program.

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Ten questions the boards should consider asking about ethics and compliance programs

An effective ethics and compliance program requires senior management involvement, organization wide commitment, an effective communications system, and an ongoing monitoring system. This paper present ten question that aid in assessing whether the elements of an effective ethics and compliance program are present.

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Suggested guidelines for writing a code of ethics/conduct

A value-based approach to ethics and compliance states clearly and concisely the company’s expectations, outlines acceptable behaviors, and presents viable options for asking questions and voicing concerns. This document recommends elements that may be included in the code of conduct documents and risk issues which may be addressed in the company’s code.

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Ethics and corporate boards

Some ethicists see the principal role of ethics as the harmonization and reconciliation of conflicting interests. This paper analyses the basic concept of ethics and corporate functioning.

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Posted with permission from the Institute of Company Secretaries of India, copyright 2009.

Corporate compliance of labour laws

Corporate compliance of various legislations is a very significant factor in good governance. Labour laws compliance is all the more significant because of the multi-dimensional impact it carries not only for the corporates, but for the whole society and the economy. It is in this context that this article tries to highlight the need, significance and scope
of corporate compliance to labour laws.

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Posted with permission from the Institute of Company Secretaries of India, copyright 2009.

Ethics in corporate social responsibility, A positive approach

Business ethics and corporate social responsibility are again in limelight and sharp focus. CSR is all about ensuing that the activities of a corporate enterprise are carried out correctly. The positive aspects of CSR are illustrated with reference to an actual incident in the US.

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Posted with permission from the Institute of Company Secretaries of India, copyright 2009.