CORPORATE GOVERNANCE AND BUSINESS ETHICS

v  CORPORATE GOVERNANCE AND BUSINESS ETHICS 1
BUSINESS ETHICS

◦     CORPORATE GOVERNANCE

◦     CORPORATE GOVERNANCE IS THE SYSTEM OF RULES,PRACTICES AND PROCESSES BY WHICH A FIRM IS DIRECTED AND CONTROLLED. IT TRIES TO BALANCE THE INTERESTS OF COMPANY’S STAKEHOLDERS SUCH AS SHAREHOLDERS,MGMT,CUSTOMERS,SUPPLIERS,FINANCIERS,GOVT AND THE COMMUNITY

◦     IT PROVIDE THE FRAMEWORK FOR ACHIEVING ORGANIZATION’S OBJECTIVES,IT COVERS ALL THE DOMAIN OF THE MGMT FROM ACTION PLANS TO PERFORMANCE MEASUREMENT AND INTERNAL CONTROLS TO PERFORMANCE MEASUREMENT AND CORPORATE DISCLOSURE.

◦     CORPORATE GOVERNANCE PRINCIPLES:-

I.        TRANSPARENCY

II.        FAIRNESS

III.        RESPONSIBILITY FOR THE PROTECTION OF THE RIGHTS AND THE INTERESTS OF ALL STAKEHOLDERS

◦     BUSINESS ETHICS

◦     BUSINESS ETHICS IS THE APPLICATION OF GENERAL ETHICAL PRINCIPLES TO BUSINESS DILEMMAS AND COVERS A BROADER RANGE OF ISSUES AND CONCERNS THAN LAW DO AS EVERYTHING THAT IS LEGAL IS NOT ETHICAL.

◦     ETHICS INVOLVE LEARNING WHAT IS RIGHT OR WRONG AND THEN DOING THE RIGHT THINGS BUT THE RIGHT THING IS NOT  NEARLY STRAIGHTFORWARD .

◦     BUSINESS DECISIONS HAVE ETHICAL COMPONENT ITS ETHICAL CONSEQUENCES  MUST BE WEIGHED BEFORE TAKING DECISIONS.

v  BUSINESS ETHICS AND CORPORATE GOVERNANCE

◦     THE SOUND AND STRONG FOUNDATION OF GOOD CORPORATE GOVERNANCE REQUIRED IN USING BUSINESS ETHICAL PRACTICES.

◦     THE ETHICAL GUIDELINES HELP IN IMPROVING CORPORATE GOVERNANCE:

1. COMPLIANCE OF ALL THE LAWS,RULES AND REGULATIONS
2. HONESTY AND DISCLOSURE
3. FULL DISCLOSURE IN ACCURATE MANNER IN REPORTS
4. ACT IN GOOD FAITH WITH DUE CARE AND DILIGENCE
5. ACT AS TRUSTEE OF THE ORGANIZATION’S ASSETS AND USE THEM FOR THE TRUE BENEFICIARIES ONLY
6. GIVE ALL STAKE HOLDERS THEIR DUE IMPORTANCE
7. AVOID CONFLICT INTEREST IN PERSONAL AND PROFESSIONAL RELATIONSHIP
8. ETHICAL GOVERNANCE

v  BY ADOPTING FOLLOWING ETHICAL PRACTICES WE COULD MAKE THE STRONG CORPORATE GOVERNANCE:-

I.        TO RUN ORGANIZATION IN ETHICAL MANNER

II.        EQUAL CARE OF ALL THE STAKEHOLDERS

III.        COMPLIANCE OF ALL THE PROVISIONS OF THE COMPANIES ACT

IV.        ETHICAL ORIENTATION TO ADOPT RIGHT PRACTICES WHERE THE LAW IS SILENT

V.        ADOPTION OF SOUND AND ETHICAL PRACTICES BY THOSE COMPANIES WHICH ARE NOT COVERED BY SEBI

v  ROLE OF MGMT AND SHAREHOLDERS

◦     ROLE OF MANAGERS:-

I.        COMMITTED AND WELL MOTIVATED TEAM

II.        BUILDING GOOD AND STRONG RELATION WITH STAKEHOLDERS

III.        WELL DEFINED AUTHORITY AND RESPONSIBILITY AT EACH LEVEL

ROLE OF SHAREHOLDERS:

I.        SHOULD BE AWARE OF THEIR RIGHT AND RAISE QUESTION TO MGMT POLICIES

II.        SHOULD REGULARLY ATTEND THE MEETINGS

III.        MINORITY SHAREHOLDERS’S VIEWS MAY BE IN LINE WITH THE LONG TERM INTEREST OF THE ORGANIZATION. DUE WEIGHT AGE SHOULD BE GIVEN

◦     FEATURES OF AN ETHICAL ORGANIZATION

I.        EMBED CORE VALUES INTO EVERY ACTION,STRATEGY AND POLICY

II.        DEAL ETHICS AS RIGHT V RIGHT NOT RIGT OR WRONG

III.        DEVELOP ETHICAL IMAGINATION TO THINK ON ETHICAL MANNER

IV.        FOCUS ON MORAL PRINCIPAL OVER LEGAL COMPLIANCE

V.        EXPAND THE MORAL PERIMETER

VI.        CONCENTRATE ON RELATIONSHIP BUILDING RATHER DEAL MAKING

VII.        INTEGRATION OF MANAGERIAL AND ETHICAL COMPETENCE

VIII.        MAINTAIN DEEP RESERVES OF MORAL COURAGE

IX.        TOLERANCE OF ETHICAL DISAGREEMENT

v  BENEFITS OF ETHICAL ORGANIZATION

I.        COMPETITIVE ADVANTAGE

II.        BETTER STAFF ATTRACTION AND RETENTION

III.        INVESTMENT

IV.        MORALE AND CULTURE

V.        REPUTATION

VI.        LEGAL AND REGULATORY REASONS

VII.        LEGACY