Ethics And Development

transcript

ETHICS AND DEVELOPMENT “Entrenching the principles of good governance in public and private sectors for sustainable development” Pavan Kumar Vijay

Past President The Institute of Company Secretaries of India

04/12/23

Program at The Institute of Certified Public Secretaries of Kenya

on 12.08.2010

…the application of best management practices, compliance of law in letter and spirit and adherence to ethical standards for effective management and distribution of

wealth and discharge of social responsibility for sustainable development of all stakeholders”

Institute of Company Secretaries of India

“Corporate governance is…

Corporate Governance rests with the Vision and Perception of the Leadership

A Leader need to adopt a Vision for Corporate Governance

Corporate Governance Framework

Output – Input = Wealth Created ?

Sustainability

Happiness andProsperity of all

Stakeholders

Reinvestment

Distribu- tion

Research and DevelopmentHR DevelopmentInfrastructureRisk Management

SUPPLIERS Adequate ReturnsHUMAN ASSETS Adequate RemunerationCUSTOMERS Affordable PricesPUBLIC Payment of Taxes and Partnership in National Development Projects

Wealth Creation Wealth Management Wealth Sharing

EnhancedCapabilities

Best Management Practices are Vital HereLaw and Ethics are Vital Here

Constituents of

Corporate Governance

The stakeholder value chain

SUPPLIERS CUSTOMERSHUMAN RESOURCE

Supply Funds, Materials and Services

Value Addition and Management of Resources

Give Opportunity to Co. to Satisfy their Needs

Adequate Returns for Funds, Material and Services Supplied

Adequate Salary and Security for leading a Happy Life

Best Quality Products and Customer Care at Minimum Prices

ROLE OF STAKEHOLDERS

EXPECTATIONS OF STAKEHOLDERS

Potential Suppliers, Human Resources and Customers

Biological, Economic and Cultural EnvironmentPUBLIC

PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT

The Principles of Good Governance

A Case Study on Corporate Governance - Examples from India

The vision adopted in Infosys

Systematic Scheduling of Board Meetings with maximum Participation

assured.

Ensuring delegation at committee level being composed of optimum

number of Independent Directors.

Maximum tenure of independent directors is nine years.

Dissemination of regular information to investors through e-mail,

telephone, face-to-face meetings, road shows etc.

Cont…

The vision adopted in Infosys

Presentations are made by executive directors to familiarize the new

non-executive directors with the Company’s operations.

Evaluation of non-executive directors through a peer-evaluation

process.

Whistle blower policy providing direct access of employees to

Chairperson of Audit Committee.

That’s what makes

Infosys

A value driven organization and resuts into greater valuation and overlall

benefits

A Comparison of Infosys in IT Industry

with their P/E multiple

The Satyam Disaster!!!

Depiction of rosy picture in disclosures Lack of transparency Ineffective participation of Independent Directors Falsification of accounts Failure of Board Procedures & Systems Unproductive Whistle Blower

Eventually the whole system of Corporate Governance was treated as a mockery by not adoption of principles in Spiritual sense which resulted in a

Corporate Slaughter

The age old mantra of Indians is that

Commitment to well-being and progress of all stakeholders

‘Satyam Vada Dharmam Chara’

- Taittariya Upanishad

Mantra for Good Governance

Cont…

Speak the Truth and Practice Righteously

Mantra for Good Governance

Karna Parva of the Mahabharata, an Indian Epic (more than 2500 years ago)

Worshipping 33 Crore Godheadssignifying various species,

plants, cosmic elements, …

Care for Panchtatvas (The Basic Elements)

Earth, (Prithvi)

Water, (Jal),

Sky , (Akaash)

Wind, (Vaayu) &

Fire (Agni)

that make a human being

This is our approach to

Environment Protection

The essential principle of Mahatma Gandhi's Governance philosophy

“Trusteeship”

Capacity, Knowledge and Resources

Maximization of stakeholders’ value and well-being and progress of humankind

TOWARDS

THROUGH

Transparency, accountability and truthful disclosure of state of affairs

Righteousness

Corporate are also expected to use their

This is our own age old mantra of Good Governance

Companies that have followed theseprinciples of

Corporate Governancehave

Consistently earned high returns, increased their net worth,

enhanced their shareholders wealth

Invested significantly in proactive research and development

Developed people into ‘achievers’ than just ‘performers’

Dealt ethically with customers, government and business partners

Maintained and updated their professional management culture, system and processes

..and accomplished

WINNINGEMPLOYEES

GROWINGINVESTORS

DELIGHTEDCUSTOMERS

TRUSTEDSUPPLIERS

SATISFIEDGOVERNMENT AND

REGULATORS

SATISFIEDGOVERNMENT AND

REGULATORS

HAPPYSOCIETY

Advantages of applying Best Corporate Governance Practices

Widespread Goodwill and Brand Reputation

Access to Global Markets

Better Access to Human Capital

Ready Market for New Products

Widening Customer Base

Enhanced Trust and Confidence of all Stakeholders

EMPLOYEESEMPLOYEES

INVESTORSINVESTORS CUSTOMERSCUSTOMERS

SUPPLIERSSUPPLIERS

GOVERNMENT AND REGULATORS

SOCIETYSOCIETY

Leading to…

Environment

Civil SocietyBusiness Society

SUSTAINABLEDEVELOPMENT OF

NATION

The Nation’s Welfare

Happier Nation World wide recognition Overall GrowthEnhanced confidence amongst foreign investors

though Primary/Secondary Market Overall stakeholders benefit Enhanced repute and significance of Citizens at the

global platform.

The Indian Growth Story &

The Role of Governance

The Indian scenario – The Initial Hurdles

Cause Behind Slow Industrial Growth

The Story of Change over

The initiatives by the government

Liberalization of Industrial Development Improved Infrastructural development Development through Public Private Partnership (PPP) Model Transparency in Disclosures through RTI Act & proposed Law

on Whistle Blower Disclosure & Protection Strengthened Governance Model Legal Process strengthening through e-governance

(The Delhi Metro Rail)

The Desired Result

Optimum utilization to high population Increased per capita Income More Infrastructural DevelopmentMore FDI due to enhanced GovernanceInvestors trust within and outside nation

India Today

• 2nd most populous nation 1.2 billion – Largest Pool of young & Skilled Manpower

• The 2nd fastest growing economy of the world after China. • GDP USD 1 trillion and growth in last 4 years is 9%, 9.6%,

9.4% and 6.7% • GDP - Agriculture : 20%, Industry 23%, Services: 57%• Never defaulted on international commitments• Preferred destination of Foreign Direct Investment• Believed to be one of the top five Economies by 2050

The real enemy of good governance – The root cause

CORRUPTION

The Evil of Corruption – The Way outs to deal

The Anti Corruption Implementation Model

– The e-governance Initiative (MCA21, UID, other e-portals)

– Better governance through Legal formulation and initiative of Right to Information (RTI) Act

– The consideration of Public Interest Disclosure and Protection to Persons Making The Disclosure Bill, 2010

The need of hour for Developing NationsOptimal utilization of available

resources Improved Infrastructural development Enhanced Education Facilities Liberalization of EconomyIndustrialization with Human Face

Initiatives towards Corporate Governance by

The Institute of Company Secretaries of India

Initiatives of ICSI towards good governance

The Corporate Governance Award function

The Post Membership Qualification on Corporate Governance

The Corporate Governance Module for best practices

The laying of secretarial standards for best practices

Investor Education and Awareness Programmes

Founder member of International Federation of Company Secretaries

The Secretarial Standards of ICSI One of its own type in the world

SS-1 Meetings of the Board of Directors SS-2 General Meetings SS-3 Dividend SS-4 Registers and Records SS-5 Minutes SS-6 Transmission of Shares and Debentures SS-7 Passing Resolutions By Circulation SS-8 Affixing of Common Seal SS-9 Forfeiture of Shares SS-10 Board's Report

ICSI + ICPSK…. The way ahead

Advocacy of Good Governance Practices Recognition to Good Governed Companies Specifying structures and role models Inculcate the better Governance Practices in Members &

Students Promotion of the Secretarial Standards

Outstanding Performance, Higher Profits,

Expanded Market Reach and the like FAILS

to protect a company which has put good governance & ethics

at the back burner….

History is Witness

..…Only the culture of strict adherence to good compliance can keep a company

ahead on sustainable basis , bring in larger profits!!!

Secret behind building foundations

Corporates should act like Honeybee which suck the nectar of the flowers without effecting its fragrance and produce honey for the well –being of society .

The Ancient Indian Philosophy

Thank you kenya