Upload
irfana-hashmi
View
225
Download
0
Embed Size (px)
Citation preview
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
1/28
Preparing a Code of ConductConcept note
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
2/28
Confidential Preparing a code of conduct 2
Contents
Introduction to the Note ........................ 3
Integrity, Morals and Ethics ................... 4
Meaning of Code of Conduct .................. 5
Contents of a Code of Conduct ............... 6
A. Introductory ................................. 8
Procedural Sections of CoC ................. 10
B. Legal & Regulatory Compliance .... 11
C. Interacting with the World Outside 14
D. Internal Work Culture .................. 18
E. Protecting The Organization ........ 23
EY Contacts ....................................... 26
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
3/28
Confidential Preparing a code of conduct 3
Int roduct ion to the Note
This docum ent has been created by Ernst &
Young LLP for for FICC I. The objective is to
deliberate and finalise an approach that can be
used as a guideline for preparing a Code of
Conduct by m em bers of FICC I.
It is not practically feasible to have a “one size fits
all Code of Conduct”for m em ber organizations.
This docum ents attem pts to lay out guidance
containing the follow ing aspects that w ill help
m em ber organizations to prepare their ow n Code
of Conduct:
o W hat does a Code of Conduct m ean
o Sections that need to be included in a Code of
Conduct
o R ationale for having the section
o Im portant aspects to be covered in each
section
o Factors to be considered w hile preparing
content for each section
o G ood practices that an organization m ay
consider (these m ay not be related to a Code
of Conduct)
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
4/28
Confidential Preparing a code of conduct 4
Integrity, Morals andEthics
1. Concepts1.1 Integrity m eans ‘Q uality of being honest
and having strong m oral principles’–source
Oxford dictionary
1.2 M orals m eans ‘Concerned w ith or derived
from the code of behavior that is
considered right or acceptable in a
particular society’ – source Oxford
dictionary
1.3 Ethics m eans ‘M oral principles that govern
a person’s behaviour or the conducting ofan activity.’- source Oxford dictionary
A s per the Ethics Institute of South A frica,
‘O rganizational ethics refers to standards
of good, right, and fair conduct that prevail
in an organization. These standards
determ ine how an organization w ill treat
internal and external stakeholders.
The ethics of an organization is influenced
m ore by the prevailing culture in an
organization than by w hat is w ritten in
policy docum ents. In other w ords, it is
about the inform al know ledge of 'how w e
do things aroun d here'. O rganizational
integrity is the extent to w hich the form al
policy docum ents and the actual behavior
are aligned.’
2. From morals to Ethics2.1 M orals are individualistic traits one im bibes
w hile grow ing up and interacting w ith
fam ily, friends and others
2.2 W hen a group of individuals com e together
they bring together their m oral values, the
com m on set of those becom e group’s m oral
values. W hen this group of individual w orks
for com m ercial purposes, they m ay take
the form of business values
2.3 W hen the group takes ethical cognizance of
all stakeholders in the ecosystem and not
just its shareholders (and goes beyond the
m ere objective of profit), it gives rise to its
ethical philosophy and values w hich form
the basis of its code of conduct
3. Code of Ethics in organizational
context3.1 Individual are governed by m orals and core
values w hich in turn determ ine the behavior
of an individual
3.2 Code of Ethics is the philosophy w hich
governs the conduct and business of an
organization
3.3 The values of an organization should
determ ine its decisions and its conduct
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
5/28
Confidential Preparing a code of conduct 5
3.4 The Code of Ethics and Conduct are
docum ents w hich are instrum ental in
achieving this
Meaning of Code of Conduct
4. Code of ethics and code of conduct
4.1 A code of ethics is aspirational docum ent
outlining an organization's core values,
ideals and principles
4.2 Code of conduct lays dow n procedures and
rules regarding acceptable or unacceptable
practices related to organizational issues
4.3 Code of ethics is a value-based docum ent,
w hile a code of conduct is a rule-based
docum ent
Source – Ethics Inst itute of South Af rica
4.4W hile a Code of Conduct is not a
com pilation of all policies of an
organization, it does norm ally have a
reference to all and extract of som e critical
ones
5. Drivers of a code of conduct
The key drivers of a Code of conduct
(“CoC”) are prim arily com pliance (legal ®ulatory), good governance and
protection of its reputation. These broadly
encapsulate the entire contents of a C oC as
depicted below :
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
6/28
Confidential Preparing a code of conduct 6
6. Why is a Code of Conduct
required?
6.1 CoC acts as a directive and guide to
em ployees, and other stakeholders in
laying dow n the organization’s expectation
of them and is a reference to all other
detailed policies of the organization
6.2 CoC is a guide that helps em ployees in
dealing w ith ethical dilem m as
6.3 CoC prom otes the organization’s values
and enhances its ethical environm ent
6.4 For listed com panies, a CoC is required
under
6.4.1 SEBI’s Clause 49 of the listing
agreem ent w hich states “The Board
shall lay down a CoC f or all Boar d
members and senior management of
t he company. The CoC shall be posted
on the website of the company.”
6.4.2 Schedule IV of the Com pany’s A ct,
2013, w hich states that the
appointm ent of an independent
director is to be form alized through
an appointm ent letter w hich sets out,
inter-alia, com pany’s “Code of
Business Ethics”. Therefore, by
implication, it appears that a company should have a CoC or a “Code of
Business Ethics”
6.5 For other com panies, it is advisable to have
a CoC as it is an im portant elem ent of an
organization’s overall ethical environm ent
and a strong directive control
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
7/28
Confidential Preparing a code of conduct 7
Contents of a Code of Conduct
7. The suggested contents of a CoC are
set out below:
A. Introductory
A 1 Pream ble
A 2 Top m anagem ent’s support
A 3 V alue statem ent
A 4 A pplicability
A 5 A bout raising concerns
B. Procedural sections of CoC
B1 Legal & Regulatory Com pliance
B2 Political and religious affiliations
C. Interaction with the world outside
C1 G ifts and business courtesies
C2 Conflict of interest
C4 Confidentiality and intellectual property
C5 M edia and com m unication
D. Internal work culture
D 1 Diversity and inclusion
D 2 W orkplace harassm ent
D 3 Corporate Social Responsibility (CSR )
D 4 W histleblow ing
E. Financial reporting and asset protection
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
8/28
Confidential Preparing a code of conduct 8
A. Introductory
A1. Preamble
The pream ble should address the follow ing points:
R easons for issuing the CoC
H ow it guides decision-m aking and
prom otes governance and com pliance
H ow the other organizational policies and
processes need to be read, w ith respect to
CoC
Clarification about the exhaustiveness of
the perm issible/non-perm issible acts listed
in it
H ow and from w hom clarifications related
to C oC m ay be sought
► Introductory part sets out the tone and
authorit y of the document and generally puts
things in context so t hat t he document is read
in the r igh t spi r it
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
9/28
Confidential Preparing a code of conduct 9
A2. Top management’s support
CoC should contain a m essage from top
m anagem ent, indicating senior m anagem ent’s
com m itm ent to the C oC, its authority and their
endeavor to ensure adherence
The m essage should encourage the
stakeholders to un derstand the rationale of
CoC , its contents and w hy they need to com ply
to it
A3. Value statement
The value statem ent of the organization m ay
be reproduced in this section
This could also be the ethics policy of the
organization
A4. Applicability
A pplicability of the CoC should be clarified w ith
respect to the follow ing:
A pplicability to group entities, subsidiaries,
joint ventures, alliances, etc.
A pplicability to internal and external
stakeholderso Internal stakeholders like em ployees,
w orkers, contract labor, directors,
trainees, retainers etc.
o External stakeholders like dealers,
franchises, distributors, vendors, service
providers, etc.
A pplicability across locations and geographies
o It m ay include a note that in case of
conflict betw een provisions of CoC and
local law s –clearly stating that the latter
w ill prevail and override the form er
A5. About raising concerns
It should state the responsibility of
em ployees for follow ing CoC
It should caste responsibility for reporting
violations/suspected violations on
em ployees- not as a punitive m easure but
stem m ing out of the need to “w hat is right”
Concerns should be genuine and reported
in good faith
A6. Ownership and control:
The ow nership and control of the CoC
should be clearly specified
N orm ally, it is assigned to a joint com m itteeform ed by the representatives of the staff
functions (H um an Resources, Finance,
Com pliance, Legal etc.)
A7. Revisions
The CoC is a dynam ic docum ent and needs
to be review ed and revised periodically or
on a need basis
A ccordingly, a C oC should contain a
provision for review , revision and approvalof changes in it
A n illustration is set out below :
i . The CoC shou ld be rev iewed
every two years by the joint
commit tee which will
recommend changes aft er t he
review
i i. The CoC shou ld also be rev iewed
when t here is a:
a.Change in law, or
b.Change in the
organization struct ure or
a business process
i ii . A ll changes will be made a fte r
the approval of t he Leadership
Team of the company
A8. Comments, suggestions or queries
► The CoC should contain provisions for
com m ents, suggestions or queries, and
should specify the em ployee/departm ent
w ho can be contacted for this
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
10/28
Confidential Preparing a code of conduct 10
Procedural sect ions of
CoC
The procedural sections of a CoC are dependent
on the follow ing factors:
· N ature of business or businesses
· D iversity of operations (geographical)
· Interaction w ith and dependence on third
parties
· N ature and extent of tangible and intangible
assets generated and held by the organization· Regulatory fram ew ork
· D em ographics of em ployees and vendors
G enerally, there are four sections in the
procedural part of the C oC. These are depicted
below and elucidated in the follow ing pages of this
note:
W hile elucidating each section the rationale for it,
guidance in the form of recom m ended practices,
factors to be considered and ‘good to have’
m easures have been explained
There is no “one size fits all”CoC and each
organization has to consider various factors to
design the contents of each of the sections
Protecting
the organization
Interaction with world
outsideInternal w ork culture
Legal & regulatory
compliance
► Com pliance
requirem ents
► Bribery & corruption
law s
► Law s for fair
com petition
► Political & religious
affiliation
► Practices w ith
respect to diversity &
inclusion
► W orkplace
harassm ent
► Sexual harassm ent
► Environm ent & safety
► W histle-blow ing and
reporting violations
► CSR
► G ifts and business
courtesies
► Conflict of interest
► Confidentiality &
intellectual property
► M edia &
com m unications
► O ff-duty conduct
► D uties tow ards
custom ers
► A ccurate financial
reporting
► Protecting com pany
assets
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
11/28
Confidential Preparing a code of conduct 11
B. Legal & RegulatoryCompliance
B1. Regulatory compliance
R ecom m ended content:
· O rganization’s philosophy tow ards legal and
regulatory com pliances
· Expectation from em ployees and other
stakeholders - “zero tolerance”tow ards non
com pliance
· Contact for seeking clarification in case of
doubt and responsibility for non-com pliance
· Key provisions of or reference to im portant
anti-bribery, corruption related law s and
regulations like Foreign C orrupt Practices
A ct (FCPA ), U K Bribery A ct (U KBA ),
Prevention of Corruption A ct (PCA) (thisshould be one of the key focus areas of thissection)
· Explaining key provisions by illustrating
potential violations of applicable law s and
the expected behavior by em ployees
· Key provisions of and reference to industry
body regulations or guidelines
· Statem ent clarifying that the CoC does not
list out all com pliance requirem ents and itis expected of em ployees to have know ledge
of law s and regulations related to their w ork
· Statem ent clarifying that the law s of the
land supersede the C O C.
· R eference and link to the A nti-bribery Policy
and any other related policies.
► Good to haveo Com pliance Risk assessm ent
o A separate and detailed A nti-bribery &
Corruption P olicy and training program
o Periodic auditso Self-reporting m echanism and
confirm ations by locations, divisions,
functions etc
o Com pliance com m ittee/s
► Rat ionale for having this sect ion in CoCOrganizations are exposed to var ious legal
fr ameworks in their day to day activit ies, like,
international laws, labor laws, t ax laws, civil
laws etc. Hence it is crit ical to set out
organizat ion’s philosophy and expectat ions
tow ards compliance of various stake-holders
► Factors to be consideredo Law s applicable to the organization –
dom estic and international
o Industry regulations
o Industry or trade body rules
o Internal com pliance risk assessm ent,
m anagem ent and reporting fram ew ork
o G eographies in w hich operations are
spread
o N ature of business
o Feasibility / viability of com pliance
com m ittee
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
12/28
Confidential Preparing a code of conduct 12
B2. Fair competition
R ecom m ended content:
· Reference to Com petition A ct and its
requirem ents applicable to the organization
· O rganization’s rules and expected behavior
of em ployees and other stakeholders w hile
dealing w ith com petitors
· Key provisions of and reference to industry
body regulations or guidelines
· Illustrations explaining the expected
behavior
· Reference and link to the Fair Com petition
Policy and any other related policies
► Good to haveo A separate and detailed Fair Com petition
Policy
► Rationale for having this sect ion in CoCCompetit ion is an essenti al element of t he
economy and mar kets. This section lays down
the gr ound rules while dealing with competitor s
and a reference to r equirements of competit ion
laws
► Factors to be considered
o Law s applicable to the organization –
dom estic and international
o Industry regulations
o G eographies in w hich operations are
spread
o N ature of business
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
13/28
Confidential Preparing a code of conduct 13
B3. Political or religious affiliations
The CoC should cover follow ing key aspects
related to the expected behavior by the
em ployees:
· O rganization’s view tow ards religious,
political affiliations and support to m ass
m ovem ents (non-aligned)
· N o restrictions on em ployees to support
political, religious or social m ass
m ovem ents in their individual capacity, in
their ow n tim e, w ith their ow n resources,
and w ithout any reference to the
organization
· The m anner in w hich one should act as a
representative of the organization w hile
engaging in political or religious activities
· Explaining expected behavior by w ay of
illustrations w hile em ployees participate in
social activities like political or religious
activities, or m ass or civil m ovem ents
· D istinguishing Corporate Social
Responsibilities (CSR) from political and
religious activities by em ployees in
individual capacity
► Factors to be considered
o O rganizational dem ographics
o Social environm ent
o Extent and nature of business operations
► Good to have
o U nbiased organizational policies and
procedures
o Identification of cham pions w ho can be
approached by em ployees for inform al or
form al consultation, w hen in doubt
► Rat ionale for having this sect ion in CoCHumans are social beings. Almost all people
participate in r eligious or political activit ies.
Consequently, the management maintaining its
unbiased stand needs to clarif y it s position in
terms of non-affiliation to religious or political or
other mass movements
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
14/28
Confidential Preparing a code of conduct 14
C.Interact ing with the
World Outside
R ecom m ended content:
· Follow ing policies should form part of this
section
o G ifts and Business C ourtesies
o Conflict of Interest
o M edia and Com m unication
o W histle B low ing
· D os and don’ts for em ployees w hile
w orking w ith third parties vendors,
custom ers, sub-contractors
· G eneral principles of a ‘fair transaction’
· Illustrating the behavior expected from
em ployees w hile w orking w hile interacting
w ith third parties
· O ff duty conduct not to represent or even
appear to represent the organization
(m ore and m ore organizations are
including this as a part of the CoC, as
em ployees actions even outside dutyhours can im pact its reputation)
C1. Gifts and business courtesies
R ecom m ended content:
· D efinition of
o G ifts
o Business courtesies
· Im portance of taking business decisions
based on m erit alone and w ithout any
influence
· R elevant extracts of policies in this regard
· Lim its for accepting or offering gifts etc.
and approval m atrices
· D ealing w ith governm ent officials
· Illustrations explaining the expected
behavior
· A ction to be taken in case of deviation
w hich could not be avoided
· R eference and link to the Gift & Business
Courtesies Policy
► Factors to be considered
o Type of third party interactions
o Level of interaction of em ployees w ith
third parties
o Lo cal custom s and traditions
o N ature of industry
o Financial control over transactions
o Reporting structure
► Good to have
o D etailed Gift & Business Courtesies
Policy and procedures
o R obust financial procedures and
controls
o A dequate aw areness of the procedural
aspects
o Identifying em ployees responsible for
enforcem ent, consultation
► Rat ionale for having this sect ion in CoC -Organizations transact with t heir v endors and
customers, etc. on a daily basis. This exposes
the organization to a risk of reputation apart
fr om risk of f raud, misconduct and non -
compliance. Management should specify how
the employees should conduct their behavior so
that the reputation risk is mitigated
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
15/28
Confidential Preparing a code of conduct 15
► Rat ionale for having t his section in CoC -
Em ployees m ay encounter situations of conflict of
interest (“CO”I) w hile discharging their day to day
du ties. This m ay lead them to take decisions that
m ay not be in the best interest of the o rganization.
It is im portant for them to understand the need to
take decision s based only on business
con siderations and m erit
C2. Conflict of interest
R ecom m ended content:· D efinition of Conflict of Interest (“CoI”)
o Potential
o Real
o Perceived
· G uidance on updating CoI
· CoI declarations process
· Illustrations explaining the expected
behavior
· Resolution of CO I through a C om m ittee
· R eference and link to the Conflict of
Interest Policy
► Factors to be considered
o Type of third party interactions
o Level of interaction of em ployees w ith
third parties
o Type of inform ation should be shared w ith
third parties
o V iability of resolution of CO I through
Com m ittee
o Reporting structure
► Good to have
o D etailed Conflict of Interest Policy and
procedures
o Robust Standard O perating Procedu res
(“SO P”) especially for procurem ent
function
o A dequate procedures for enforcem ent of
the policy
o Identifying em ployees responsible for
enforcem ent, consultation and resolution
o A w areness am ongst em ployees including
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
16/28
Confidential Preparing a code of conduct 16
C3. Confidentiality and intellectual property
R ecom m ended content:
· D efinition of confidential inform ation
· R am ifications of leakage of confidential
inform ation
· Explaining w hat constitutes intellectual
property
· The perm issible m anner of sharing critical
business inform ation for its appropriate
use
· Im portant to respect confidentiality of
inform ation of third parties residing in the
organization
· U se of critical business inform ation / IPgathered during w ork w hich is related to
third parties
· Providing suitable illustrations to explain
the concept and expected behavior from
em ployees
· D efinition of personal inform ation and the
organization’s com m itm ent to protect it
· R eference and link to the IT Security or
any other relevant policy
► Rationale for having this sect ion in CoCDuring course of employment employees get access to
vit al business inform ation / secrets including related t o th ird part ies. The same need to be prot ected especially
from competition
► Factors to be considered
o N ature of business
o Level of interaction of em ployees w ith
third parties
o N ature, type and extent of inform ation
shared w ith third parties
o N ature, type and extent of confidential
inform ation of third parties that is
accessible to the organization/em ployees
► Good to have
o A dequate physical and logical controls on
sharing of inform ation
o Strong access controls
o M onitoring of logs
o A w areness am ongst em ployees
o Regular audits
o IT Security Policy
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
17/28
Confidential Preparing a code of conduct 17
C4. Media and communication
R ecom m ended content:
· Im portance of public com m unication in
m aintaining relationships and reputationof the organization
· Identification of authorized
departm ent/personnel for m edia
interaction (or post their approval)
· List-out illustrative ‘dos and don’ts’
· Specifying perm issible interactions and
m anner of facilitating external
com m unication by w ay of exam ples
· Illustrations / explanations about
expectations from em ployee
com m unication:
o
at client locationso at vendor locations
o during public appearances
o Legal com m unication, etc.
· R eference and link to the M edia P olicy
C5. Use of social media
R ecom m ended content:
· W hat constitutes social m edia
· Im pact of social m edia
· R am ifications of im proper use of socialm edia
· List-out illustrative ‘dos and don’ts’
· Expression of ow n view s not to appear as
organization’s view s
· Illustrations / explanations about
expectations from em ployees
· R eference and link to the detailed Social
M edia U sage Policy
► Rat ionale for having this section in CoCOft en employees are requir ed to make public
statements, clarify position of t he business on
cert ain issues th rough mass communicatio n media.
It is import ant for organizations to lay down
protocols for it s employees to f ollow so that the
reputation of the organization is not impacted
adversely
Also, with social m edia gaining popularity, it is
import ant t o recognize the rights of employees to
use it. At t he same time, it is critical to have
guidelines on its usage so that comments made on
social media are not perceived as the views of the
organization
► Factors to be considered
o Types of platform s available for public
com m unication and related im pact
o Social norm s and cultural environm ent
o O rganizational dem ographics
o Feasibility of having separate team
looking after public com m unication
► Good to have
o D etailed M edia Policy and procedures
o M arketing and com m unications team
for approving com m unication to be
sent out
o D etailed guidelines on how to
com m unicate in a public forum
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
18/28
Confidential Preparing a code of conduct 18
D.Internal Work Culture
Recommended content:
Follow ing policies should form part of this
section
o D iversity & inclusiveness (including
equal opportunity)
o W orkplace harassm ent (including
sexual harassm ent)
o W histle-blow ing
o This section m ay also contain an
extract of the organization’s
Environm ent & Safety Policy
o Illustrations explaining the expected
behavior
o Reference and link to the detailed
Sexual H arassm ent Policy
D1. Diversity & inclusiveness
The CoC m ay touch upon the follow ing
aspects:
· The organization’s view s on diversity
and inclusion and how does it intends
to keep decisions free of bias andbased only on m eritocracy
· M anagem ents support to certain
sections of society, if required by law
of trade/industry body guidelines
· Illustrations / explanations about
expectations from em ployees
· R eference and link to the detailed
D iversity & Inclusiveness Policy
► Rationale for having this sect ion in CoCA n o rganization has em ployees and others
stakeholders w ho com e from diverse
backgrounds in term s of religion, culture,
ethnicity, caste, gender, m ental & ph ysical ability ,
marit al status, age etc. An organization clearly
need to set out that it is an equal opport unity
empl oyer and assesses people only on basis of
performance and meritocracy
► Factors to be consideredo
D ifferent aspects of diversity in the w orkenvironm ent
o Em ployees’exposure and m aturity levels
o A w areness of organizations stance on
diversity and the various initiatives
driving for the cause
o Local and international law s (m ay
determ ine if any of the attributes need
to be added or deleted from the list)
► Good to have
o Platform s for aw areness and open
com m unication (training, m eetings w ith
leaders, forum s to share experiences
and success stories
o Provision for w orkplace counselling
o Support groups w ithin the w orkplace
o D edicated council to m anage related
issues
o Transparent and w ell defined
perform ance m anagem ent system
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
19/28
Confidential Preparing a code of conduct 19
D2. Workplace harassment
R ecom m ended content:
· D efining follow ing concepts:
1. M isconduct
2. Bullying at w orkplace
3. W orkplace harassm ent
4. W orkplace violence
5. Sexual harassm ent
· Procedure to lodge com plaints and the
m echanism to handle the sam e
· Procedures m eant for sexual harassm ent
m ay be driven by law and need to be set
out separately
· Responsibility of em ployees to not
indulge in any form of harassm ent and
also to report any suspected or realviolation of the policy
· Illustrate the relevant law s applicable to
this area
· D os and D on’ts for em ployees
· Illustrations/exam ples show ing w hat
constitutes various form s of m isconduct
and recom m ended action
· R eference and link to the detailed Sexual
H arassm ent and W orkplace Harassm ent
Policy
► Rat ionale for having this sect ion in CoCEmployees must feel comfort able in their work
environment t o achieve their maximum potent ial.
It is imperative for an organization to have
policies to ensure this. Also, the requir ements of
local laws need to be adhered to
► Factors to beconsidered
o O rganizational dem ographics
o A pplicable law s including civil, crim inal
and labor law s or specific law s w ith
regard to harassm ent or sexualharassm ent
o Locations of the organization - from a
legal requirem ent perspective, especially
The S exual H arassm ent of W om en at
W orkplace (Prevention, Prohibition and
R edressal) A ct, 2013 w hich cam e into
effect from 9 D ecem ber 20 13
► Good to have
o Separate and stand-alone Sexual H arassm ent
Policy that m ay need to be com pliant w ith local
law s
o D ifferent channels to report concerns
o Provision for w itnesses to report inappropriate
behavior
o Provision for w orkplace counselling/support
groups w ithin the w orkplace
o Form ations of “Internal Com plaints Com m ittee”
as per the afore-m entioned act (this is
m andatory as per the The S exual H arassm ent of
W om en at W orkplace (Prevention, Prohibition
and R edressal) A ct, 2013
o O bjective com plaint investigation resolution
process
o M anager’s and H R Personnel’s intervention in
the form of counselling, coaching, w orkshops on
assertion and social survival skills w here
necessary
o G raphical representation of the recom m ended
course of actions one should follow w hen he/she
encounters harassm ent at w orkplace
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
20/28
Confidential Preparing a code of conduct 20
D3. Corporate social responsibility
R ecom m ended content:
This section should include a reference to the
Corporate S ocial Responsibility (CSR) Policy. CSR
initiatives should be integrated w ith the business
strategy.
· N ature of CSR initiatives:
· Stakeholder engagem ent –to w in
their trust
· Brand building –to increase brand
value and capture m arkets
· Em ployee engagem ent –to becom e
an em ployer of choice
· R educe, R euse and R ecycle (triple R
approach) –to go green
· Ethical trade –to build a responsible
supply chain
· Philanthropy and how it is different from
CSR m ay be explained
· Carrying out due diligence prior to m aking
social investm ents
· Perm issible and non-perm issible funding on
behalf of the organization
· Com pliance w ith relevant statutes e.g. The
Com panies A ct, 2013, SEBI Circular on
Business Responsibility Reports, 2012, etc.
· Reference and link to the detailed
Corporate Social Responsibility P olicy
► Rationale for having this sect ion in CoCOrganizations have a commitm ent t o t he society
in which they operate. Every organization must
contribut e to t he society t o make it bett er. This is
also mandated by laws in form of cor porate social
responsibility. Every organization must set out its
commitment t o the society and its expectations of
employees and other st akeholders in the CoC
► Factors to be considered
o Prioritizing initiatives
o Prom oting innovation for continuous
environm ental im provem ent
o Financial situation of the organization
o Legal / statutory requirem ents
o Socioeconom ic environm ent in w hich the
organization operates
► Good to have
o A separate and stand-alone policy on C SR
o CSR reporting as required by law
o Clearly defined objectives and perm issible
lim its
o D efined authorities for pre approvals
o Regular audits
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
21/28
Confidential Preparing a code of conduct 21
D4. Whistle-blowing (This is referred to as
“Vigil mechanism” under the Company’s
Act, 2013)
R ecom m ended content:
D efinition of w histle-blow ing
Protocols for reporting (w histle-blow ing
does not substitute other norm al
reporting protocols)
The concept and scope of w histleblow ing
Provisions for safeguard of interest of the
person using w histle-blow ing
R eiterating that concerns should be
genu ine and reported in good faith
Provision for action to be taken against
frivolous com plaints
Provision for non-retaliation against the
person using the m echanism
M echanism available for com plaints,
related authorities and procedure of
handling com plaints
R eferring to or reiterating relevant
extracts of other policies and procedures
(it is a key focus area for this section)
Providing suitable exam ples for explainingthe scope of w histleblow ing and the
expected behavior from the stakeholders
of CoC
Casting responsibility of reporting
violations of the C oC on em ployees and
other covered stakeholders
Illustrations of w hat an em ployee or any
other covered stakeholder is expected to
do in w hen faced w ith dilem m a on
w hether to report or not
Reference and link to the detailedW histle-blow ing policy
► Factors to be considered
o Legal requirem ents like The Com panies
A ct, 2013 specifically w ith regard to
section 1 77(9) and (10), w hich deal w ith
“vigil m echanism ”
o Regulatory requirem ent like RBI, ID RA
o O rganizational dem ographicso Extent of operations, locations
► Good to have
o U sing a third party service provider for
com plete and unbiased reporting
o Fraud response plan, including protocols
for prelim inary review of concerns,
investigation and reporting protocols
o Training and aw areness of the em ployees
and other covered stakeholders
o R eference of availability of w histle-
blow ing in other sections of the CoC and
stand-alone policies
o G raphical representation of the
recom m ended procedure to be follow ed
w hen som eone w ants to report using the
w histle-blow ing m echanism (vigil
m echanism )
► Rat ionale for having this sect ion in CoCWhistle-blowing provides a platf orm f or report ing
concerns to employees and other persons
covered by it, without any fear of r eprisal or retaliation. Globally, maximum number of f rauds
is detect ed through whistl e-blowing in comparison
to t han any ot her means. It also leads to a str ong
anti-fraud/ misconduct culture.
At the same time, it clearly reflects the
organization’s commitm ent t o good governance,
including ethical values and t ransparency.
Proposed sections of t he new Companies Act,
20 13 make it mandator y for some companies to
have a Vigil Mechanism, which is nothing but
whistle-blowing
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
22/28
Confidential Preparing a code of conduct 22
D3. Off duty conduct
R ecom m ended content:
· State the policies for drug and alcohol
abuse during office hours
· Statem ent explaining how em ployees and
am bassadors of the organization and that
their actions can im pact the reputation of
the organization
· D efinition of the illegal and im m oral off
duty conduct
· Illustrations explaining the off duty conduct
► Factors to be considered
o Socioeconom ic environm ent in w hich the
organization operates
o D em ographic profile of the organization
► Good to have
o List of behaviors/actions that can possibly
be deem ed to be im pacting the
organization adversely
► Rationale for having this sect ion in CoCEvery organization is concerned about the welfare
and safet y of its employees at t he workplace and
outside. This section lays down the r ules with
regards to substance/ alcohol abuse during office
hours and is a reminder that employees’ off duty
conduct can adversely impact the or ganization’s
reputation.
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
23/28
Confidential Preparing a code of conduct 23
E.Protect ing TheOrganization
E1. Protecting financial asset and reporting
R ecom m ended content:
D efinition of assets - tangible and
intangible assets
Tangible assets to include physical assets
like fixed assets, plan, m achinery and also
cash, etc
Intangible assets to include intellectual
property, copyrights, patents, goodw ill
and reputation
O rganization’s policy related to usage /
possession of assets
Responsibility to protect the assets and
records in possession of the em ployees
O rganization’s policy on recording
financial transactions and their
transparency of financial reporting and
retention policies
O rganization’s view s on financial audits
and reporting risk w hile reporting risks
m ay result into loss of goodw ill or
reputation
Prohibited financial practices
(illustrative)
Refer to or reiterate relevant extracts of
other policies and procedures
Illustrations w ith hypothetical scenarios
and expected behavior
R efer and link to Financial policies, HR
policies, A sset usage policies, IT policies
and other related docum ents.
© 2014 Ernst & Young LLP All Rights Reserved.
► Factors to be considered
o N ature of assets
o N ature of business operations /
transactions
o Financial control risk and m anagem ent
o Robustness of the financial controls and
reporting m echanism
► Good to have
o Control over issue of assets
o Clear policy related to use of assets by
em ployees
o M echanism to track assets possessed by
others
o R obust em ployees policies and S O Ps w ith
regard to intellectual property, financial
reim bursem ent, paym ents, etc
o R ecord Retention P olicy
o Regular audits and m onitoring m echanism
► Rationale for having this sect ion in CoC
An organizati on needs to pr otect it s assets- both tangible and intangible. While tangible assets can
easily be seen and it is relat ively easy to pr otect
them, it is critical f or businesses t o safeguard
int angibles like reput ation and intellectual
property. Financial report ing, which is a function
of financial contr ols within an organization can
also lead to reputation damage
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
24/28
Confidential Preparing a code of conduct 24
E2. Insider trading
R ecom m ended content:
R eference to relevant statutes e.g.
Securities and Exchange Board of India
(Prohibition of Insider Trading)
R egulations 19 92
D efinition of insider trading
Include and define the term s associated
w ith insider trading
W ho does the Insider Trading Code apply
to
A pplicable law s that cover insider trading
D isclosure requirem ents of the
shareholdings in the com pany
Preservation of price sensitive
inform ation
Illustrate prohibited insider trading
practices
R efer and link to the detailed Insider
Trading P olicy and other related
docum ents
► Factors to be considered
o N ature of business operations /
transactions
o A pplicable law s and regulations an
organization is subject to(dom estic and
international)
► Good to have
o D etailed Insider Trading Policy and
procedures
o R estrictions and prohibitions
o Pre clearance of trade in securities
o D isclosure requirem ents
► Rat ionale for having this sect ion in CoC
An organization endeavors to preserve its
confidentiality and prevent t he misuse of material,
un-published and price sensitive inf ormat ion
especially wit h regards to insider t rading. Also, a
listed entity is subject to l aws and regulations
prohibiting insider tr ading
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
25/28
Confidential Preparing a code of conduct 25
Disclaimer
This document is intended for private circulation duringFICCI's National Executive Committee meeting.
This presentation contains confidential materialsproprietary to Ernst &Young. The materials, ideas andconcepts contained herein are to be used solely andexclusively to evaluate the capabilities of Ernst & Youngto provide assistance to you. The contents of thispresentation are intended only for you and may not bedistributed to third parties.
This document is intended only for the use of client
and may not be distributed to third parties. Thisdocument does not constitute an agreementbetween Ernst & Young and the Client. Anyservices Ernst & Young may provide to Clients willbe governed by the terms of a separate writtenagreement signed by both, the Client and Ernst &Young and subject to internal approvals. Somedetails in this document are based on informationprovided to us by the Client which we have notverified. Accordingly, we are not responsible for any inaccuracies in that information.
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
26/28
Confidential Preparing a code of conduct 26
EY Contacts
Arpinder Singh
Partner and National DirectorTel: +91 22 6665 2590Mobile:+91 98672 83313Fax: +91 22 6749 8200Email: [email protected]
Introduction:
► Arpinder is a Part ner and the National Leader of EY’s Fraud Invest igation & Dispute Services wit hover seven years’ global forensic experiencespecializing in f raud and corruptioninvestigat ions. He has worked with t heRegulatory bodies in India on a number of highprofile investigations
► He has an extensive experience of 18 years,working in India and the US. He has worked as aFinance Controller at Cisco Systems Inc in San
Jose-USA► He is a Chart ered Account ant, LLB, CFE, MBA
(Syracuse Universit y, NY, USA) , and CPA► He has worked extensively in t he area of FCPA
across different sectors as it relates toinvestigat ions, due diligence and tr ainings
► President of Mumbai Chapter of The Associationof Cert if ied Fraud Examiners (ACFE)
► President of Mumbai Chapter of The Associationof Cert if ied Fraud Examiners (ACFE)
► Arpinder is a member of various commit tees:The Internat ional Chamber of Commerce (ICC)
Commission on Arbit rat ion, the Confederat ion of Indian Industry (CII) National Commit tee onDispute Resolution, The London Court of International Ar bitration (LCIA) UK, Anti-corruption commit tee of AMCHAM (AmericanChamber of Commerce); and The Federat ion of Indian Chambers of Commerce and Industry(FICCI) Ant i-Smuggling & Counterf eit committ eeand Intellectual Property Rights committee
J agdeepSingh
Director – National AssuranceTel: + 91 20 6603 6119Mobile: +91 9049987840Fax: + 91 20 6603 5900Email: jagdeep.singh@ in.ey.com
Introduction:
► Jagdeep is a Director wit h EY’s FraudInvest igation & Dispute Services
► He is a Chartered Accountant and a Cert if iedInternal Audit or with around 13 years of professional experience
► He specializes in corporate investigat ions,including invest igations into allegat ions of bribery and corruption
► He has conducted numerous investigationsinvolving occupat ional f rauds and anti-
bribery and corr uption issues► He has been advising var ious corporations on
corporate governance (including Code of Conduct), including compliance frameworksand whistle-blowing mechanism
► He has led several projects involvingimplementation of whistle-blowing mechanismin organizations across sectors
► He speaks regularly at seminars andconferences on corporate integrity, anti-bribery & corrupt ion and fraud & misconduct
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
27/28
Our offices
Ahmedabad2nd floor, Shivalik Ishaan
N ear. C.N V idhyalaya
Am baw adi,
Ahm edabad –380 01 5
Tel: + 91 79 66 08 380 0
Fax: + 91 79 660 8 3900
Bengaluru12th & 13th floor
“U B City”Canberra Block
N o.24, V ittal M allya Road
Bengaluru –560 001
Tel: + 91 80 40 27 500 0
+ 91 80 6727 5000
Fax: + 91 8 0 22 10 60 00 (12 th floor)
Fax: + 91 80 2 224 0 695 (13 th floor)
1st Floo r, Prestige Em erald
N o.4, M adras Bank R oad
Lavelle Road Jun ction
Bengaluru-560 001 India
Tel: +91 80 67 27 5000
Fax: +91 80 2222 4112
Chandigarh1st Floo r
SC O : 16 6-16 7
Sector 9-C, M adhya M arg
Chandigarh –160 00 9Tel: + 91 172 671 78 00
Fax: + 91 172 671 7888
ChennaiTidel Park,
6th & 7th Floor
A B lock (M odule 60 1,70 1-702)
N o.4, Rajiv G andhi Salai
Taram ani
Chennai –60 0 11 3
Tel: + 91 44 66 54 810 0
Fax: + 91 44 225 4 0120
HyderabadO val O ffice
18, iLabs C entre,
H itech C ity, M adhapur,
H yderabad –50 0 0 81
Tel: + 91 40 67 36 200 0
Fax: + 91 40 673 6 2200
Kochi9th Floo r “ABA D N ucleus”
N H -49, M aradu PO ,
Kochi –682 30 4
Tel: + 91 484 304 40 00
Fax: + 91 484 27 0 5393
Kolkata22 , Cam ac Street
3rdFloor, Block C”Kolkata –70 0 016
Tel: + 91 33 661 5 3400
Fax: + 91 33 2281 775 0
Mumbai14th Floor, The Ruby29 Senapati Bapat M arg
Dadar (w est)
M um bai –40 0 0 28
Tel + 91 22 619 2 0000
Fax + 91 22 6192 1000
5th Floor Block B-2,N irlon K now ledge Park
O ff. W estern Express Highw ay
Goregaon (E)
M um bai –40 0 0 63
Tel: + 91 22 619 2 0000Fax: + 91 22 6192 3000
NCRGolf View CorporateTow er –B
N ear DLF Golf Course,
Sector 42
Gurgaon –122 00 2
Tel: + 91 124 46 4 4000
Fax: + 91 124 464 4050
6th floor, HT House18-20 Kasturba Gandhi M arg
N ew Delhi –11 0 00 1Tel: + 91 11 436 3 3000
Fax: + 91 11 4363 3200
4th & 5th Floor, Plot No 2B,Tow er 2, Sector 126,
N oida –20 1 30 4
Gautam Budh N agar, U .P. India
Tel: + 91 120 67 1 7000
Fax: + 91 120 671 7171
PuneC—401, 4th floor
Panchshil Tech Park
Yerw ada (N ear Don B osco School)
Pune –41 1 006Tel: + 91 20 660 3 6000
Fax: + 91 20 6601 5900
8/19/2019 FICCI CoC Concept Note 09-07-14 EY
28/28
Ernst& Young LLP
Assurance | Tax | Tran saction s | A dvisory
About Ernst & Young
Ernst & Y oung is a global leader in assurance,
tax, transaction and advisory services.
W orldw ide, our 167,000 people are united by our
shared values and an unw avering com m itm ent to
quality. W e m ake a difference by h elping our
people, our clients and our w ider com m unities
achieve their po tential.
Ernst & Y oung refers to the global organ ization
of m em ber firm s of Ernst & Y oung G lobal Lim ited,
each of w hich is a separate legal entity.
Ernst & Y oun g G lobal Lim ited, a U K com pany
lim ited by guarantee, does not provide services
to clien ts. Fo r m ore inform ation about our
organization, please visit ww w .ey.com
Ernst & Y oung LLP is one of the Indian client serving m em ber
firm s of EY GM Lim ited. For m ore inform ation ab out our
organ ization, please visit w w w .ey.com /india
Ernst & Young LLP is a Lim ited Liability P artnership, registered
under the Lim ited Liability Partnership A ct, 2008 in India, having
its registered office at 22 Cam ac S treet, 3rd Floor, Block C ,
Ko lkata –700 01 6
© 20 14 Ernst & Yo ung LLP Published in India.
A ll Rights Reserved.
Th is publication contains inform ation in sum m ary form and is
therefore intended for general guidan ce only. It is not intended to
be a substitute for detailed research or the exercise of
professional judgm ent. N either EYGM Lim ited nor any other
m em ber of the global Ernst & Young organization can accept any
responsibility for loss occasioned to any person acting or
refraining from action as a result of any m aterial in this
publication. O n any specific m atter, reference should be m ade to
the appropriate advisor
A bout FICCI
Established in 1927, FICCI is the largest and
oldest apex bu siness organization in India. Its
history is closely interw oven w ith India’s struggle
for indepen den ce, its industrialization, and its
em ergen ce as one of the m ost rapidly grow ing
global econom ies. FICCI has contributed to this
historical process by enco uraging debate,
articulating the private sector’s view s and
influen cing policy.
A no n-governm ent, not-for-profit organization ,FICCI is the voice of India’s business and industry.
FICCI draw s its m em bership from the corporate
sector, both private and pu blic, including SM Es
and M N Cs; FICCI enjoys an indirect m em bership
of over 2, 50,000 com panies from various
regional cham bers of com m erce.