Business Ethics 604 Unit 1

BCP 604/Unit - 1
Business Ethics
Composed by: - PIYUSH R SAHAY

Asst. Professor/St. Xavier’s College, Patna
(MBA/UGC NET)/PIYUSHRSAHAY@GMAIL.COM
BCP 604/Unit - 1
Section I
1. Introduction to Business Ethics a. Definition b. Role in various types of business structures 2:
Why are Ethics in Business Important? a. Define responsibilities and obligations b. Structure of
business ethics. 3: Ethics in the Workplace a. Small Business Ethics b. Codes of Conduct c. Code
of Ethics 4: Corporate Responsibility a. Definition b. Case Study. 5: Corporate Compliance a.
Definition b. Responsibility c. Laws and Regulations.
Section II
1: Social Responsibility. Business accountability. Ethical Values. Environment. 2: Ethics'
Positive Impact on Business a. Employee rights b. Productivity c. Legality Issues. 3:
International Business Ethics a. Why is it necessary? b. Global Competition c. Corporate
Integrity.
Section III
1: Consumer Rights a. Expectations vs. Reality b. A Bridge between Business and Society. 2:
Business Ethics and the Financial World a. Various examples of Insider Trading, Junk Bonds and
Leveraged Buyouts.

BCP 604/Unit - 1
Section I
1. Introduction to Business Ethics a. Definition b. Role in various types of business structures 2:
Why are Ethics in Business Important? a. Define responsibilities and obligations b. Structure of
business ethics. 3: Ethics in the Workplace a. Small Business Ethics b. Codes of Conduct c. Code
of Ethics 4: Corporate Responsibility a. Definition b. Case Study. 5: Corporate Compliance a.
Definition b. Responsibility c. Laws and Regulations.
Introduction to Business Ethics

Ethics is a branch of social science. It deals with moral principles and social values. It helps us to
classify, what is good and what is bad? It tells us to do good things and avoid doing bad things.
So, ethics separate, good and bad, right and wrong, fair and unfair, moral and immoral and proper and
improper human action. In short, ethics means a code of conduct. It is like the 10 commandments of
holy Bible. It tells a person how to behave with another person.
So, the businessmen must give a regular supply of good quality goods and services at
reasonable prices to their consumers. They must avoid indulging in unfair trade practices like
adulteration, promoting misleading advertisements, cheating in weights and measures, black
marketing, etc. They must give fair wages and provide good working conditions to their
workers. They must not exploit the workers. They must encourage competition in the market.
They must protect the interest of small businessmen. They must avoid unfair competition. They
must avoid monopolies. They must pay all their taxes regularly to the government.
In short, business ethics means to conduct business with a human touch in order to give
welfare to the society.
Definition of Business Ethics
According to Andrew Crane,

"Business ethics is the study of business situations, activities, and decisions where issues of
right and wrong are addressed."
According to Raymond C. Baumhart,

"The ethics of business is the ethics of responsibility. The business man must promise that he
will not harm knowingly."
Features of Business Ethics
The characteristics or features of business ethics are:-

1. Code of conduct : Business ethics is a code of conduct. It tells what to do and what not
to do for the welfare of the society. All businessmen must follow this code of conduct.
2. Based on moral and social values : Business ethics is based on moral and social values.
It contains moral and social principles (rules) for doing business. This includes self-

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control, consumer protection and welfare, service to society, fair treatment to social
groups, not to exploit others, etc.
3. Gives protection to social groups : Business ethics give protection to different social
groups such as consumers, employees, small businessmen, government, shareholders,
creditors, etc.
4. Provides basic framework : Business ethics provide a basic framework for doing
business. It gives the social cultural, economic, legal and other limits of business.
Business must be conducted within these limits.
5. Voluntary : Business ethics must be voluntary. The businessmen must accept business
ethics on their own. Business ethics must be like self-discipline. It must not be enforced
by law.
6. Requires education and guidance : Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics.
Trade Associations and Chambers of Commerce must also play an active role in this
matter.
7. Relative Term : Business ethics is a relative term. That is, it changes from one business
to another. It also changes from one country to another. What is considered as good in
one country may be taboo in another country.
8. New concept : Business ethics is a newer concept. It is strictly followed only in
developed countries. It is not followed properly in poor and developing countries.
Need or Importance of Business Ethics
These twelve points below discuss the need, importance of business ethics.
1. Stop business malpractices : Some unscrupulous businessmen do business malpractices

by indulging in unfair trade practices like black-marketing, artificial high pricing,
adulteration, cheating in weights and measures, selling of duplicate and harmful
products, hoarding, etc. These business malpractices are harmful to the consumers.
Business ethics help to stop these business malpractices.
2. Improve customers' confidence : Business ethics are needed to improve the customers'
confidence about the quality, quantity, price, etc. of the products. The customers have
more trust and confidence in the businessmen who follow ethical rules. They feel that
such businessmen will not cheat them.
3. Survival of business : Business ethics are mandatory for the survival of business. The
businessmen who do not follow it will have short-term success, but they will fail in the
long run. This is because they can cheat a consumer only once. After that, the consumer
will not buy goods from that businessman. He will also tell others not to buy from that
businessman. So this will defame his image and provoke a negative publicity. This will
result in failure of the business. Therefore, if the businessmen do not follow ethical
rules, he will fail in the market. So, it is always better to follow appropriate code of
conduct to survive in the market.

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4. Safeguarding consumers' rights : The consumer has many rights such as right to health
and safety, right to be informed, right to choose, right to be heard, right to redress, etc.
But many businessmen do not respect and protect these rights. Business ethics are must
to safeguard these rights of the consumers.
5. Protecting employees and shareholders : Business ethics are required to protect the
interest of employees, shareholders, competitors, dealers, suppliers, etc. It protects
them from exploitation through unfair trade practices.
6. Develops good relations : Business ethics are important to develop good and friendly
relations between business and society. This will result in a regular supply of good
quality goods and services at low prices to the society. It will also result in profits for the
businesses thereby resulting in growth of economy.
7. Creates good image: Business ethics create a good image for the business and
businessmen. If the businessmen follow all ethical rules, then they will be fully accepted
and not criticised by the society. The society will always support those businessmen who
follow this necessary code of conduct.
8. Smooth functioning: If the business follows all the business ethics, then the employees,
shareholders, consumers, dealers and suppliers will all be happy. So they will give full
cooperation to the business. This will result in smooth functioning of the business. So,
the business will grow, expand and diversify easily and quickly. It will have more sales
and more profits.
9. Consumer movement: Business ethics are gaining importance because of the growth of
the consumer movement. Today, the consumers are aware of their rights. Now they are
more organised and hence cannot be cheated easily. They take actions against those
businessmen who indulge in bad business practices. They boycott poor quality, harmful,
high-priced and counterfeit (duplicate) goods. Therefore, the only way to survive in
business is to be honest and fair.
10. Consumer satisfaction: Today, the consumer is the king of the market. Any business
simply cannot survive without the consumers. Therefore, the main aim or objective of
business is consumer satisfaction. If the consumer is not satisfied, then there will be no
sales and thus no profits too. Consumer will be satisfied only if the business follows all
the business ethics, and hence are highly needed.
11. Importance of labour : Labour, i.e. employees or workers play a very crucial role in the
success of a business. Therefore, business must use business ethics while dealing with
the employees. The business must give them proper wages and salaries and provide
them with better working conditions. There must be good relations between employer
and employees. The employees must also be given proper welfare facilities.
12. Healthy competition: The business must use business ethics while dealing with the
competitors. They must have healthy competition with the competitors. They must not
do cut-throat competition. Similarly, they must give equal opportunities to small-scale
business. They must avoid monopoly. This is because a monopoly is harmful to the
consumers.

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The Importance of Ethics in Organizations
Ethics are the principles and values an individual uses to govern his activities and decisions. In
an organization, a code of ethics is a set of principles that guide the organization in its
programs, policies and decisions for the business. The ethical philosophy an organization uses
to conduct business can affect the reputation, productivity and bottom line of the business.
Leadership Ethics
The ethics that leaders in an organization use to manage employees may have an effect on the
morale and loyalty of workers. The code of ethics leaders use determines discipline procedures
and the acceptable behavior for all workers in an organization. When leaders have high ethical
standards, it encourages workers in the organization to meet that same level. Ethical leadership
also enhances the company’s reputation in the financial market and community. A solid
reputation for ethics and integrity in the community may improve the company’s business.
Employee Ethics
Ethical behavior among workers in an organization ensures that employees complete work with
honesty and integrity. Employees who use ethics to guide their behavior adhere to employee
policies and rules while striving to meet the goals of the organization. Ethical employees also
meet standards for quality in their work, which can enhance the company’s reputation for
quality products and service.
Ethical Organizational Culture

Leaders and employees adhering to a code of ethics create an ethical organizational culture.
The leaders of a business may create an ethical culture by exhibiting the type of behavior they'd
like to see in employees. The organization can reinforce ethical behavior by rewarding
employees who exhibit the values and integrity that coincides with the company code of ethics
and disciplining those who make the wrong choices.
Benefits to the Organization

A positive and healthy corporate culture improves the morale among workers in the
organization, which may increase productivity and employee retention; this, in turn, has
financial benefits for the organization. Higher levels of productivity improve the efficiency in
the company, while increasing employee retention reduces the cost of replacing employees.
The Advantages of a Code of Ethics in Organizations

A code of ethics is an integral component of company culture, but organizations must actively
promote their ethical policies to fully leverage the advantages. A code of ethics can be viewed
as either an administrative formality with no practical use or a dynamic, comprehensive
guideline for making company decisions. Realizing the advantages of a code of ethics in your
organization relies on every employee's awareness of and commitment to the code.
Strategic Decision-Making

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Small business owners make decisions at the executive level of their company. A code of ethics
in a small business can provide a foundation on which to base all decisions that affect internal
and external stakeholders, such as employees or residents in the local community. Ethical
dilemmas faced by small business owners most often do not have the same scope as issues
faced by corporate executives, such as laying off thousands of workers or introducing tons of
pollutants into the environment. However, having a solid code of ethics in place from the
beginning can help to guide you as your company eventually grows to a corporate size.
Day-to-Day Decisions
Company owners are not the only employees in a small business who make decisions. Due to
the size of small businesses, front-line employees often have less supervision and more
personal responsibility than employees of large corporations. This makes it even more
important for all employees to fully understand the expectations of the company and the
ethical guidelines in which to make decisions.
Company Reputation
Small businesses work hard to gain competitive advantages. Gaining advantages from a positive
reputation in the marketplace can be enough to secure a sizable market share from your larger
competitors. Proudly displaying your code of ethics on your website or in press releases, while
taking care to ensure that your actions are always in line with your words, can garner a positive
image among consumers and job-seekers, creating a loyal customer base and helping to
develop your brand image.
Legal Considerations
The legal benefits of having a code of ethics in place make ethics statements a virtual
requirement of doing business. All of the advantages mentioned above can serve to keep your
company out of legal trouble, which, while important to every company, is especially important
for sole proprietorships and partnerships that do not enjoy personal liability protection. A
comprehensive code of ethics can provide extra protection if a single employee commits a
criminal act in the name of your company, as well. If a single purchasing manager defrauds your
suppliers, for example, your code of ethics can help to convince a court that your company does
not endorse that kind of behavior.
Disadvantages
Business ethics reduce a company's freedom to maximize its profit. For example, a
multinational company may move its manufacturing facility to a developing country to reduce
costs. Practices acceptable in that country, such as child labor, poor health and safety, poverty-
level wages and coerced employment, will not be tolerated by an ethical company.
Improvements in working conditions, such as a living wage and minimum health and safety
standards reduce the level of cost-savings that the company generates. However, it could be
argued that the restrictions on company freedom benefit wider society.
People, Planet, Profit

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Companies increasingly recognize the need to commit to business ethics and measure their
success by more than just profitability. This has led to the introduction of the triple bottom line,
also known as "people, planet, profit." Companies report on their financial, social and
environmental performance. The Dow Jones Sustainability Index benchmarks companies who
report their performance based on the triple bottom line. This type of performance reporting
acknowledges that companies must make a profit to survive, but encourages ethical and
sustainable business conduct.
Rules or Principles of Business Ethics
Rules or principles of business ethics are the code of conduct for businessmen. It tells us how
businessmen should do business for social good. These principles are related to consumers,
employees, investors, local community and the society as a whole.
The important rules or principles of business ethics are as follows:-

1. Avoid exploitation of consumers : Don't cheat and exploit consumers by using
bad business practices such as artificial price rise and adulteration.
2. Avoid profiteering : Don't indulge in unscrupulous activities like hoarding, black-
marketing, sale and use of banned or harmful goods, etc., for the sake of greed to earn
exorbitant profits.
3. Encourage healthy competition: Don't destroy a healthy competitive atmosphere in the
market which offers certain benefits to the consumers. Do not engage in a cut-throat
competition. Avoid making attempts to malign and spoil the image of competitors by
unfair means.
4. Ensure accuracy : Always check and verify the accuracy in weighing, packaging and
quality while supplying goods to the consumers.
5. Pay taxes regularly : Pay taxes and other charges or duties to the government honestly
and regularly. Avoid bribing government officials and lobbying for special favours.
6. Get accounts audited : Maintain accurate business records, accounts and make them
available to all authorised persons and authorities.
7. Fair treatment to employees : Pay fair wages or salaries, provide facilities and
incentives and give humane treatment to employees.
8. Keep investors informed: Supply reliable information to shareholders and investors
about the financial position and important decisions of the company.
9. Avoid injustice and discrimination: Avoid injustice and partiality to employees in
transfers and promotions. Avoid discrimination among them based on gender, race,
religion, language, nationality, etc.
10. No bribe and corruption: Don't give expensive gifts, secret commissions, kickbacks,
payoffs to politicians, bureaucrats, government officials and suppliers. Say no to bribe
and avoid corruption.
11. Discourage secret agreement: Do not make a secret agreement with other businessmen
for controlling production, distribution, pricing or for any other activity, which is harmful
to the consumers.

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12. Keep service before profit: Accept the principle of "service first and profit next." The
customer or consumer is the most important part of any business. All business activities
are done for meeting his needs and for increasing his satisfaction and welfare.
13. Practice fair business: Make your business fair, humane, efficient and dynamic. Give the
benefits of these qualities to the consumers.
14. Avoid monopoly: Avoid forming private monopolies and concentration of economic
power. Monopolies are bad for consumers.
15. Fulfill customers’ expectations: Adjust your business activities as per the demands,
needs and expectations of the customers.
16. Respect consumers rights: Give full respect and honour to the basic rights of the
consumers.
17. Accept social responsibilities: Honour responsibilities towards different social groups.
18. Satisfy consumer’s wants: Find out and satisfy the wants of the consumers. Use the
available resources to produce good quality goods and services. Supply these goods and
services regularly to the consumers. Charge reasonable prices for the goods and
services. Give proper after-sales services. Do not produce goods and services, which are
harmful to the health and life of the consumers. Remember, the main objective of the
business is to satisfy the consumer’s wants.
19. Service motive: Give more importance to service and consumer's satisfaction and less
importance to profit-maximization. Make profits by providing services to the consumers.
Do not make profits by exploiting the consumers.
20. Protect group interests: Protect the interest of the group i.e give employees better
wages and good working conditions, give shareholders better rate of dividend, give
consumers good quality goods and services at low prices, etc.
21. Optimum utilization of resources: Ensure better and optimum utilisation of natural and
human resources and minimize wastage of these resources. Use the resources to
remove poverty and to increase the standard of living of people.
22. Intentions of business: Use pure, legal and sacred means to do business. Do not use
illegal, unscrupulous and evil means to do business.
23. Follow Woodrow Wilson's rules: According to the late American President Sir Thomas
Woodrow Wilson, there are four important principles of business ethics. These four
rules are as follows:-
a. Rule of publicity: According to this principle, the business must tell the people
what it is going to do. It must not create doubts, misunderstanding, suspicion,
secrets, etc.
b. Rule of equivalent price: According to this principle, the customer must be given
proper value for their money. So the business must not sell below standard,
outdated and inferior (poor) goods for high prices.
c. Rule of conscience in business: If the business is conducted properly, then it is
beneficial to the society. Otherwise, it is harmful to the society. Therefore, the
businessman must have a conscience, i.e. a morale sense of judging what is right
and what is wrong. He must be very careful while taking business decisions
because these decisions affect the entire society.

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d. Rule of spirit of service: The business must give importance to the service
motive. That is, priority must be given to render service to human beings over
profit.
 Role of Business Ethics in various types of business structures (Organizational

structure and ethics)
Organizational structure plays crucial role in a number of organizational decisions and activities.
As Daft suggests, the definition of organizational structure has three components:
The organizational structure designates the formal reporting relationships. It prescribes the
levels of hierarchy that the organization would have and the span of control for each level.
The organizational structure prescribes the grouping of organizational members into
departments and departments into an organization.
The organizational structure identifies the systems for coordination, communication and
integration of efforts made by organizational members across the organization.
Thus, the organizational structure lays out the whole foundation of the organization.
Organizational structure identifies how many divisions will work there in the organization and
who will report to whom. It also identifies the systems through which the work of various
divisions will be coordinated to accomplish the common organizational objective. (Daft, 2010)
Organizational structure is important to study ethics
Though the primary objective of any business is profit-maximization but making profits only
adds to a business’ financial resources. The profits earned unethically would lead the business
nowhere in today’s scenario. The customers are aware today and the laws are strict. If the
business is found to be engaged in unethical behavior of any sorts, it can ruin its goodwill
forever. Various experts have provided that the organizational structure of a firm has lot of
influence on the ethical behavior shown by the firm. As Ferrell has said, “An organization’s
structure is important to the study of business ethics because the various roles and job
descriptions that comprise that structure may create opportunities for unethical behavior.”
 Structure of business ethics
A sound ethics management programme in an organisation include: (i) formal code of conduct;
(ii) ethics committee; (iii) ethical communication; (iv) an ethic office with Ethical officers; (v)
Ethics Training Programme; (vi) a disciplinary system; (vii) establishing an ombudsperson; and
(viii) monitoring,
Code of conduct and Ethics

Several organizations have started the process with developing and implementing codes of
conduct for their employees. Codes of conduct are statements of organizational values. It
comprises of three elements such as a code of ethics, a code of conduct and statement of
values. a code of conduct is a written document, inspirational in contents and specifies clearly

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what is acceptable or unacceptable behavior at workplace and beyond ,when the employees
represent their organizations outside. In general the code should reflect the managements
desire to incorporate the values and policies of the organization. The statement of values
envisages by the management to serve the public and normally addresses the stakeholders
groups.
A code of ethics is a buzzword to employees to observe ethical norms and forms the basis
for rules of conduct. It is comprehensive enough to cover the entire scheme of organizational
ethics expected to be followed by everyone in the company. It usually specifies methods for
reporting violations, disciplinary action for violations and a structure of the due process to be
followed.
A code of ethics must summarize the beliefs and values of the organization. Those beliefs
and values should become internalized by all employees and used regularly in all business
practices, no matter the type of business. Owners of businesses that routinely engage in
unethical practices cannot help but pass those values and principles along to the other people
working in the business. Small businesses suffer even more, because unethical behavior and
actions are easier for customers to take notice of. Once customers become aware that a
business does not have high ethical ideals, they will take their business elsewhere.
Codes of ethics vary among businesses, and also from one country to another,. When business
grows large enough to expand its operations into other countries, It is critical to hire talent to
assist in training existing personnel with regard to the integrity, understanding, responsibility,
and cultural norms of the country where the new operation is located. All employees must be
treated equally, and any issues of inequality must be dealt with quickly, fairly, and in a manner
that is satisfactory to all.
Today, more than ever before, consumers pay a great deal of attention to corporate
governance and proper behavior of businesses and their owners. Because the marketplace is
flooded with numerous variations of the same businesses, promises must be fulfilled and the
price and quality of products must be equal to what is advertised, or another business will step
into deliver. Therefore a code of ethics where unarticulated or formally documented – is vital to
ensuring that a business will succeed.
A code of ethics that is both defines and acted upon is part of the business culture of every
successful business, and must become the mantra of every business owner. Growing a
flourishing business through the use of sound ethical principles will reap not only the benefits
of grown and prosperity, but also the satisfaction of being able to sleep soundly at night.
Ethics Committee
Ethics committee is formed in many organizations. They are wholly devoted at work places.
These committees can rise concerns of ethical nature; prepare or update code of conduct, and
resolve ethical dilemma in organizations. they formulate ethical policies and develop ethical
standards. The committee evaluates the compliance of the organization with these ethical
norms. The members of the ethical committee should be selected from those persons who
have knowledge in their industry, their code of ethics and community standards. The
committee members are also conscious about the corporate culture and ethical concise of the
organization.

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The following committees are to be formed :-

(i) Establishing an ethics committee at the board level -
The committee would be charged to oversee development and operation of the ethics
management programme.
(ii) Establishing an Ethics Management committee -
Ethics Management committee would be charged with implementing and administrating an
ethics management programme, including administrating and training about policies and
procedures, and resolving ethical dilemmas. The committee should be comprised of senior
officers.
Ethical Communication System

The next step is the establishment of an effective ethical communication system. Ethical
communication system place an important role in making an ethics programme successful. It
should allow employees to make enquiries , get advice if needed or report wrong doing. Ethical
communication system is a necessity to educate employees about the organizations ethical
standard and policies. It has the following objectives -
(i) to communicate the organizations‘ values and standards of ethical conduct or business to
employees.
(ii) to provide information to the employees on the company‘s policies and procedure regarding
ethical conduct of business.
(iii) to help employees to get guidance and resolve questions regarding compliance with the
firms standards of conducts and values.
(iv) to set up the means of enquiry such as telephone hotlines, suggestion boxes and email
facilities for employees to contact with and get advice from competent authorities.
Along with these means of communication there are other ways , that can be used to
communicate an organization‘s moral standards to its employees. Top management can
communicate the ethical standards to lower level managers and they can communicate it to
operational levels. Sometimes the organization publishes newsletters. It can be used to expose
company‘s code or ethics. If an organization has briefing and management meeting, these can
be used as a means of communicating values. Certain companies use attractive multi colored
posters to publicize their codes and ethics, these posters are placed in most visible places of the
organization premises.
Ethics Office and Officers

Ethics offices are to be established to communicate and implement ethics policies among
employees of the organization. For this purpose an ethics officer is to be appointed. The ethics
officer should develop a reputation for credibility, integrity, honesty and responsibility through
establishment of such ethics monitoring bodies.
Functions of the Ethics Officers
1. Ethics officers are responsible for assessing the needs and risks that an organization-wide
ethics programme must address.
2. To develop and distribute a code of conduct or ethics
3. To conduct ethical training programme for employees

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4. To establish and maintain a confidential service to answer employees questions about ethical
issues.
5. To ensure that the organization is in compliance with governmental regulations
6. To monitor and audit ethical conduct
7. To take action on possible violations of the company‘s code
8. To review and update code in time
Ethics Training Programme

To ensure a good ethical behavior in the organization the employees are to be given training.
For this purpose a corporate ethical training programme is to be devised. The main objective of
an ethical training program is to offer assistance to employees to understand the ethical issues
that are likely to arise in their work place. When new employees are to be recruited, the
induction training should be arranged for them.
This training will help to familiarize with the company‘s ethical code of behavior. Importance of
abiding code should be dealt with at the induction meeting. A well developed and proper
training programme will help the employees to understand the organizations policies and
expectations, important and relevant rules, bye laws and regulations which are to be complied
in the organization by the employees. For the success of the training programmes , the senior
executive from every department must involve fully in the training programme.
Disciplinary System
Code of conduct or ethical behavior codes should be properly enforced in the organization to
achieve the organization‘s objectives. A disciplinary system should be established to deal with
ethical violations promptly and severely. If unethical behavior is not properly dealt with, it will
threaten the entire social system that supports the ethical behavior of the organization. While
enforcing disciplines to ensure ethical conduct, companies should be consistent. ,i.e., the
company should adopt a fair attitude towards every one without any discrimination or bias.
Establishing an Ombudsperson
The ombudsperson is responsible to help coordinate development of the policies and
procedures to institutionalize moral values in the workplace. This position usually is directly
responsible for resolving ethical dilemmas by interpreting policies and procedures.
Monitoring
To become an ethical programme fruitful and successful, an effective monitoring committee is
to be formed. It can be monitored through keen observation by ethics officers, internal audits,
surveys, investigations and supporting systems.
 RESPONSIBILITIES AND OBLIGATIONS
An obligation is a course of action that someone is required to take, whether legal or moral.
There are also obligations in other normative contexts, such as obligations of etiquette, social
obligations, and possibly in terms of politics, where obligations are requirements which must be
fulfilled. These are generally legal obligations, which can incur a penalty for non-fulfilment,

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although certain people are obliged to carry out certain actions for other reasons as well,
whether as a tradition or for social reasons.
Obligations vary from person to person: for example, a person holding a political office will
generally have far more obligations than an average adult citizen, who themselves will have
more obligations than a child.Obligations are generally granted in return for an increase in an
individual's rights or power. For example, obligations for health and safety in a workplace from
employer to employee maybe to ensure the fire exit is not blocked or ensure that the plugs are
put in firmly.
The word "obligation" can also designate a written obligation, or such things as bank notes,
coins, checks, bonds, stamps, or securities.
A RESPONSIBILITIES is a duty or obligation to satisfactorily perform or complete a task

(assigned by someone, or created by one's own promise or circumstances) that one must fulfill,
and which has a consequent penalty for failure.
Some examples of responsibility include getting to work on time, taking care of children
properly, paying rent or mortgage and paying taxes. A responsibility is an agreed-upon task or
commitment between people, businesses or organizations that must be adhered to and
completed in order to satisfy the terms of the commitment.

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 ETHICS IN THE WORKPLACE
Workplace ethics and behavior are a crucial part of employment, as both are aspects that can
assist a company in its efforts to be profitable. In fact, ethics and behavior are just as important
to most companies as performance as high morale and teamwork are two ingredients for
success. Every business in every industry has certain guidelines to which its employees must
adhere, and frequently outline such aspects in employee handbooks.
Behavior
All companies specify what is acceptable behavior, and what is not, when hiring an employee.
Many even summarize expected conduct in job descriptions or during the interview process.
Behavior guidelines typically address topics, such as harassment, work attire and language.
Workers who don’t follow codes of conduct may receive written and verbal warnings, and
ultimately be fired.
Integrity
A key component to workplace ethics and behavior is integrity, or being honest and doing the
right thing at all times. For example, health care employees who work with mentally or
physically challenged patients must possess a high degree of integrity, as those who manage
and work primarily with money. Workers with integrity also avoid gossip and sneakiness while
on the job.
Accountability
Taking responsibility for your actions is another major factor when it comes to workplace ethics
and behavior. That means showing up on scheduled workdays, as well as arriving on time and
putting in an honest effort while on the job. Workers who exhibit accountability are honest
when things go wrong, then work toward a resolution while remaining professional all the
while.
Teamwork
A vital aspect of the workplace is working well with others. That includes everyone from peers
to supervisors to customers. While not all employees will always like each other, they do need
to set aside their personal or even work-related differences to reach a larger goal. In many
instances, those who are not considered “team players” can face demotion or even
termination. On the other hand, those who work well with others often can advance on that
aspect alone, with teamwork sometimes even outweighing performance.
Commitment
Ethical and behavioral guidelines in the workplace often place a high amount of importance on
dedication. Although possessing the necessary skills is essential, a strong work ethic and
positive attitude toward the job can carry you a long way. Plus, dedication is often viewed in
the business world as “contagious,” meaning employees who give a strong effort can often
inspire their co-workers to do the same.

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Good Workplace Ethics

• Staying productive
• Be accountable for your actions
• Take initiative
• Think critically to be able to solve problems
• Blowing the whistle
• Be punctual
• Stay positive
• Stay professional
• Take pride in your work
• Immediately attempting to correct an issue
• Set the example
Some workplace ethics:
Rules and regulations ought to be same for everyone. Everyone needs to attend office on time
irrespective of their designation, distance of their home from the workplace, salary or status.
An individual cannot come to office late just because he is the team leader and his team is
already present and working on his behalf. If a day’s salary of a clerk is deducted for coming late
to work, it should be the same for the marketing manager as well.
Company’s policies need to be communicated clearly to each and every one. There should be
transparency at all levels of hierarchy. Employees are the backbone of any organization and
thus they must have a say in company’s goals and objectives.
An organization ought to respect its employees to expect the same in return. Rules and
regulations should not be too rigid. Don’t expect an employee to attend office two days before
his marriage date. If an employee is not keeping well, please do not ask him/her to attend office
unless and until there is an emergency.
Management must not forget that money is a strong motivator for employees. Everything is
important, be it career, growth, job satisfaction but what is most important is employee’s
salaries. Do not unnecessary hold their salaries for a long time unless and until there is really
shortage of funds. In case of marketing and sales employees, conveyance and mobile bills must
be cleared at the earliest. Do not ask for unnecessary bills and documents.
Organization should not expect employees to attend office 365 days a year. It is the
responsibility of human resource professionals to prepare the holiday calendar at the beginning
of the year and circulate the same among all employees. Let employees enjoy their respective
festivals and come back to work with positive energy and smile.Infact allow them to go in the
festive mood two days prior to the D day. Ask them to organize pre festival bashes at the
workplace. Let them dress in colourful attires and have fun. Trust me, work never suffers this
way. Rather, employees feel attached to the organization and strive hard to deliver their level
best every time.

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Give employees the space they require. Key responsibility areas need to be communicated to
the employees on the very first day of their joining. Roles and responsibilities need to be
assigned as per an individual’s expertise and experience. Do not expect an employee with one
year experience to head the marketing team. Employees need to be trained well. Organizations
need to give at least six months time to the new employees to adjust in the new environment.
It has been observed that most of the times employees crib when they are underpaid. Make
sure employees get what they deserve. Salaries should be decided in the presence of the
employee and also keeping in mind an individual’s role in the organization, his/her gross salary
in the previous organization, responsibilities within the current system and of course his/her
years of experience. One of the major reasons as to why employees quit their jobs after a year
or so is poor appraisal system. Increments ought to be directly proportional to the amount of
hard work an employee puts in through out the year and also his/her performance.
Unnecessary favours are against the workplace ethics.
Do not be too strict with your employees. Do not block all social networking sites. Blocking face
book and Orkut is not the ideal way to ensure employees are working and not wasting their
time. Even a 24 * 7 check would not prevent employees from wasting their time unless and
until they realize it themselves. The moment, you are strict with something, people would tend
to do the same more.
 Small Business Ethics
SMEs are characterised by informal understandings and shared expectations among the
workforce regarding how business is done. Any values and ethical principles will often be
implicit rather than formally expressed through ethics policies, codes and programmes that are
familiar in large companies.
The culture and working practices of a small organisation are typically influenced by the owner,
manager or managing director. Through their very visible presence, their personal attitudes and
behaviours will set the tone of the business and have the potential to signal to employees how
seriously ethical behaviour is to be taken in the organisation.
SMEs are not usually able to devote as many resources to building an ethical workplace culture
as larger organisations. However, there are advantages to having a formal ethics policy in place.
It reinforces and makes explicit the values and principles that are part of the organisational
culture, so allowing them to be communicated to stakeholders. A code of ethics or similar
guidance will provide support to employees on how they are expected to conduct their
business. Figure 1 sets out some benefits of an explicit ethics policy.

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How to develop and implement an ethics policy
1. Identify and define core values of the business
An effective ethics policy will be based on a set of values or principles. Values express beliefs
about the ‘good’ and the ‘right’ in the context of the organisation; they are commonly derived
from wider cultural and societal value systems. When identifying the organisation’s core values,
it may help to think of some values as business values and others as ethical values, although the
distinction can be blurred and business and ethical values are often interrelated. Some
commonly found values are shown in Figure 2.
In SMEs, these values will inevitably be influenced by the personal and professional values and
principles of the owner and managers.
However, it is considered good practice to consult employees about this, asking them what they
think the values of the organization are. Employee involvement can increase the buy-in and
effectiveness of an ethics policy; it is the first stage in embedding values in the culture.

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2. Draw up a code of ethics
A code of ethics is the main tool for implementing an ethics policy. Its purpose is two-fold: a) to
provide practical guidance to staff and b) to make a public statement. It translates core values
into specific commitments and expected behaviours in relation to the organisation’s key
stakeholder groups (i.e. customers, employees, suppliers and contractors, providers of finance
and community). A code will also be a good place to address environmental responsibilities and
to state how the company seeks to relate to its competitors.
When drawing up a code it is helpful to ask employees and other stakeholders about ethical
issues that concern them and on which they would like guidance (see Figure 3).
The code may be given an accessible title such as ‘The way we work’ or ‘Our values and
principles’.
A code of ethics cannot cover every situation but should make clear the ‘spirit’ in which
business should be done and point employees in the direction of further support.
3. Embedding the code
The code needs to be communicated throughout the company. All employees should be made
aware of the code, the commitments the organisation has made and the ethical behaviours
that are expected of them and how they can get support. It’s good practice for the owners and
managers themselves to introduce the code to new employees and remind existing staff of the
importance of responsible behaviour on a regular basis, e.g. in staff meetings. Reminder
communications could include examples of ‘right action’, consequences of ‘wrong actions’, and
ethical dilemmas Employees should be encouraged to speak to their line managers or the
directors if they are unsure about the ‘right’ response in specific situations or if they have
concerns over certain decisions and behaviours.
Appointing a designated ‘ethics champion’ should also be considered. This may be the board
secretary or HR manager or, depending on the size and set-up of the business, a non-executive
director or even a person outside the organisation. Such persons may discuss ethical issues and

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concerns with the directors and be a contact if an employee wishes to raise concerns or seek
guidance outside the line management framework. The effectiveness of the ethics policy should
be monitored through confidential staff, customer and supplier surveys which can assess if the
company is living up to its values.
 Codes of Conduct
A code of conduct is a set of rules outlining the social norms and rules and responsibilities of, or
proper practices for, an individual, party or organization. Related concepts include ethical,
honor, moral codes and religious laws.
In its 2007 International Good Practice Guidance, "Defining and Developing an Effective Code of
Conduct for Organizations", the International Federation of Accountants provided the following
working definition:
"Principles, values, standards, or rules of behaviour that guide the decisions, procedures and
systems of an organization in a way that (a) contributes to the welfare of its key stakeholders,
and (b) respects the rights of all constituents affected by its operations."
A common code of conduct is written for employees of a company, which protects the business
and informs the employees of the company's expectations. It is ideal for even the smallest of
companies to form a document containing important information on expectations for
employees. The document does not need to be complex or have elaborate policies, but the file
needs a simple basis of what the company expects from each employee.
A code is a tool to encourage discussions of ethics and to improve how employees deal with the
ethical dilemmas, prejudices and gray areas that are encountered in everyday work. A code is
meant to complement relevant standards, policies and rules, not to substitute for them.
CoC Importance
A Code of Conduct can be an important step in establishing an inclusive culture, but it is not a
comprehensive solution on its own. An ethical culture is created by the organization's leaders
who manifest their ethics in their attitudes and behavior. Studies of codes of conduct in the
private sector show that their effective implementation must be part of a learning process that
requires training, consistent enforcement, and continuous measurement/improvement. Simply
requiring members to read the code is not enough to ensure that they understand it and will
remember its contents.

BCP 604/Unit - 1
The proof of CoC effectiveness is when employees/members feel comfortable enough to voice
concerns and believe that the organization will respond with appropriate action.
 Code of Ethics
The Code of Ethics states the principles and expectations governing the behavior of individuals
and organizations in the conduct of internal auditing. It describes the minimum requirements
for conduct, and behavioral expectations rather than specific activities.
Introduction to the Code of Ethics
The purpose of The Institute's Code of Ethics is to promote an ethical culture in the profession
of internal auditing.
Internal auditing is an independent, objective assurance and consulting activity designed to add
value and improve an organization's operations. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control, and governance processes.
A code of ethics is necessary and appropriate for the profession of internal auditing, founded as
it is on the trust placed in its objective assurance about governance, risk management, and
control.
The Institute's Code of Ethics extends beyond the Definition of Internal Auditing to include two
essential components:
Principles that are relevant to the profession and practice of internal auditing.
Rules of Conduct that describe behavior norms expected of internal auditors. These rules are an
aid to interpreting the Principles into practical applications and are intended to guide the
ethical conduct of internal auditors.
"Internal auditors" refers to Institute members, recipients of or candidates for IIA professional
certifications, and those who perform internal audit services within the Definition of Internal
Auditing.
Applicability and Enforcement of the Code of Ethics
This Code of Ethics applies to both entities and individuals that perform internal audit services.
For IIA members and recipients of or candidates for IIA professional certifications, breaches of
the Code of Ethics will be evaluated and administered according to The Institute's Bylaws and

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Administrative Directives. The fact that a particular conduct is not mentioned in the Rules of
Conduct does not prevent it from being unacceptable or discreditable, and therefore, the
member, certification holder, or candidate can be liable for disciplinary action.
Code of Ethics — Principles
Internal auditors are expected to apply and uphold the following principles:
Integrity
The integrity of internal auditors establishes trust and thus provides the basis for reliance on
their judgment.
Objectivity
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating,
and communicating information about the activity or process being examined. Internal auditors
make a balanced assessment of all the relevant circumstances and are not unduly influenced by
their own interests or by others in forming judgments.
Confidentiality
Internal auditors respect the value and ownership of information they receive and do not
disclose information without appropriate authority unless there is a legal or professional
obligation to do so.
Competency
Internal auditors apply the knowledge, skills, and experience needed in the performance of
internal audit services.
Rules of Conduct
1. Integrity
Internal auditors:
1.1. Shall perform their work with honesty, diligence, and responsibility.
1.2. Shall observe the law and make disclosures expected by the law and the profession.
1.3. Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable
to the profession of internal auditing or to the organization.
1.4. Shall respect and contribute to the legitimate and ethical objectives of the organization.

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2. Objectivity
Internal auditors:
2.1. Shall not participate in any activity or relationship that may impair or be presumed to
impair their unbiased assessment. This participation includes those activities or relationships
that may be in conflict with the interests of the organization.
2.2. Shall not accept anything that may impair or be presumed to impair their professional
judgment.
2.3. Shall disclose all material facts known to them that, if not disclosed, may distort the
reporting of activities under review.
3. Confidentiality
Internal auditors:
3.1. Shall be prudent in the use and protection of information acquired in the course of their
duties.
3.2. Shall not use information for any personal gain or in any manner that would be contrary to
the law or detrimental to the legitimate and ethical objectives of the organization.
4. Competency
Internal auditors:
4.1. Shall engage only in those services for which they have the necessary knowledge, skills, and
experience.
4.2. Shall perform internal audit services in accordance with the International Standards for the
Professional Practice of Internal Auditing (Standards).
4.3. Shall continually improve their proficiency and the effectiveness and quality of their
services.
 CORPORATE RESPONSIBILITY
Corporations have a responsibility to those groups and individuals that they can affect, i.e., its
stakeholders, and to society at large. Stakeholders are usually defined as customers, suppliers,
employees, communities and shareholders or other financiers.
The responsibility to society at large may well be identical with the responsibility to its various
communities. Many have suggested that corporations have a special “social responsibility”

BCP 604/Unit - 1
over and above its business purpose. In any case corporate responsibility consists of earning a
licence to operate by creating value for stakeholders, including shareholders, and society.
Corporate responsibility includes being consistent with ethical principles and conduct such as
honesty, integrity and respect for others. By voluntarily accepting responsibility for its actions
corporations earn their licence to operate in society.
Example
Companies earn a licence to operate by creating products and services that their customers
value, by creating jobs for employees whom they treat fairly and in accordance with the law,
and by complying with other applicable laws.
In a case where a company’s products are discovered to be harmful to customers, or where
their products or operations are deemed harmful to the general public, a company’s licence to
operate can become imperiled. This may result in penalties that enforce existing laws and
regulations, or new laws and regulations that in extreme cases put a company out of business
Areas :-
 CORPORATE COMPLIANCE
Compliance – the act or process of complying to a proposal, or regimen; conformity in fulfilling

official requirements, such as a specification, policy, standard, or law
The following definitions clarify the similarities and differences.

BCP 604/Unit - 1
Corporate compliance – comprises the observance of statutory and company regulations on

lawful and responsible conduct by the company, its employees, and its management and
supervisory bodies
Regulatory compliance – describes the goal that corporations or public agencies aspire to in
their efforts to ensure that personnel are aware of and take steps to comply with relevant laws
and regulations
Corporate compliance refers distinctly to the upholding of your company’s character and the
ways personnel are expected to behave. The outcome inevitably affects the success of both the
individuals and the organization as a whole. Basically, this is a form of internal maintenance to
ensure someone within your organization is keeping a watchful eye on the overall adherence to
company policies, pertinent laws, etc.
Here are a few vital aspects to incorporate in a successful corporate compliance program:
• Policies – state the plans and rules to abide by

• Procedures – dictate the methods and means to following established policies
• Standards – outline how tasks should be completed
• Laws – legal constituents that cover all applicable laws that must be abided by
• Objectives – cover the aim or general goals of your organization
• Expectations – summarize how personnel should conduct themselves in the workplace
• Obligations – cover the courses of action personnel must take
Why does my organization need one?

In 1991, the federal government enacted the Organizational Sentencing Guidelines (Chapter 8
of the Federal Sentencing Guidelines), in an effort to make the penaltiesfor corporate crime
both uniform and predictable, so as to encourage "good corporate citizenship".
Penalties under the guidelines include fines and imprisonment, as well as "corporate
probation", which is mandatory in the case of a businesswhich does not have an effective
compliance program in place. Probation involves intrusive federal monitoring of the
organization and adoption of a government authored compliance program, which can be far
more expensive and invasive than a voluntary compliance program could have been.
The Guidelines take a carrot and stick approach in order to encourage businesses to police
themselves. Each crime or violation is assigned a base fine, which is either increased or
decreased based upon the presence of certain aggravating and mitigating factors. One such
mitigating factor is the existence of an effectivecorporate compliance program.

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Under the Guidelines, an organization which has such a program may receive a substantially
reduced fine, and maybe able to avoid corporate probation andcriminal prosecution altogether.
What Are the Potential Penalties Companies Face?

Among the penalties which apply to organizations are:
1. prison
2. fines
3. restitution
4. sanctions
5. forfeiture
6. corporate probation.
Q: What makes a compliance programeffective?
A: The "Seven Steps"
1. The organization must have established compliance standards and proceduresto be

followed by its employees and other agents that are reasonably capableof reducing the
prospect of criminal conduct.
2. Specific individual(s) within high-level personnel of the organizationmust have been
assigned overall responsibility to oversee compliance withsuch standards and
procedures.
3. The organization must have used due care not to delegate substantialdiscretionary
authority to individuals whom the organization knew, or shouldhave known through
exercise of due diligence, had a propensity to engagein illegal activities.
4. The organization must have taken steps to communicate effectively itsstandards and
procedures to all employees and other agents, e.g. by requiringparticipation in training
programs or by disseminating publications thatexplain in practical manner what is
required.
5. The organization must have taken reasonable steps to achieve compliancewith its
standards, e.g., by utilizing monitoring and auditing systemsreasonably designed to
detect criminal conduct by its employees and otheragents and by having in place and
publicizing a report system whereby employeesand other agents could report criminal
conduct by others within the organizationwithout fear of retribution.
6. The standards must have been consistently enforced through appropriatedisciplinary
mechanisms, including, as appropriate, discipline of individualsresponsible for the
failure to detect an offense. Adequate discipline ofindividuals responsible for an offense
is a necessary component of enforcement;however, the form of discipline that will be
appropriate will be case specific.

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7. After an offense has been detected, the organization must have takenall reasonable
steps to respond appropriately to the offense and to preventfurther similar offenses -
including any necessary modifications to itsprogram to prevent and detect violations of
law.
Corporate compliance : overview
What are the compliance requirements to do business in India?
As an emerging market, India is one of the biggest and fastest growing economies in the world
today. According to a report, India is cited as having the potential to become the third largest
economy in the world within the next 30 years, behind only China and the USA. The “Make in
India” campaign coupled with other initiatives taken by the Ruling Government, like “Skill
India”, “Digital India”, etc., has stirred huge interest among various domestic and overseas
stake holders (predominately, the startups!).
Requirements under the New Companies Act

Companies incorporated in India are primarily regulated by the recently enacted New
Companies Act.
The New Companies Act, amongst other provisions, lays down the detailed provisions regarding
qualification, appointment, remuneration removal, retirement of directors, conducting board
and shareholders meetings, passing of resolutions, related party transactions, the maintenance

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of books of accounts and the preparation and presentation of annual accounts (matters to be
reported upon in the annual reports of the companies), periodical filing of forms with the
Registrar of Companies, etc.
Once all the legal formalities required for incorporation are completed and the certificate of
incorporation is issued to the company, the company is recognised as a separate legal entity in
the eyes of law, distinct from its members who have incorporated such entity.
Whether the company is a private company or a public company, several things are required to
be done post incorporation. There are matters which are required to be undertaken in the first
Board meeting immediately post incorporation, and then there is work which is required to be
done on regular and periodical basis.
A company does its business through directors who are responsible to ensure the above
compliances.
As soon as the company is incorporated, but no later than 30 days, a director should call for the
first board meeting by issue of notice (together with the agenda) of the meeting at least seven
days before the meeting. A number of matters then need to be resolved upon in this first board
meeting.
The company must also have the name board outside the registered office address, with its
name, registered office address, Company Identification Number, e-mail ID, and phone number
(which are mandatory now), website address and fax number, if any, stated on it. These details
are also required to be printed on all business letters, bill-heads, and all other official
publications.
If PAN has not been applied for along with the incorporation, then immediately after
incorporation, the company must apply for PAN and TAN.
The company has to convene regular board meetings in the calendar year and prepare the
minutes of the meeting of the Board of Directors and the shareholders meeting, and the same
has to be maintained as a permanent document till the life time of the company. Within 30
days from the meeting, the minutes have to be prepared, duly signed, and maintained in a
minute’s binder. Like the same way on allotment of shares, the company has to issue share
certificates to those who have been allotted shares and the company has to maintain members
register and share allotment register.
A company is required to file its balance sheet, profit and loss account, auditor’s report, and
annual return every financial year before the due date, with the Registrar of Companies.
In addition to that, there are several instances wherein the company has to intimate the
concerned Registrar of Companies, on the timely basis, about the appointments of directors,
removal and certain other changes in the prescribed manner.

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The New Companies Act has also introduced the CSR (Corporate Social Responsibility)
provisions where the corporate entities are obligated to undertake certain philanthropic
activities. All companies which satisfy the CSR criteria will have to undertake CSR activities
during the given financial year.
The above compliance requirements under the New Companies Act, which a company must
comply, is not a comprehensive list. Some companies may also require registration for service
tax, VAT, professional tax, shops, and establishment. It is pertinent to note that the
responsibility of compliance is not a one-time affair, but in fact a continuous process.
Requirements under the Labor and Employment Legislation

Next, businesses with production lines, factories, would also have to consider and comply with
a host of statutes such as the Employees' State Insurance Act, 1948; the Maternity Benefits Act,
1961; the Industrial Disputes Act, 1948; The Contract Labor (Regulation and Abolition) Act,
1970; the Trade Union Act, 1926; the Equal Remuneration Act, 1976; the Payment of Gratuity
Act, 1972; the Workmen’s Compensation Act, 1923’ the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, etc.
The above statutes govern issues such as working time and conditions of employment of
workers, minimum wages and remuneration, rights and obligations of the trade unions,
insurance of the employees, maternity benefits, employment retrenchment, payment of
gratuity/provident fund, payment of bonus, regulations of the contract labor and such other
issues concerning the employees.
The company should ensure that proper compliances of these various statues vis-à-vis its
employees are in place and the employee policies are formulated accordingly.
Requirements under the Environmental Law

Environmental and pollution control matters are governed by various statutes such as the
Environment (Protection) Act, 1986; the Water (Prevention and Control of Pollution) Act, 1974;
the Air (Prevention and Control of Pollution) Act, 1981; Hazardous Wastes (Management,
Handling and Trans boundary Movement) Rules, 2008; the Manufacture, Storage and Import of
Hazardous Chemicals Rules, 1989; the Indian Forest Act, 1927; the Forest (Conservation) Act,
1980; the National Environment Tribunal Act, 1995; the Public Liability Insurance Act, 1991, etc.
A company is required to comply with the provisions of these environmental laws to the extent
specifically applicable to the business operations of such company. Consequences of non-
compliance with the relevant provisions of any such statutes and rules framed there under are
provided in the respective statutes.

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Tax and stamp duty
India has a federal tax structure and taxes are levied by the Central Government, the State
Governments, and the local regulatory authorities. These taxes are broadly in the nature of (i)
Direct Tax (which includes income tax, wealth tax, dividend distribution tax, minimum alternate
tax (MAT), share buy-back tax), (ii) Indirect Tax (which includes VAT/CST, Service Tax, Excise
Duty, Customs Duty, Entry Tax, R&D Cess), and (iii) Levies on transaction (which includes stamp
duty, securities transaction tax, and commodity transaction tax).
All the Indian companies are subjected to payment of tax and stamp duty for their business
transactions undertaken during the course of any financial year and on the income generated
from such operations. Non-payment (inadequate and/or untimely payment) of tax and stamp
duty may attract moderate to heavy penalty, cause enforceability issue of the document and, in
some cases, impounding of the documents by the authority.
Conclusion
While the above lays down the general laws governing a company in India, local laws also play a
very important role. As such depending in which state the company is registered or state and
city in which its operations are conducted, the company must be mindful of and adhere to the
laws of such state/ city.
Over the past several years, the policy and procedures regulating and governing the Indian
corporation have been progressively liberalised and simplified. However, there are several
compliances requirements that need to be adhered to, failing which there could be
consequences of disqualification of directors, attracting of penal provisions and in some cases
even imprisonment of the directors and key personnel.


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BCP 604/Unit - 1

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

Introduction to Business Ethics

Definition of Business Ethics

According to Andrew Crane,

According to Raymond C. Baumhart,

Features of Business Ethics

The characteristics or features of business ethics are:-

Composed by: - PIYUSH R SAHAY

Need or Importance of Business Ethics

1. Stop business malpractices : Some unscrupulous businessmen do business malpractices

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

The Importance of Ethics in Organizations

Ethical Organizational Culture

Benefits to the Organization

The Advantages of a Code of Ethics in Organizations

Composed by: - PIYUSH R SAHAY

People, Planet, Profit

Composed by: - PIYUSH R SAHAY

Rules or Principles of Business Ethics

The important rules or principles of business ethics are as follows:-

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

 Role of Business Ethics in various types of business structures (Organizational

Organizational structure is important to study ethics

 Structure of business ethics

Code of conduct and Ethics

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

The following committees are to be formed :-

Ethical Communication System

Ethics Office and Officers

Composed by: - PIYUSH R SAHAY

Ethics Training Programme

 RESPONSIBILITIES AND OBLIGATIONS

Composed by: - PIYUSH R SAHAY

A RESPONSIBILITIES is a duty or obligation to satisfactorily perform or complete a task

Composed by: - PIYUSH R SAHAY

 ETHICS IN THE WORKPLACE

Composed by: - PIYUSH R SAHAY

Good Workplace Ethics

Some workplace ethics:

Composed by: - PIYUSH R SAHAY

 Small Business Ethics

Composed by: - PIYUSH R SAHAY

How to develop and implement an ethics policy

1. Identify and define core values of the business

Composed by: - PIYUSH R SAHAY

2. Draw up a code of ethics

3. Embedding the code

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

Introduction to the Code of Ethics

Applicability and Enforcement of the Code of Ethics

Composed by: - PIYUSH R SAHAY

Code of Ethics — Principles

Composed by: - PIYUSH R SAHAY

Composed by: - PIYUSH R SAHAY

Compliance – the act or process of complying to a proposal, or regimen; conformity in fulfilling

The following definitions clarify the similarities and differences.

Composed by: - PIYUSH R SAHAY