FICCI CoC Concept Note 09-07-14 EY

8/19/2019 FICCI CoC Concept Note 09-07-14 EY

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Preparing a Code of ConductConcept note


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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


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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)


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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


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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 &regulatory), good governance and

protection of its reputation. These broadly

encapsulate the entire contents of a C oC as

depicted below :


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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


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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


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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


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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


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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


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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


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B2. Fair competition


· 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



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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


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


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C.Interact ing with the

World Outside


· 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


· 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


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


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


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► 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


behavior

· Resolution of CO I through a C om m ittee

· R eference and link to the Conflict of

Interest Policy


o Type of third party interactions


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


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C3. Confidentiality and intellectual property


· 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




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


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C4. Media and communication


· 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


· 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


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


o Types of platform s available for public

com m unication and related im pact

o Social norm s and cultural environm ent


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


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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


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


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D2. Workplace harassment


· 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 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


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D3. Corporate social responsibility


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


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


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D4. Whistle-blowing (This is referred to as

“Vigil mechanism” under the Company’s

Act, 2013)


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


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


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D3. Off duty conduct


· 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


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.


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E.Protect ing TheOrganization

E1. Protecting financial asset and reporting


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.


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


24/28


E2. Insider trading


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


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


25/28


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.


26/28


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


27/28

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28/28

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FICCI CoC Concept Note 09-07-14 EY

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