BECG Assignments

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Amity Campus

Uttar Pradesh

India 201303

ASSIGNMENTS

PROGRAM: BFIA SEMESTER-VI

Subject Name BUSINESS ETHICS AND CORPORATE GOVERNANCE

Study COUNTRY SOMALIA LC

Roll Number (Reg. No.) BFIA01512010-2013019

Student Name Mohamed Abdullahi Khalaf

INSTRUCTIONS

a) Students are required to submit all three assignment sets.

ASSIGNMENT DETAILS MARKS

Assignment A Five Subjective Questions 10

Assignment B Three Subjective Questions + Case Study 10

Assignment C Objective or one line Questions 10

b) Total weight age given to these assignments is 30%. OR 30 Marks

c) All assignments are to be completed as typed in word/pdf.

d) All questions are required to be attempted.

e) All the three assignments are to be completed by due dates and need

to be submitted for evaluation by Amity University. f) The students have to attach a scanned signature in the form.

Signature :

Date : 05/05/2013

( ) Tick mark in front of the assignments submitted.

Assignment A Assignment B Assignment C

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BUSINESS ETHICS AND CORPORATE GOVERNANCE ASSIGNMENT- BECG

Part -A

Q: 1). (a) Write notes on any two of the following:

i. Role of Company Secretary in ensuring risk management ii. Corporate governance in public sector undertakings

Answer:

(a) i) ROLE OF COMPANY SECRETARY

As a top level officer and board confidante, a Company Secretary can play a significant role in ensuring that a sound enterprise wide risk management which is effective throughout the company is in place. The board of directors may have a risk management sub-committee assisted by a Risk Management Officer. As an officer responsible for coordination and communication for effective corporate functioning and governance, a Company Secretary shall ensure that there is an Integrated Framework on which a strong system of internal control is built. Such a Framework will become a model for discussing and evaluating risk management efforts in the organization. Risk and control consciousness should spread throughout the organization. A Company Secretary can ensure that this happens so that the risk factor will come into consideration at the every stage of formulation of a strategy. It will also create awareness about inter-relationships of risks across business units and at every level of the organization.

(a) ii) CORPORATE GOVERNANCE IN PUBLIC SECTOR UNDERTAKING

The Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises has issued Guidelines on Corporate Governance for Central Public Sector Enterprises.

For the purpose of evolving Guidelines on corporate governance, Central Public Sector Enterprises (CPSEs) have been categorized into two groups, namely, (i) those listed in the Stock Exchanges; (ii) those not listed in the Stock Exchanges.

CPSEs listed in Stock Exchanges

In so far as listed CPSEs are concerned, they have to follow the SEBI guidelines on corporate governance. In addition, they may follow those provisions in guidelines issued by Department of Public Enterprises which do not exist in the SEBI guidelines and also do not contradict any provisions in the SEBI guidelines.

Non-listed CPSEs

As per DPE directive, each PSE should strive to institutionalize good corporate governance practices broadly in conformity with the SEBI guidelines. The listing of the non-listed CPSEs in the stock exchanges may also be considered within a reasonable time frame to be set by the Administrative Ministry concerned in consultation with the

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CPSEs concerned. The non-listed CPSEs may follow the Guidelines on Corporate Governance, which are voluntary in nature.

The guidelines for listed and unlisted CPSEs deal with the subject of Corporate Governance, under the following headings:

o Board of Directors o Audit Committee o Subsidiary Companies o Disclosures o Report, Compliance and Schedule of Implementation.

Q: 2). The Chairmans primary responsibility is to lead the Board and ensure its Effectiveness. Elucidate this statement.

Answer:

The responsibility for ensuring that boards provide the leadership which is expected of them is that of its Chairperson. A Chairman though has no legal position; he is the person elected by the board to take the chair at a particular meeting.

Boards are not bound to continue with the same chairman for successive meetings. In law, all directors have broadly equal responsibilities and chairmen are no more equal than any other board member. Chairmen are an administrative convenience and a means of ensuring that board meetings are properly conducted.

The Chairmans primary responsibility is for leading the Board and ensuring its effectiveness.

The role of the Chairman includes:

o Setting the Board agenda, ensuring that Directors receive accurate, timely and clear information to enable them to take sound decisions, ensuring that sufficient time is allowed for complex or contentious issues, and encouraging active engagement by all members of the Board;

o Taking the lead in providing a comprehensive, formal and tailored induction programme for new Directors, and in addressing the development needs of individual Directors to ensure that they have the skills and knowledge to fulfill their role on the Board and on Board Committees;

o Evaluating annually the performance of each Board member in his/her role as a Director, and ensuring that the performance of the Board as a whole and its Committees is evaluated annually. Holding meetings with the non-executive Directors without the executives being present;

o Ensuring effective communication with shareholders and in particular that the company maintains contact with its principal shareholders on matters relating to strategy, governance and Directors remuneration. Ensuring that the views of shareholders are communicated to the Board as a whole.

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Q: 3). Discuss the principles of corporate governance evolved by the

Institute of Company Secretaries of India.

Answer:

The principles of corporate governance evolved by the ICSI are as under:

o Sustainable development of all stakeholders to ensure growth of all individuals associated with or effected by the enterprise on sustainable basis.

o Effective management and distribution of wealth to ensure that enterprise creates maximum wealth and judiciously uses the wealth so created for providing maximum benefits to all stakeholders and enhancing its wealth creation capabilities to maintain sustainability.

o Discharge of social responsibility to ensure that enterprise is acceptable to the society in which it is functioning.

o Application of best management practices to ensure excellence in functioning of enterprise and optimum creation of wealth on sustainable basis.

o Compliance of law in letter and spirit to ensure value enhancement for all stakeholders guaranteed by the law for maintaining socio-economic balance.

o Adherence to ethical standards to ensure integrity, transparency, independence and accountability in dealings with all stakeholders.

Q: 4). Corporate Social Responsibility (CSR) is also called corporate citizenship or corporate responsibility. Discuss

Answer:

Corporate Social Responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.

The main function of an enterprise is to create value through producing goods and services that society demands, thereby generating profit for its owners and shareholders as well as welfare for society, particularly through an ongoing process of job creation.

o Corporate Social Responsibility can be explained as under: o Corporate means organized business. o Social means dealing with the people/society including environment. o Responsibility means accountability of the corporate towards society.

The term corporate citizenship implies the behaviour which would maximize a companys positive impact and minimize the negative impact on its social and physical environment.

o CSR means open and transparent business practices that are based on ethical values and respect for employees, communities and the environment.

o Corporate Social Responsibility is also called corporate citizenship or corporate responsibility.

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Q: 5). (a) Describe briefly the following:

i. Barriers to visionary leadership. ii. Diligence report in banks.

iii. Scope of work of the Asian Corporate Governance Association.

Answer:

i) Barriers to Visionary Leadership

Frank Martin Elli - Lists the barriers with a view to helping companies identify them in their organizations and to remove them to facilitate visionary board leadership:

1) Micro Management - It is necessary that the board focuses its attention on items of critical importance to the organization. If the board is tempted to micro manage or to meddle in lesser matters, an opportunity to provide visionary leadership is lost.

2) Clinging to Tradition Boards often resist change in order to preserve tradition. However, changing environment requires the Boards to be open to change.

3) Confused Roles - Some boards assume that it is the job of the executive director to do the visionary thinking and that the board will sit and wait for direction and inspiration.

4) Time Management - Lack of time to attend meetings, read materials and maintain contact with each other in between meetings.

5) Resistance to risk taking - Board leadership must strike a balance between taking chances and maintaining the traditional stewardship role.

6) Strategic Planning - Strategic planning offers boards an opportunity to think about changes and trends that will have significant impact and develop strategies to respond to challenges.

7) Complexity - Board members frequently lack a deep understanding of critical changes, trends and developments that challenge fundamental assumptions about how it defines its work.

ii) Diligence report in banks

The Reserve Bank of India recently has advised all the scheduled commercial Banks to obtain regular certification (Diligence Report) by a professional, preferably a Company Secretary, regarding compliance of various statutory prescriptions that are in vogue. The Diligence Report will not only act as an effective mechanism to ensure that the legal

and procedural requirements under the respective legislations are duly complied with but also instill professional discipline in the working of the companies that have taken loan, besides building up the necessary confidence in the state of affairs of the companies.

iii) Scope of work of the Asian Corporate Governance Association

Asian Corporate Governance Associations scope of work covers three areas:

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1) Research: Tracking corporate governance developments across 11 markets in Asia and producing independent analyses of new laws and regulations, investor activism and corporate practices.

2) Advocacy: Engaging in a constructive dialogue with financial regulators, stock exchanges, institutional investors and companies on practical issues affecting the regulatory environment and the implementation of better corporate governance practices in Asia.

3) Education: Organizing conferences and seminars that foster a deeper understanding of the competitive benefits of sound corporate governance and ways to implement it effectively.

Q: 6). Describe and differentiate risk reduction and risk retention.

Answer:

Risk Reduction: The Physical risk reduction (or loss prevention, as it is often called) is one of ways of dealing with any risk situation. It is done in steps to reduce the probability of loss. The ideal time to think of risk reduction measures is at the planning stage of any new project when considerable improvement can be achieved at little or no extra cost. Risks are reduced by taking actions to lessen the probability of negative consequences associated with a risk. The only cautionary note regarding risk reduction is that, as far as possible expenditure should be related to potential future saving in losses and other risk costs; in other words, risk prevention generally should be evaluated in the same way as other investment projects.

Risk Retention: It is also known as risk assumption or risk absorption. It is the most common risk management technique. This technique is used to take care of losses ranging from minor to major break-down of operation. There are two types of retention methods for containing losses as under:

o Risk retained as part of deliberate management strategy after conscious evaluation of possible losses and causes. This is known as active form of risk retention.

o Risk retention occurred through negligence. This is known as passive form of risk retention.

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P art -B

(a) You are the Company Secretary of Universal Development Ltd. The company often faces ethical dilemma. The Board wants to circulate a guidance note for its managers to resolve ethical dilemma. Draft guidance note for the consideration and approval of the Board.

Answer:

Universal Development Limited

Draft of the guidance note for resolving an ethical dilemma

Steps to Resolving an Ethical Dilemma:

i) What are the options? List the alternative courses of action available. ii) Consider the Consequences: Think carefully about the range of positive and

negative consequences associated with each of the different paths of action available.

o Who/What will be helped by what is done? o Who/What will be hurt? o What kinds of benefits and harms are involved and what are their relative

values? o What are the short-term and long-term implications?

iii) Analyze the actions: Actions should be analyzed in a different perspective i.e. viewing the action per se disregard the consequences concentrating instead on the actions and looking for that option which seem problematic. How do the options measure up against moral principles like honesty, fairness, equality and recognition of social and environmental vulnerability?

In the case you are considering, is there a way to see one principle as more important than the others?

iv) Make decision and act with commitment: Now, both parts of analysis should be brought together and a conscious and informed decision should be made once the decision is made, act on the decision assuming responsibility for it.

v) Evaluate the system: Think about the circumstances which led to the

dilemma with the intention of identifying and removing the conditions that allowed it to arise.

S d/-

ABC

(Company Secretary)

For Universal Development Limited

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(b) An organizations structure is important to the study of business ethics. Comment

Answer:

An organizations structure is important to the study of business ethics. In a Centralized organization, decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. Responsibility, both internal and external, rests with top management. This structure is especially suited for organizations that make high-risk decisions and whose lower-level managers are not highly skilled in decision making. It is also suitable for organizations in which production processes are routine and efficiency is of primary importance.

These organizations are usually extremely bureaucratic, and the division of labour is typically very well defined. Each worker knows his or her job and what is specifically expected, and each has a clear understanding of how to carry out assigned tasks. Centralized organizations stress formal rules, policies, and procedures, backed up with elaborate control systems. Their codes of ethics may specify the techniques to be used for decision making.

Because of their top-down approach and the distance between employee and decision maker, centralized organizational structures can lead to unethical acts. If the centralized organization is very bureaucratic, some employees may behave according to the letter of the law rather than the spirit.

In a decentralized organization, decision-making authority is delegated as far down the chain of command as possible. Such organizations have relatively few formal rules, and coordination and control are usually informal and personal. They focus instead on increasing the flow of information. As a result, one of the main strengths of decentralized organizations is their adaptability and early recognition of external change. With greater flexibility, managers can react quickly to changes in their ethical environment. Weakness of decentralized organizations is the difficulty they have in responding quickly to changes in policy and procedures established by top management. In addition, independent profit centers within a decentralized organization may deviate from organizational objectives.

(c) The Chairmans primary responsibility is to lead the Board and ensure its effectiveness. Elucidate this statement.

Answer:

The responsibility for ensuring that boards provide the leadership which is expected of them is that of its Chairperson. A Chairman though has no legal position; he is the person elected by the board to take the chair at a particular meeting.

Boards are not bound to continue with the same chairman for successive meetings. In law, all directors have broadly equal responsibilities and chairmen are no more equal than any other board member. Chairmen are an administrative convenience and a means of ensuring that board meetings are properly conducted.

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The Chairmans primary responsibility is for leading the Board and ensuring its effectiveness.

The role of the Chairman includes:

o Setting the Board agenda, ensuring that Directors receive accurate, timely and clear information to enable them to take sound decisions, ensuring that sufficient time is allowed for complex or contentious issues, and encouraging active engagement by all members of the Board;

o Taking the lead in providing a comprehensive, formal and tailored induction programme for new Directors, and in addressing the development needs of individual Directors to ensure that they have the skills and knowledge to fulfill their role on the Board and on Board Committees;

o Evaluating annually the performance of each Board member in his/her role as a Director, and ensuring that the performance of the Board as a whole and its Committees is evaluated annually. Holding meetings with the non-executive Directors without the executives being present;

Ensuring effective communication with shareholders and in particular that the company maintains contact with its principal shareholders on matters relating to strategy, governance and Directors remuneration. Ensuring that the views of shareholders are communicated to the Board as a whole.

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CASE STUDY

Trade in human Organs

An entrepreneur in a certain country conceives of a business that is designed to avoid waste and is committed to recycling. One of the first actions is to contact an undertaker with a view to purchasing spectacles from the deceased with a view to setting up a shop that sells such recycled goods. The undertaker saw no problem with that idea and entered into an arrangement to sell the goods, they being of no further use to the former owner.

That was such a successful venture that the entrepreneur extended the idea and suggested to the undertaker that artificial dentures would be a good next venture. With

some misgivings the undertaker agreed, but with the proviso that they were properly sterilized first. Among the reservations by the undertaker here was the notion of who is the owner? Should the relatives be consulted? How were the proceeds to be divided? Having solved that problem satisfactorily the entrepreneur found business so good that he wished to extend it further.

The next stage was seen as a rather personal form of recycling, that of body organs. Where a corpse had an undamaged and potentially useful, organ that too might be harvested. Here the problems become more complicated. The recycling of organs needs much more technical knowledge than is available to the average undertaker. Among the technical problems are those of tissue typing, of preservation and prompt use, of the setting up of a register and of financial compensation and to whom. Add to this is the problem of whose permission is needed.

If this venture is successfully exploited with a proper setup is then the demand could well increase. Suppose that the entrepreneur is so successful that he wanted to extend the supply and, ideally, have fresh organs from young healthy cadavers. Being a lateral thinker he contacted prison authorities who might have a supply of those executed. At least, he argued, they were not put to death in vain. If the prison authorities agreed and appropriate rules were framed, then the pressure might be on the system to ensure a steady supply and thus affect the rate at which prisoners were condemned to death.

One of the interesting ideas that the entrepreneur had was a prisoner who was not condemned to death might agree to the removal of a non-vital removal (say, one kidney) in return for a commutation of sentence and thus save the state the cost of further imprisonment as well as providing the prisoner with funds to start a new life.

Suppose, instead of a prison situation there is a hospital one. In a hospital there are always those who are very ill and in need of a transplant. For organ removal one needs to be certain that the donor is really dead before removal and dead from natural causes rather than being 'helped' along the way because of an urgent need for the organ. The criteria of 'death' then becomes a crucial one. A patient might be physically surviving, put be brain dead. Could one harvest an organ from a brain dead patient, which would involve ignoring other vital signs?

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In this case one can see the escalation of a comparatively small moral issue into one which has very wide ramifications. This engaging case has some further aspects: one is the moral position of starting with simple items from the dead and escalates into a problem involving some very complex issues. Put in interrogative form here are some of the issues and questions for solution.

Q: 1). Is the selling of spectacles from cadavers morally correct provided permission is given?

Answer:

To my view, selling of spectacles from cadavers is morally and ethically incorrect regardless of whatever permission provided because of the consequences that it may

endanger so many savable lives, and the use of it with or without permission is an insult to the dead no matter which culture.

Q: 2). Does that same point apply to full dentures?

Answer:

Yes, it applies to full dentures, to close the road to any human disrespect.

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Part -C

Q: 1). Which markets embody sense of justice?

a) Mixed markets b) Liberal markets

c) Free markets (). d) None of the above

Q: 2). Which of the following choices does NOT describe a situation that is covered by the concept of rights?

a) The absence of prohibitions against an activity

b) The authorization to do something to secure one's interests c) The necessity of doing something required by authority d) The existence of prohibitions on others to enable individuals to pursue

an activity ().

Q: 3). Which theory claims that people would be lazy without private property?

a) Capitalism (). b) Socialism c) Utilitarianism d) None of the above

Q: 4). The most influential economic institutions are designed to achieve?

Select correct option:

a) Production of the goods b) Distribution of the goods

c) Both a & b (). d) None of the above

Q: 5). According to Aristotles view, how do we learn virtue?

a) By habit b) By dialectical argument c) By rational instruction

d) By learning from our mistakes ().

Q: 6). Which philosopher defended the idea that we should always treat humanity as an end in itself rather than a means?

a) Kant (). b) Mill c) Bentham d) Rawls

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Q: 7). The concept that there are no relevant differences among people that

can justify unequal treatment is known as?

a) Egalitarianism (). b) Utilitarianism c) Socialism d) None of the above

Q: 8). Commodities that are considered valuable only because they lead to other good things are called:

a) Instrumental goods b) Instrumental values c) Intrinsic goods

d) Intrinsic values ().

Q: 9). Socialist view on distribution is best described as:

a) From each according to his ability, to each according to his needs (). b) The benefits a person receives should be proportional to his contribution c) From each they choose, to each as they are chosen d) Always treat humanity as an end in itself rather than as a means

Q: 10). Factual evidence has the following properties except?

a) Time bound (). b) Accurate c) Relevant d) Complete

Q: 11). In which country Lockes property rights have been influential?

a) England b) Germany

c) America (). d) Greek

Q: 12). Which of the following are the criteria for determining moral right and wrong?

a) Universalizability

b) Reversibility


Q: 13). Utilitarianism is unable to deal with following kind of moral issues?

a) Rights b) Justice


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Q: 14). What are the levels on which ethical decision making occurs?

a) Individual b) Organizational c) Business system

d) All of the given ().

Q: 15). Privacy is an example of?

a) Positive right b) Basic need

c) Negative right (). d) None of the above

Q: 16). Which theory includes means of production and selling one's labor?

a) Capitalist systems (). b) Free economy system c) Socialist system d) None of the above

Q: 17). Equality of income and equality of opportunity is refers to:

a) Equality b) Political equality

c) Economic equality (). d) Human equality

Q: 18). Through utilitarianism offers a clear-cut method of calculating morality. What is the number of problems identified with this method?

a) 5 (). b) 4 c) 3 d) 2

Q: 19). Who presented the theory of absolute advantage?

a) Adam Smith (). b) Friedrich A. Hike c) Murray Roth bard d) Eric Mack

Q: 20). Which of the following are components of free market systems?

a) Private property system b) Voluntary exchange system


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Q: 21). The most important reason for having a Code is that:

a) it provides a formal frame of reference for values (). b) it is required by the Board c) it helps establish a good reputation d) it gives employment to HR staff

Q: 22). Despite cultural diversity it is important that we consider:

a) various principles of value b) always follow the UN principles c) give salience to the dominant national culture

d) follow only your own religious laws ().

Q: 23). Cultural relativism means

a) One culture is quite as good as any other nominated culture b) Culture is the only reference point for a values system

c) Activities should be interpreted in terms of one's own culture (). d) One culture should be compared to another

Q: 24). It is the function of an ethics code to:

a) set standards b) apply sanctions c) neither

d) Both ().

Q: 25). Ethics is about

a) improvement in standards b) rewards and sanctions c) reputation

d) All of the above ().

Q: 26). Ethics is about

a) Tangible and intangible benefits (). b) only tangible benefits c) only intangible benefits d) something other than the above

Q: 27). Ethics is the same as

a) legality b) strict compliance

c) Conformance to agreed values (). d) following black letter law

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Q: 28). Where does ethical loyalty primarily lie?

a) towards family

b) Towards agreed principles (). c) towards the company d) towards professional standards

Q: 29). Ethics is concerned about

a) the means of achieving something b) the ends to be achieved c) neither of those

d) Both of those ().

Q: 30). Time frames are

a) Crucial part of ethics (). b) irrelevant to ethics c) of marginal interest to ethics d) an explanation of spatiality

Q: 31). Circumstances that leave a person uncertain but not altogether unsure about what he or she is doing is a feature of

a) Excusing Conditions b) Moral reasoning

c) Mitigating factors (). d) Ignorance

Q: 32). What type of resource depletion is marked by increasing rates of usage and sudden, complete depletion within a short period of time?

a) Depletion of fossil fuels

b) Exponential Depletion (). c) Peaked depletion d) Species depletion

Q: 33). Which of the following is not considered as part of the three stages of moral development proposed by Carol Gilligan?

a) Social Contract Orientation (). b) Principled morality c) conventional morality d) progressing from selfish

Q: 34). Which of the following is the type of moral standards?

a) Utilitarianism b) Rights c) Justice

d) All of the above ().

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Q: 35). What are the levels on which ethical decision making occurs?

a) Individual b) Organizational c) Business system

d) All of the given ().

Q: 36). Which one of the following is not an essential component of moral reasoning?

Select correct option:

a) Understanding of reasonable requirement of moral standard

b) Evidence or information regarding these moral standards

c) Both a & b (). d) None of the given options

Q: 37). Which of the following refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another country?

a) Absolute advantage

b) Comparative advantage (). c) Resource efficiency d) Natural advantage

Q: 38). Which one of the following is not a basic type of moral standards?

a) Utilitarianism b) Rights c) Justice

d) Relevant ().

Q: 39). Which philosopher defended the idea that we should always treat humanity as an end in itself rather than a means?

a) Kant (). b) Mill c) Bentham d) Rawls

Q: 40). Which one of the following is NOT a trait of character that makes an individual a morally good human being?

a) Courage b) Temperance

c) Hope (). d) Justice

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