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National Corporate Governance Review Committee (NCGRC)

The MALAWI CODE II

CODE OF BEST PRACTICE FOR

CORPORATE GOVERNANCE IN MALAWI

Corporate Governance Sector Guidelines

for Cooperatives, Associations and other Membership-based Organisations

(CAMO sector guidelines)

Officially launched on 14th

June 2011

CAMO Sector Guidelines – Launched 14th June 2011 / 38

The implementation of the Corporate Governance Action Plan for

Malawi, in response to the Report on the Observance of Standards

and Codes (ROSC) carried out by the World Bank Group in 2007, is

funded by the Government of Flanders.

These Sector Guidelines are published by the Institute of Directors. Blantyre, June 2011

Copyleft The IOD of Malawi, as custodian of the Malawi Code II, allows and encourages the free reproduction, copying, and use of the text, concepts and ideas developed for and used in the Malawi Code II and in these Sector Guidelines. All such use is however subject to the condition that any derived use or adaptation remains freely available under the same conditions.


TABLE OF CONTENTS

INTRODUCTION ................................................................................................................................................... 4

ACKNOWLEDGEMENTS ....................................................................................................................................... 6

DEFINITIONS ....................................................................................................................................................... 7

1. COMPLIANCE WITH THE CODE ...................................................................................................................... 11

2. OWNERS ........................................................................................................................................................ 12

3. BOARD STRUCTURE ....................................................................................................................................... 16

4.THE ROLE OF THE BOARD ............................................................................................................................... 17

5. BOARD EVALUATION ..................................................................................................................................... 24

6. BOARD SUB-COMMITTEES............................................................................................................................. 25

7. THE CHAIRMAN ............................................................................................................................................. 25

8. MEMBERS OF THE BOARD ............................................................................................................................. 26

9. NON-EXECUTIVE MEMBERS OF THE BOARD .................................................................................................. 27

10. APPOINTMENT OF MEMBERS OF THE BOARD ............................................................................................. 28

11. REMUNERATION OF MEMBERS OF THE BOARD ........................................................................................... 30

12. TRAINING AND DEVELOPMENT OF MEMBERS OF THE BOARD .................................................................... 31

13. THE COMPANY SECRETARY .......................................................................................................................... 32

14. RELATED PARTY TRANSACTIONS ................................................................................................................. 33

15. RISK MANAGEMENT AND INTERNAL CONTROLS ......................................................................................... 34

16. ETHICS ......................................................................................................................................................... 35

17. GOOD CITIZENSHIP ...................................................................................................................................... 36

18. SUSTAINABILITY .......................................................................................................................................... 37

19. EXTERNAL COMMUNICATIONS .................................................................................................................... 37

20. INTEGRATED REPORTING AND AUDITING .................................................................................................... 38


INTRODUCTION

The Malawi Code II (Code of Best Practice for Corporate Governance in Malawi) was published by the

Institute of Directors (IOD) on 1st June 2010.

When reviewing the first Malawi Code, published in 2001, the “National Corporate Governance Review

Committee” (NCGRC) decided that the Malawi Code II would comprise a set of Overarching Provisions

(OPs) that would apply to all organisations in Malawi, not just incorporated entities. The OPs should be

appealing and applicable to all types of organisations in Malawi; this, however, does not imply that these

OPs should be vague or sketchy. On the contrary, they are as concrete and as detailed as possible;

while still remaining applicable to all types of organisations in Malawi.

In addition to the OPs of the Malawi Code II, the NCGRC and the IOD envisaged some Sector

Guidelines that would detail how the OPs would apply in specific cases or specific types of

organisations.

These “Corporate Governance Sector Guidelines for Cooperatives, Associations and other

Membership-based Organisations” provide interpretation, best practices and additional guidance for

implementation of the Malawi Code II by such organisations in Malawi.

While drawing upon and being inspired by international best practices1 with respect to governance for

Cooperatives, Associations and other Membership-based Organisations, these sector guidelines have

been specifically designed and tailor-made in order to meet the challenges and needs of this type of

organisations in Malawi.

Corporate Governance contributes to the success, profitability and sustainability of

Cooperatives, Associations and other Membership-based Organisations (CAMOs) in Malawi.

CAMOs will benefit from applying the Malawi Code II and these Corporate Governance Sector

Guidelines in order to address problems related to :

1. Member – Board relationships ;

2. Internal democracy, voting and decision power;

3. Unclear governance structures and conflict of interests;

4. Inadequate and improper rules of decision making;

5. Roles and responsibilities;

6. Operational inefficiencies;

7. Management of risks;

8. Unqualified personnel and inadequate supervision;

9. Social and environmental irresponsibility:

10. Trustworthiness, transparency and accountability towards members and stakeholders.

1 Inspiration was found in international documents such as: the “Code of Governance for Co-operatives -

Singapore”; the “Worker co-operative Code - UK” and “Bridging the governance divide in the Philippines:

perspectives from the cooperative sector”.


Custodian of these Sector Guidelines for CAMOs.

The sector-specific subcommittee and the NCGRC have asked the IOD to act as the initial custodian of

these guidelines.

The custodian(s) will undertake their role in close cooperation with those key organizations and

individuals that will commit themselves to significantly contribute to the promotion of these sector-

specific governance guidelines for CAMOs and to the monitoring of its application by such organisations

in Malawi. This will include cooperation with representative organizations and individuals active in this

sector.

Together, they will promote and facilitate the creation of incentives for CAMOs that commit to apply

these guidelines and that demonstrate this through their annual reporting.

A long term effort in communication, education and promotion is required. This will include sensitisation

of training institutions and other providers of business training to include these guidelines in their

training. For communication purposes, a shorter and easier to comprehend text / booklet, with the

essentials of these guidelines but without the technical distinction between the overarching provisions of

the Malawi Code II and the sector-specific provisions, might be developed. This would then also provide

a proper basis for translation and communication in national languages.

As part of his monitoring role, the custodian should produce an annual report on the implementation of

these guidelines. Therefore the custodian shall also promote mechanisms of monitoring and reporting

by key stakeholders in order to allow an assessment of the extent to which CAMOs in Malawi are

committing to and applying these guidelines.

Any concerns over non-compliance with the Malawi Code II and with these guidelines should be

reported to the IOD as a last resort once discussions with the organisation concerned have been

exhausted.


ACKNOWLEDGEMENTS

These Corporate Governance Sector Guidelines were commissioned by the IOD and the NCGRC in

order to provide the necessary interpretation, best practice and specific requirement for applying the

Malawi Code II in CAMOs in Malawi. These guidelines are the result of the hard work of many people

representing different organizations operating in Malawi.

The IOD would particularly like to thank the following:

The members of the NGRC‟s Subcommittee for CAMOs :

Mrs. Thandiwe Mang‟anda, SEDOM - Operations Manager

Mr. Lowani Munkhondia Malasha holdings Limited - Managing Director

Mr. Lackson Kapito, NABW - National Credit Coordinator (attending on behalf of Mrs. Mary

Malunga)

Mr. Mateyu Sisya, Malawi Law Society - Legal Officer

Mr. Dixies Kambauwa, IOD – Executive Director

Mr. Wouter Verelst, SHMPA

Mr. Harrison Kalua, Mzuzu Coffee Planters Cooperative Union (MZCPCU), Chief Executive

Mr. Daniel Harawa, Mzuzu University and Board Member of Mzuzu Coffee Planters Cooperative

Union (MZCPCU)

Mr. John Jim Banda, GTPA, Board member

Mr. Charles Kayesa, Cooperatives Division of the Department of Industry & Trade, Assistant

Director

Mr. Express Moyo, Lead & Manage Consulting - Managing Director

Mr. Sydney Khando, Farmers Union of Malawi, Business & Marketing Coordinator

Mr. Mark Matabi, Farmers Union of Malawi, Institutional & Cooperatives Development Advisor

Mr. Derek Lakudzala, BUMAS International, Managing Director

Those individuals who attended the consultation events on 1st April in Lilongwe and on 5

th April in

Blantyre.

Those who provided written comments as part of the general written consultation between 15th

April and 13th May 2011.

The members of the IFC Global Corporate Governance Forum‟s Private Sector Advisory Group

(PSAG), who provided feedback on the draft sector guidelines.

The International Finance Corporation (IFC) – Global Corporate Governance Forum (GCGF) for

providing technical advice to the project through the following Consultants:

Mr. Patrick Stoop,

Mrs. Alison Dillon Kibirige.

The members of the National Corporate Governance Review Committee

The IOD staff, particularly Mr. Anthony Kamtimaleka, for providing secretarial support.

Mr. Dixies Kambauwa Mr. John Robson Kamanga

Executive Director Chairman

Institute of Directors in Malawi Institute of Directors in Malawi


Preliminary Remarks

These Sector Guidelines are presented in a table with two columns.

The left column comprises the general definitions and overarching provisions of the Malawi Code II,

applicable to all types of organisations and sectors in Malawi.

The right column comprises the corresponding sector-specific definitions and provisions for CAMOs in

Malawi. These have been developed as sector-specific “guidelines” to be applied by all CAMOs that

have decided to abide by these sector guidelines. These sector-specific provisions are to be used

together with the overarching provisions of the Malawi Code II.

In addition to the sector-specific provisions, the right column also comprises sector-specific comments,

providing additional explanation and guidance for CAMOs in Malawi who want to apply best practices in

corporate governance. Such comments are provided in a distinct letter type (italics).

Malawi Code II Sector guidelines

DEFINITIONS

Def. 1. Owners The owners of the organisation shall be understood as those who constitute the supreme authority of the organisation, for example, Government, Shareholders, Holding or Parent organisation, etc. There may be a sole owner of the organisation; the shareholders or the members might exercise their ownership role in the Annual General Meeting (or General Assembly); owners may entrust “trustees” to take on the “ownership role” on their behalf; or there may be another ownership arrangement appropriate to the type of organisation.

OP-Def.1_CAMO.1 In the case of CAMOs the members

are deemed to be the owners.

Comments: OP-Def.1_CAMO.1-C1 CAMOs can be created / registered:

as a Trust, according to the Trustees Incorporations Act;

as a company limited by guarantee, according to the Companies Act;

as an NGO, according to the NGO Act;

as a Cooperative, according to the “Cooperative Societies Act” or to the “Financial Cooperatives Act”.

But, whatever juridical structure used, CAMOs have their members as their (real) owners.



Def. 2. Boards The board, often called board of directors, is a body of elected or appointed members who jointly oversee and direct the affairs of an organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, governing board, governing council, board of commissioners, etc. It is often simply referred to as "the board." A board's activities are determined by the powers, duties, and responsibilities delegated to or conferred on it by the owners of the organisation and/or as specified by laws and regulations applicable to the type of organization. While the “Owners” constitute the supreme authority of the organisation, they confer the supreme governing role to the board. The board therefore is the main governing body situated between the Owners and the Executive Management of the organisation.

OP-Def.2-CAMO.1: In the case of CAMOs, the “Board” shall be regarded as the body of authority that the members have entrusted with the responsibilities for strategically guiding the organisation, effectively monitoring the implementation of the organisation‟s strategy, and properly accounting to the members.

Comments: OP-Def.2_CAMO.1-C1 Among CAMOs, the body entrusted with the roles of the “Board” is sometimes called the “Committee” or the “Executive Committee”.



Def. 3. Member of the Board A member of the board shall be understood as any individual elected to or appointed as member of the Board (see definition above) e.g. Directors, members of governing councils, etc.

Def. 4. Private, Public and Not for Profit Sectors

Private Sector is that part of the economy which is both run for private profit and is not controlled by the state. It includes family owned businesses, private companies, Micro, Small and Medium Enterprises, as well as the informal sector. Public Sector, sometimes referred to as the state sector, is a part of the state that deals with the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal. It includes State Owned Enterprises, Parastatals and Public Authorities or Commissions. Not for Profit Sector is that part of the economy where organizations are not for profit and are not part of the government. This sector is also called the third sector, in reference to the private sector and the public sector, or the Civic sector emphasizing the sector's relationship to civil society. It includes Non-Governmental Organizations, Community Based Organizations and other related organisations.

SG-Def_CAMO.1 CAMO and CAMOs. a) CAMO is the acronym for Cooperative, Association or

other Membership-based Organisation. b) CAMOs is the acronym for Cooperatives, Associations

or other Membership-based Organisations.

SG-Def_CAMO.2 The “Secretariat”. a) CAMOs in Malawi often use the term “Secretariat” to

identify those responsible for implementing the strategy set by the Board and for managing the operations of the organisation.


SG-Def_CAMO.3 Chief Executive Officer (CEO). a) The Chief Executive Officer (CEO) is the most senior

manager of the organisation. b) Different types of denominations are being used in

Malawi: o Chief Executive o General Manager, o Executive Director, o Executive Secretary, o Principal Secretary, o Director General, o Managing Director, o etc. These Sector Guidelines use the term “CEO” or “Chief Executive Officer” to describe this person.

c) Generally, this person is heading the Secretariat of the organisation.

SG-Def_ CAMO.4 Chairman: The Malawi Code II and these sector guidelines use the term “Chairman” as a gender-neutral term for the person (male or female) who holds the position of the chairman. “Chairman” is thus defined as the person (male or female) who chairs a Board or a Committee of the Board and who is invested with the specific roles and responsibilities of the Chairman. Some organisations use the term “President”, “Chairperson” or “Chair” to refer to such person.



1. COMPLIANCE WITH THE CODE

1.1 The Malawi Code II is concerned with the establishment of an environment conducive to enabling organisations to grow, thrive, survive and create sustainable development for Malawi, whilst acting as good corporate citizens.

1.1-CAMO.1: CAMOs should on a continuous basis add

value to its members.

Comments: 1.1-CAMO.1-C1 Complying with the Malawi Code II

ensures that Boards of CAMOs add value to the members trough, among others: strategic thinking and strategy setting; balance of power and control, efficiency and effectiveness; transparency and probity; responsibility and responsiveness; productivity and profitability; creativity and innovativeness; competiveness and sustainability.

1.1- CAMO.2: CAMOs shall ensure coordination of interests among various concerned stakeholders

Comments: 1.1-CAMO.2-C1 It is often complicated to coordinate and

harmonize expectations and interests of different stakeholders; for example conflicting expectations may arise between: members, government, management, employees, suppliers, donors, customers and local communities.

1.1-CAMO.2-C2 In this respect, CAMOs and their stakeholder may benefit from pursuing integrated, fair and well balanced approaches and/or creative win-win solutions.

1.1-CAMO.3: CAMOs shall conduct their operations in a sustainable and responsible manner with awareness of their social responsibilities, with transparency and fairness in accordance with the principles applicable to their line of activities, while accepting accountability to members and stakeholders.

1.1-CAMO.4 Within the framework of its purpose, the CAMO should offer open and voluntary membership for those potential members who are able and willing to accept the responsibilities of membership.

1.2 These Overarching Provisions (OPs) should thus be applied in all organisations be they large, medium or small; in the private, public or not for profit sector.



1.2-CAMO.1: Any CAMO in Malawi should apply both the Overarching Provisions (OPs) of the Malawi Code II and the provisions of these specific sector guidelines.

1.3 Organisations in their annual or directors‟ reports should state whether the Code has been adhered to or, if not, explain with reasons in what respects it has not been adhered to.

1.3-CAMO.1: Any CAMO should produce a simple annual statement specifying to what extent they have applied the Malawi Code II and these sector guidelines and explaining why specific provisions, if any have not been applied.

1.3-CAMO.2: Cooperatives, Association or other Membership-based Organisations, when registering, should consider the appropriateness of including within their constitution a commitment to apply these corporate governance guidelines and to report on them on a yearly basis.

2. OWNERS

The owners of the organisation should:

2.1 Jointly and severally protect, preserve and actively exercise the supreme authority of their organisation.

2.1-CAMO.1: CAMOs shall ensure that their constitution comprises clear written rules on respective voting power for different types of membership and regulating voting and decision processes by their members, which should be fair and appropriate.

Comments: 2.1-CAMO.1-C1 Specific types of membership for which

the membership rights and voting power should be clearly defined include: founding members, specific categories of membership, etc.



2.1-CAMO.2: In order to allow them to exercise their rights and responsibilities as owners, CAMOs shall respect and promote the basic right of all members, including those belonging to minority groups and/or holding few shares and/or voting power. These basic rights comprise: a) the right to participate in general

meetings of members and to vote on basic decisions of the organisation, including elections and dismissals of members of the Board or decisions on fundamental strategic changes impacting on the essence of the organisation;

b) the basic right to share in any benefits provided by the organisation to its members.

The constitutional documents of any CAMO shall not deny the members the right to take legal actions against the organisation or its controlling group of members.

2.1-CAMO.3: In order to respect and foster the basic rights of all members, CAMOs shall: a) develop and/or improve an environment

in which members are encouraged to participate in general meetings and exercise their voting rights appropriately;

b) provide an appropriate communication channel between the organisation and its members.

Comments: 2.1-CAMO.3-C1 The communication channel between the

organisation and its members should also take into account the requirements for communication between the Board and the members of the organisation, as set forth in chapter 4 of the Malawi Code II and in the corresponding sector-specific provisions.

2.1-CAMO.3-C2 What should at least be communicated to the members of the organisation include: annual financial statements, a balanced assessment of the organisation‟s performance, position and prospects and sustainability issues; as described in chapters 18, 19 and 20 of the Malawi Code II and in the corresponding sector-specific provisions.

2.1-CAMO.4: In order to empower their members in their ownership role and in their overall socio-economic environment, CAMOs shall promote and, to the extent possible, offer and organize appropriate training and development support to all their members.



2.1-CAMO.5: CAMOs shall provide Members with easy access to the organisation‟s constitutional documents, vision, mission, rules, regulations, policies and procedures; if appropriate, bundled in a user-friendly Members‟ Basic Manual. The organisation shall appropriately inform its members on any relevant changes in these matters.

2.2 Ensure that only competent and reliable persons with appropriate knowledge, skills and experience are elected or appointed to the board.

2.2-CAMO.1 The members of the Board of a CAMO are either elected or appointed, according to the procedures for election or appointment as stipulated in the constitutional documents of the organisation. These procedures should be: a) transparent, b) fair for all types of members, c) and appropriate in order to lead to the

best possible composition of the Board.

2.3 Decide the term to be served by non-executive members of the board and ensure that the board is refreshed on a regular basis; bringing new and unbiased viewpoints into discussions and decision-making.

Comments: 2.3-CAMO.1-C1 A three years, renewable, term for

members of the board is usually considered to be good practice.

2.3-CAMO.1-C2 Upon appointment the maximum tenure for the Members of the Board should be agreed. A maximum of three terms as Member of the Board is usually considered to be good practice. However this should not lead to an entire Board continuing for three consecutive terms. Every three years, there should be a replacement of at least one third of Board Members; thus bringing new and unbiased viewpoints into discussions and decision-making.



2.3-CAMO.1-C3 Cooperatives, Associations or other Membership-based Organisations may have good reasons to allow for exceptions to the good practice of a maximum of three terms as Member of the Board. However in such cases they are encouraged to justify such a choice and have it approved explicitly by the members at a general meeting. In such cases the organisation involved is also encouraged to increase its initiatives to develop new leadership capacity among the membership base and to ensure that new and unbiased viewpoints are brought into the discussions and decision-making of the Board.

2.4 Foster constructive relationships with the board to facilitate the success and sustainability of the organisation.

2.5 Ensure that the board is constantly held accountable and responsible for the efficient and effective governance of the organisation.

2.6 Change the Chairman and/or the composition of a board that does not perform to expectations or in accordance with the mandate of the organisation

2.6-CAMO.1 In case of unsatisfactory performance of the

Board, orderly succession should be ensured when changing its composition.

2.7 Ensure that their organization acts as a good corporate citizen, and in a sustainable manner, taking into consideration, as appropriate, the views of stakeholders.

2.8 Comply with all applicable pieces of legislation.

2.9 Respect the fiduciary duties of the members of the Board.

2.9-CAMO.1 While fully exercising their ownership rights and responsibilities, controlling groups within the membership of CAMOs should let the Boards exercise their responsibilities and should respect the fiduciary duties of the Members of the Board.

Comments: 2.9-CAMO.1-C1 In case of Boards hiring incompetent

management or Boards not resolving performance problems of senior management, then this should be considered to be unsatisfactory performance of the Board itself and the members of the organisation should then hold the Board accountable for such underperformance.



2.10 Ensure that the level of remuneration for members of the board and top management is sufficient to attract and retain the quality and calibre of individuals needed to run the organisation successfully.

Comments: 2.10-CAMO-C1 As pointed out in overarching provision

11.3 of the Malawi Code II, the Members of the Board of CAMOs may agree to work pro bono.

2.11 The majority of Owners and the Members of the Board should appropriately respect the rights of minority Owners. The organisation‟s affairs may not be conducted in a manner which is unfairly prejudicial to the interests of minority Owners and/or to the purpose of the organisation.

2.11-CAMO.1: The Board of any CAMO shall ensure that their members, particularly their incoming or potential members, have a clear understanding of their rights and responsibilities as “members” and therefore also as “owners” of the organisation.

2.11-CAMO.2: The Board of any CAMO shall ensure that

all holders of the same class of membership receive equal treatment.

2.11-CAMO.3: The Board of any CAMO shall ensure that the differences in treatment between different classes of membership, if any, are fair and justified and that they are perceived as such by all members.

3. BOARD STRUCTURE

3.1 The unitary (or one tier) board structure, comprising executive and nonexecutive directors, rather than the dual (or two tier) board structure adopted in some countries, is considered appropriate for Malawi as it provides greater interaction among all board members when dealing with matters such as strategic planning, performance, standards of conduct, resource allocation and communication with stakeholders.

3.1-CAMO.1 Boards of Cooperatives, Associations or other Membership-based Organisations in Malawi normally comprise non-executive Members of the Board..



Comments: 3.1-CAMO.1-C1 The Members of the Board of a CAMO

should be able to exercise objective judgment on the affairs of the organisation. The Board as a whole should be able to provide strategic guidance and monitoring to the committee(s) and or individuals to whom the Board has delegated specific roles in the running of the affairs of the organisation.

3.1-CAMO.1-C2 When the Board of a CAMO delegates roles, responsibilities and/or activities, it should document to whom it has been delegated, what roles, responsibilities and/or activities have been delegated and whether these can be sub-delegated.

3.2 While the size of the Board shall be determined by the organisation, and shall vary from organisation to organisation, the size should be such that it ensures that the organisation operates effectively.

3.2-CAMO.1: It is recommended that the Board of a CAMO consists of between 5 and 12 Members.

Comments: 3.2-CAMO.1-C1: Having a smaller size Board, with less

than 5 Members, reduces the opportunities for the Board to profit from a broad mix of knowledge, experience and skills.

3.2-CAMO.1-C2: Having a larger size Board, with more than 12 Members, reduces the capacity of the Board to meet effectively and to act swiftly and decisively.

3.2-CAMO.2 No individual or small group of individuals should be allowed to dominate the Board‟s decision-making. If such a risk exists, a slightly larger size Board should be preferred and used to avoid such dominance.

4.THE ROLE OF THE BOARD

The Board should:

4.1 Ensure that the organisation complies with all relevant laws, regulations and codes, including the Malawi Code II, and, if appropriate, ask executive management to report periodically on such compliance.

4.1-CAMO.1: The Board of any CAMO shall ensure that the organisation develops, improves and uses appropriate systems of internal checks and balance which allow it to make reasonable judgments on the organisation‟s compliance with laws, regulations and codes.



4.2 Exercise leadership, enterprise, integrity and sound judgement in directing the organisation; so as to achieve sustainable success for the organisation.

4.2-CAMO.1 The Board of any CAMO should have the necessary authority, competencies and objectivity to carry out its function of strategic guidance and monitoring its implementation. It should act with integrity and be held accountable for its actions.

4.2-CAMO.2 The Board of any CAMO should ensure that it has and continues to have a strong legitimacy among the members of the organisation. On strategic and governance issues, the Board should therefore foster effective communication, both between the Board and the members of the organisation and between members themselves.

Comments: 4.2-CAMO.2-C1: Ideas on how to foster effective

communication are provided in provision 17.1-CAMO.3.

4.2-CAMO.3 CAMOs should foster democratic processes and approaches of democratic accountability empowering all types of members in their ownership role and allowing them to provide feedback and to hold the Board accountable to the members of the organisation.

4.3 Determine the organisation‟s mission, values and objectives; ensure that a strategy is in place to achieve these and hold management accountable for its implementation.

4.3-CAMO.1 The Board should carry out its functions of strategic guidance and monitoring, subject to the purpose of the organisation set forth in its constitutional documents and/or as approved or updated at the general meeting of members.

4.3-CAMO.2 In case the CAMO has a Secretariat, then the Board should hold it accountable for the implementation of the strategy, as set by the Board. In case the CAMO delegates specific responsibilities for implementing the organisation‟s strategy to committees, individual members of the board or other members of the organisation, then the Board should hold them accountable and expect them to periodically report to the Board as a whole.


4.3-CAMO.3 The mission and vision of the CAMO should be clearly articulated, and should represent members‟ needs and expectations.

Comments: 4.3-CAMO.3-C1 CAMOs are established to meet the

needs and expectations of members; in accordance with common (cooperative) principles and values.

4.3-CAMO.3-C2 CAMOs should actively involve their members in strategy setting and long term planning.

4.3-CAMO.3-C3 The Board shall define and approve the vision and mission of the organisation and shall clearly document and communicate these to members and the secretariat and.

4.3-CAMO.3-C4 The Board shall periodically, preferably every three years and at least every five years, review the vision and mission of the organisation to ensure their relevance to the members of the organisation and to the community. For such review, the Board shall appropriately invite and foster feedback by the members of the organisation and by key stakeholders.

4.3-CAMO.4 In order to ensure that the organisation‟s operations and resources are directed towards achieving its stated mission and objectives, Boards should set clear strategic direction for the Secretariat and/or any committees or individuals to whom the Board has delegated responsibility.

Comments: 4.3-CAMO.4-C1 Boards of CAMOs are encouraged to

develop and decide on strategic planning covering one, three, and more years and containing: a) agreed upon strategic objectives

(aligned with the vision and mission) of the organisation and expected results and outcomes;

b) strategic and business initiatives and corresponding financial planning;

c) key performance measures and indicators for assessing the organisation’s performance in delivering the desired outcomes and objectives;

d) key issues on risk management and fraud and corruption prevention

e) making best use of strategic opportunities arising from technological advances.


4.3-CAMO.5 Boards of CAMOs shall hold the Secretariat and/or any committees or individuals to whom the Board has delegated responsibility accountable for that responsibility and shall refrain from interfering in the roles and responsibilities of the Secretariat or of others to whom the Board has entrusted such responsibilities.

4.3-CAMO.6 Boards of CAMOs shall conduct regular reviews of the organisation's strategy, governance, business management, processes and service delivery. For such exercises the Board shall appropriately invite and foster feedback by the members of the organisation.

4.4 Ensure that appropriate procedures and practices, to protect the organisation‟s assets, resources and reputation, are in place and are effective.

4.4-CAMO.1 The Board should ensure that the organisation has documented policies and procedures in place to safeguard the organisation‟s assets. The Secretariat, or in the absence of a secretariat the committee / individual whom the Board has entrusted with such responsibilities, should ensure that the organisation is operating on a financially sound basis, which includes sufficient liquidity, capital adequacy and optimum-leverage (optimum balance between internal and external financing).

4.4-CAMO.2 If the CAMO undertakes capital development / acquisition projects for which significant funds are required, then the Secretariat, or in the absence of a secretariat the committee / individual whom the Board has entrusted with such responsibilities, should ensure that a distinct Fund (e.g. Building Fund) is set up for the specific purpose identified. The organisation should disclose the size, purpose and planned timeline for the capital development / acquisition.

4.5 Develop a board charter, based on the organisation‟s Constitution, Articles of Association, and the laws and regulations that apply to the organisation, in which roles and responsibilities are clearly defined.

4.5-CAMO.1 CAMOs shall develop a Board charter outlining what is expected of Board Members, and what the sanctions for non conformance are.

4.5-CAMO.2 Appropriately applying the principle of delegation of authority, the Board‟s roles and responsibilities and those of the Secretariat should be clearly defined.

4.5-CAMO.3 The Board‟s charter should foster a healthy balance of power and authority, such that no one individual represents a considerable concentration of power.



4.6 Retain full and effective control over the organisation.

4.7 Ensure that decisions on material matters are in the hands of the Board. The Board should have a definition of materiality on matters such as the acquisition and disposal of assets, investments, capital projects and authority levels. The level or definition of materiality is a matter for each organisation to decide.

4.7-CAMO.1 There should be documented investment policies and procedures, including delegation thresholds, which are approved by the Board and reviewed periodically. Higher quantum and/or higher risk investments should correspondingly require higher levels of authorization before commitment. A review of the performance of the investment should be carried out.

4.7-CAMO.2 Before CAMOs embark on fund raising exercises, the Board should review the need and purpose for additional funds from members and/or other parties.

4.8 Define the responsibilities of and requirements for reporting by executive management and monitor their performance.

4.8-CAMO.1 The Board shall foster a climate of

accountability at all levels within the organisation.

4.8-CAMO.2 The Board shall approve an annual budget appropriate for the activities of the organisation and monitor regularly, at least quarterly, its budget expenditure.

4.8-CAMO.3 The Secretariat, or in absence of a secretariat the committee or the individual entrusted with such responsibilities, should provide all Members of the Board with a report, including an income and expenditure statement and a balanced assessment of the organisation‟s performance, position and prospects on a regular basis.

4.9 Ensure that plans are in place for orderly succession of Members of the Board and of the Chief Executive Officer.

4.10 Ensure that every member of the board is able to play a full and constructive role in the affairs of the organisation.

4.11 Develop policies and processes to avoid or minimise conflicts of interest.

4.11-CAMO.1 CAMOs should establish clear policies to avoid or minimise conflicts of interest. At least yearly they should review compliance with these policies by Members of the Board and by the Secretariat.


Comments: 4.11-CAMO.1-C1 In order to avoid and minimize conflicts

of interests, CAMOs are encouraged to develop clear policies and procedures with respect to procurement, financial management, human resources management and risk management.

4.11-CAMO.1-C2 Members of the Board should always refrain from pursuing their personal interests and / or the interests of their connections at the expense of the interests of the organisation.

4.11-CAMO.1-C3 As part of the annual Board Evaluation Process (see Overarching Provision 5.1), the Board shall assess to what extent this guiding principle on “avoidance and minimization of conflict of interest” is appropriately adhered to by both Board Members and the Secretariat.

4.11-CAMO.2 Members of the Board shall inform the Board whenever any matter to be discussed and / or decided by the Board may comprise (or appear to comprise) a conflict of interest or that may involve a party related to the concerned Board Member. In such a case, the concerned Board Member should not be present during the discussion and decision by the Board on such matter.

4.11-CAMO.3 Where there is a close relationships with current Members of the Board / Secretariat the Board member, manager or staff involved shall make a declaration of such relationships and shall not influence decisions on the recruitment of the person to whom they are related.

4.12 As part of its decision making process, take into consideration wider societal interests and other circumstances affecting how the organisation fulfils its „license to operate‟.

4.13 Ensure that a dialogue, based on mutual understanding of the objectives of the organisation, exists between the Board itself and the owners of the organisation.

4.14 Ensure that it acts in the best interests of the organisation and that in doing so it meets the organisation‟s purpose.

4.15 Meet regularly. Each Board should decide how regularly it needs to meet to discharge its duties, having regard to the organisation‟s own circumstances.

4.15-CAMO.1 CAMOs shall ensure that their constitution defines how regularly the Board should meet.

4.16 On the appointment and throughout the duration of tenure of its members, ensure that the members are able to devote sufficient time to their responsibilities as members of the Board.



4.17 Ensure that its members have among them the right mix of expertise, experience, skills and knowledge appropriate to the organisation.

4.17-CAMO.1 The Board should comprise Members who as a group provide all core competencies that would support effective decision-making. Where such core competencies are not available among the members of the organisation, the Board should ensure, wherever possible, that non-members of the organisations with such core competencies are appointed as Members of the Board.

Comments: 4.11-CAMO.1-C1 CAMOs should check their constitution

to ensure that they are able to appoint non-members of the organisation as members of the Board. If appropriate they may consider modifying their constitution to allow this.

4.18 Ensure that it is adequately informed and where necessary invite executive management to clarify and/or provide additional information.

4.18-CAMO.1 Board members should be provided with complete and timely information prior to Board meetings and on an on-going basis.

Comments: 4.18-CAMO.1-C1: The Secretariat is responsible for

supplying the Board with complete information in a timely manner to enable the Board to make informed decisions.

4.18-CAMO.1-C2: Information provided may include background or explanatory information relating to matters to be brought before the Board, copies of disclosure documents, budgets, forecasts and monthly internal financial statements. In respect of budgets, any material variance between the projections and actual results should also be disclosed and explained.

4.18-CAMO.1-C3: The Board should have appropriate access to the secretariat who may be invited to clarify and/or provide additional information.

4.19 Ensure that its members are of sufficient calibre to bring independent judgement to bear on issues of strategy, performance, resources, standards of conduct, and evaluation of performance.

4.20 Ensure that the integrated reporting by the organisation is accurate and truthful, at the time of disclosure.

4.20-CAMO.1: It is the duty of Members of the Board to fully understand their statutory responsibilities concerning reporting and financial and/or other disclosure by their CAMO.


4.20-CAMO.2 Relevant information should be made available to members and potential members to enable them to make informed decisions about membership issues.

Comments: 4.20-CAMO.2-C1 The Board should ensure there is a

clearly written policy for relevant information to be provided to potential members. Such information may include the by-laws, latest audited financial statements and annual reports.

4.20-CAMO.2-C2 It should be clearly disclosed to (current and potential) members what the costs of membership (both initial cost and annual contributions) and benefits of membership are and how the reimbursement to a departing member (if any) will be calculated upon withdrawal of membership.

4.20-CAMO.2-C3 Annual reports, where existing, should be made available on the office premises and/or organisation’s website for members’ information.

4.21 Consider using alternative dispute resolution as a method of resolving disputes arising both within the organisation and between the organisation and other parties. Alternative dispute resolution comprises among others: open communication, win-win arrangements, negotiations, mediation and arbitration.

4.21-CAMO.1: The Board of a CAMO, shall actively promote alternative dispute resolution as a means of resolving disputes among members, within the organisation and/or with other stakeholders.

5. BOARD EVALUATION

5.1 It is good practice for Boards to evaluate annually the mix of skills and experience of their members as well as the board‟s performance and processes. The level of evaluation would depend on the type of organisation. Large organisations may also consider evaluating the Chairman, other Members of the Board, Board Sub-committees and the Chief Executive Officer.

5.1-CAMO.1 The Board of any CAMO shall (preferably annually) review the Board‟s performance, its processes and its mix of experience and skills.

5.2 Organisations should agree in advance the type of evaluation suitable for their organisation and how to measure and report it in the organisation‟s Directors‟ or Annual Report.



6. BOARD SUB-COMMITTEES

6.1 Boards may find it useful to establish board sub-committees to deal with matters that can best be dealt with in a small forum. The number and nature of sub-committees will depend on the type of organisation. All sub-committees when established should be given, in writing, clear Terms of Reference.

6.2 Decisions of each sub-committee should be communicated to the Board as recommendations for its further consideration.

6.3 When constituting sub-committees, the Board should ensure that the subcommittees‟ members have the appropriate balance of skills, experience, independence and knowledge of the organisation and the sub-committees‟ Terms of Reference to discharge their duties and responsibilities effectively.

6.4 Sub-committees should also be provided with sufficient and appropriate resources to undertake their duties.

7. THE CHAIRMAN

7.1 The Chairman should preferably be non-executive

7.2 The roles of the Chairman and the Chief Executive Officer should preferably be separate, but where they are combined, it is important that the Chairman encourages proper deliberation of all matters requiring the Board‟s attention and obtains optimum input from all Members of the Board.

7.2-CAMO.1 Within a CAMO, the roles of the Chairman of

the Board must be clearly defined.

Comments: 7.2-CAMO.1-C1 In a CAMO with a professional

Secretariat, a strong non-executive Chairman provides the appropriate counterbalance and checks to the power of the Secretariat.

7.2-CAMO.1-C2 The added value of a strong Chairman will materialize through strategic guidance and support that create appropriate conditions for the Secretariat to fulfil their own mission and to achieve the strategic objectives as set by the Board.

7.2-CAMO.1-C3 The Chairman shall provide healthy counterbalance and second opinion, whenever this is needed, and should make sure that the Board retains full and effective control over the organisation.



7.3-CAMO.1-C4 The Chairman of the Board: (i) leads the Board to ensure its

effectiveness; (ii) ensures that the Members of the

Board receive accurate, timely and clear information;

(iii) ensures effective communication with members;

(iv) encourages constructive relations between the Board and the Secretariat;

(v) facilitates the effective contribution of all Members of the Board;

(vi) promotes high standards of governance.

7.3 The Chairman should ensure that all Board Members are as fully informed as possible on any issue on which a decision is to be made and afford each Board Member a reasonable opportunity to contribute to the Board‟s deliberations.

Comments: 7.3-CAMO-C1 Fully informed means sufficiently

informed within the context of the decision to be taken.

7.4 It is the responsibility of the Chairman, following a Board Evaluation, to recommend to the Owners the removal of Board Members who do not contribute effectively to the Board.

7.5 Where the Chairman is appointed by the Board, the members of the Board should ensure that only a person that can add value is appointed to the position. The organisation should determine the length of service of the Chairman.

7.6 Where the Chairman is required to exercise a casting vote, he should use it objectively.

8. MEMBERS OF THE BOARD

In carrying out their functions, Members of the Board should:

8.1 Exercise reasonable care, skill and diligence. This means the care, skill and diligence that would be exercised by a reasonably diligent person with: a) the general knowledge, skill and

experience that may reasonably be expected of a person carrying out the functions of a Member of the Board of the organisation, and

b) the general knowledge, skill and experience that the Member has.

8.2 Both during and after their tenure of office, avoid using privileged information for their own personal benefit or that of other people associated with them.



8.3 Ensure that they devote sufficient time to their responsibilities.

8.4 Be diligent in discharging their duties to the organisation, endeavour to attend meetings regularly and be prepared and able where necessary, to express disagreement with colleagues on the Board including the Chairman and the Chief Executive Officer.

8.4-CAMO.1 All Members of the Board should attend the organisation‟s general meeting of members to answer questions about their work.

8.5 Be truthful and disclose all the information at their disposal to enable the Board to make an informed decision.

8.6 At the expense of the organisation, be entitled to seek independent professional advice about the affairs of the organisation. Before seeking independent professional advice, however, the member concerned should discuss and clear the matter with the Chairman or the Company Secretary. If to approach either of them is inappropriate in the circumstances of the matter, the board member must act within the best interests of the organisation.

8.6-CAMO.1 Any member of the Board shall be entitled to raise his / her concerns, if any, about the affairs of the organisation. If needed to act in the best interests of the organisation, the CAMO should ensure that independent professional advice is available on such matters for those members of the Board who require it.

9. NON-EXECUTIVE MEMBERS OF THE BOARD

Non-Executive Members of the Board should:

9.1 Be independent in character and judgement, even where there are relationships or circumstances which are likely to affect, or could appear to affect the judgement of the members of the board.

9.2 Not take part in the day-to-day management of the organisation.

9.3 Not have any benefits from the organisation other than their fees and other approved expenses. All sitting allowances are deemed to be part of fees.



9.4 Not undertake any advisory work for the organisation unless that work has been approved in advance by the Board and is limited in scope and time in order not to compromise the “non-executive” status of that member and to avoid any conflict of interest.

9.5 Be of sufficient calibre to bring independent judgement to bear on issues of strategy, performance, resources, standards of conduct, and evaluation of performance.

9.6 Constructively challenge and contribute to the development of strategy.

9.7 Scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance.

9.8 Satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and sound.

9.9 Be responsible for ensuring that plans are in place to ensure the long term sustainability of the organisation. In this regard they may have a role in appointing and, where necessary, removing senior management and determining their levels of remuneration.

10. APPOINTMENT OF MEMBERS OF THE BOARD

10.1 The appointment of the Board should be appropriate for the organisation taking into account good governance and the requirements for the organisation to meet its goals and to ensure its long-term sustainability.

10.2 Appointments to the Board should be planned with strategic considerations and objectives of the organisation in mind.

10.2-CAMO.1 The process through which Members of the Board of CAMOs are appointed or renewed should allow for appropriate continuity and successful performance of the Board.

Comments: 10.2-CAMO.1-C1 A complete renewal of the Board in the

same year should be avoided. It is therefore preferable to limit the periodic replacement of Board membership to a maximum of 50% of Board Members in one same year.


10.2-CAMO.2 While reconstituting the Boards, there should be a focus on maintaining those existing Board Members who contributed the most and who may be expected to continue to contribute much in the coming years.

10.3 The selection process must be managed by considering a balanced mix of experience and skills needed to add value to the strategic role of the Board. Depending on the type of organisation, the selection process may also consider appropriate diversity of gender and / or social and economic background.

10.3-CAMO.1 While constituting the Board of CAMOs, the Board nomination process should consider the required skills, knowledge and experience of the Board as a whole.

Comments: 10.3-CAMO.1-C1 The Board should be considered as a

multidisciplinary team. 10.3-CAMO.1-C2 The selection and appointment process,

should ensure that the Board as a whole comprises the required skills, knowledge, experience and diversity (gender, age, background, ...) to govern the CAMO and to ensure sufficient capacity within the Board as required for successful performance in all Board roles and responsibilities.

10.4 An organisation should make appointments to the Board on merit.

10.4-CAMO.1 The process by which Members of the

Board of CAMOs are appointed must be robust, transparent and based on merit.

10.5 The term served by both executive and non-executive Members of the Board should be decided by the organisation; taking into account the period that could reasonably be perceived to materially interfere with the Member‟s ability to act in the best interest of the organisation‟s goals and long-term sustainability.

10.6 Where appointments to the Board are done in an AGM or General Assembly, Owners should be provided with a list of candidates from whom to elect Members of the Board.

10.6-CAMO.1 Where appointments to the Board are done at the general meeting of members, the members should be provided with a brief biography of each candidate Board Member, standing for election or re-election at the general meeting.



11. REMUNERATION OF MEMBERS OF THE BOARD

11.1 Remuneration of Members of the Board should be appropriate to the organisation and should take into account the long term sustainability of the organisation.

11.2 There should be a formal and transparent process for determining remuneration of Members of the Board and of top management.

11.2.-CAMO.1 The policies of CAMOs with respect to honoraria of Members of the Board and/or remuneration for the Secretariat shall be in line with the organisation‟s strategic objectives and values.

11.2.-CAMO.2 Where Board Members receive an honorarium, this should be put to members for approval.

11.2.-CAMO.3 Where honoraria is payable, no Member of the Board should individually decide on his/her own honoraria.

11.2.-CAMO.4 Where remuneration is payable, no member of the Secretariat should individually decide on his/her own remuneration.

11.2.-CAMO.5 Remuneration for the Secretariat should enable the CAMOs to attract and retain sufficiently qualified candidates to manage the organisation successfully, taking into account that the organisation plays a social role in addition to its commercial nature.

11.3 Non-Executive Members of the Board should receive fees at levels that reflect time invested, commitment, performance and responsibilities. Organisations, may however choose for an arrangement where Members of the Board are fully committed to the mission of the organisation and therefore agree to work pro bono.

11.3.-CAMO.1 Members of Boards of CAMOs generally serve in voluntary capacities and do not expect market levels of honoraria for their services on the Board. Nevertheless, where honorarium is paid, it should be appropriate to attract and retain competent Members to the Board. The quantum of the honorarium should take into account: the level of service provided by the Member of the Board (if applicable), the obligations, duties and responsibilities of the position, the size and complexity of business, the organisation‟s financial capacity.



11.4 An organisation should disclose, at least on an aggregate basis, in its Directors‟ or Annual Report the remuneration, bonuses and other benefits received by Members of the Board. What is to be disclosed should represent the total cost to the organization.

11.5 When considering appointing Executive Members of the Board, the Board should seek proper legal advice in relation to termination clauses to avoid the risk of paying excessive amounts on termination of service.

12. TRAINING AND DEVELOPMENT OF MEMBERS OF THE BOARD

12.1 Members of the Board need proper knowledge of the organisations for which they are responsible. They should acquire a broad knowledge of: 12.1.1 the business of the organisation

so that they can provide meaningful direction to it;

12.1.2 the statutory and regulatory requirements affecting the direction of the organisation and the environment in which the organisation operates;

12.1.3 their role, duties, responsibilities, and obligations as well as board practices and procedures.

12.2 The Board in developing training needs, should take into account any training needs identified during a Board Evaluation.

12.3 The Board should ensure that new Members undergo a tailored induction programme, particularly if the new Members have no previous board experience.

12.3.- CAMO.1 The Board of a CAMO should ensure that newly appointed Members of the Board participate, where appropriate, in an induction and training on their duties, powers and responsibilities and on the organisation‟s operations, the Secretariat‟s role and the business environment.



12.4 Every Member of the Board should keep abreast of both practical and theoretical developments affecting the environment in which the organisation operates as well as to ensure that their expertise and experience remain relevant to the Board and to the organisation. Members of the Board should be regularly exposed to matters relevant to legal reforms, Corporate Governance, changing corporate environment, risks, opportunities and other matters that may be of interest in the execution of their duties.

12.4.- CAMO.1 The Board of a CAMO should, to the extent possible, establish regular refresher programmes for continuous professional development of Members of the Board.

12.5 Executive members of the board should be encouraged by their organisation to take non-executive appointments in other organisations. However, the number of non-executive appointments should not be such that the members‟ executive responsibilities to their own organisation are adversely affected.

13. THE COMPANY SECRETARY

13.1 All organisations, where required by law, should ensure that they have access to a competent Company Secretary to render company secretarial services to the organisation. The appointment and removal of the Company Secretary should be a matter for the Board as a whole.

13.1-CAMO.1 Any CAMO shall ask a capable individual

to function as Board Secretary.

13.2 The Company Secretary should among other duties, be responsible for advising the Chairman and the Board on the implementation of the Code.

13.3 All members of the board should have access to the advice and services of the Company Secretary.

13.4 The Company Secretary should be responsible for ensuring effective information flows between the Board and top management and between the Board and its Sub-Committees.

13.5 Wherever possible the role of the Chief Executive Officer and that of the Company Secretary should be separated.



13.5-CAMO.1 In Cooperatives, Associations or other Membership-based Organisations the chief executive officer / general manager would normally be Secretary to the Board.

14. RELATED PARTY TRANSACTIONS

14.1 Organisations should identify, manage and document “related party transactions”.

14.2 The following are “Related parties”: (a) a member of the Board or of the key

management personnel of the organisation;

(b) any other person that significantly controls or influences the organisation;

(c) any close member of the family (such as the individual's domestic partner and children, children of the individual's domestic partner and other dependants of the individual or of the individual's domestic partner) of any individual referred to in (a) or (b);

(d) any entity controlled or significantly influenced by the organisation or by any individual referred to in (a) or (b);

(e) any entity under joint control with the organisation;

(f) any entity that significantly controls or influences the organisation.

14.3 A related party transaction shall be understood as a transfer of resources, services or obligations between related parties and the organisation, regardless of whether or not a price is charged. This includes, among others, purchases or sales of goods, property and other assets; rendering or receiving of services, leases, transfers of research and development, transfers under licence agreements, financial arrangements (including loans and equity contributions in cash or in kind), provision of guarantees or collateral, commitments to do something if a particular event occurs or does not occur in the future, including executory contracts; etc.



14.4 Owners should be informed of any “related party transaction” that may significantly affect the current and or future financial position, the performance, the capacity, the opportunities and/or the risks of the organisation. Such disclosure should explain what the nature of the transactions is and how the potential conflicts of interest or other risks for the organisation are being avoided and/or mitigated.

15. RISK MANAGEMENT AND INTERNAL CONTROLS

15.1 The Board should be responsible for the governance of risk.

15.2 The Board should regularly review the organisation‟s risks, risk appetite and tolerance, and ensure that it has endeavoured to put in place measures to minimise or avert any identified risks. The Board should also regularly review the appropriateness of these measures.

15.2-CAMO.1: The Board should ensure that the organisation has suitable systems of internal controls and a risk management policy and process.

15.3 The Board of an organisation that relies heavily on IT (computer) Systems should ensure that appropriate back-up measures are adopted and that measures are put in place to safeguard all information stored by the organisation.



16. ETHICS

Organisations should:

16.1 Ensure that they act ethically.

16.1-CAMO.1 CAMOs should adopt transparent procedures to ensure honest and ethical fund-raising as well as appropriate use of funds, in accordance with the causes for which the funds are raised. Fund raising activities should also adhere to all relevant legislation.

Comments: 16.1- CAMO.1-C1 CAMOs are to have clearly documented

policies and procedures on raising of capital and funds.

16.1- CAMO.1-C2 The use of a commercial third party fund-raiser (if any), its rationale and the detailed arrangements shall be disclosed to and formally approved by the Board. If the organisation is employing third party fundraisers, this should be made known to the donor.

16.1- CAMO.1-C3 The intended purpose of the fundraising and the use of the donated funds should also be made known to donors.

16.2 Consider developing a Code of Ethics aimed at fostering an ethical culture within their organisation. Where adopted, a Code of Ethics should: 16.2.1 Commit the organisation to the

highest standards of behaviour; 16.2.2 Be developed with the full

participation of all parties expected to abide by it;

16.2.3 Receive total commitment from the Board and the Chief Executive Officer of the organisation;

16.2.4 Be sufficiently detailed as to give a clear guide to the expected standards of behaviour of all employees.

16.3 Allow African “umunthu” values to thrive within the ethical framework of the organisation. Relationships within the organisation and with its stakeholders should therefore also be guided by the following concepts: thoroughly valuing others and in doing so valuing ourselves, cooperation, kinship and belonging within the community.



17. GOOD CITIZENSHIP

17.1 An organisation as well as being an economic entity is also a citizen of Malawi and as such has a moral and social standing within Malawian society, with all the responsibilities attached to that status. As such, when making decisions, an organisation should consider the impact of its decisions on its stakeholders (both internal and external), the environment and society as a whole.

17.1-CAMO.1 As a good corporate citizen in Malawi, CAMOs should regularly reflect on their social, economic and environmental impact and, whenever appropriate, update and communicate their policy in these matters.

17.1-CAMO.2 In their decision making, CAMOs should

consider key stakeholders‟ views.

17.1-CAMO.3 In addition to the general meeting, CAMOs should, wherever possible, conduct forums, social activities and/or other initiatives to encourage participation from members.

17.1-CAMO.4 CAMOs, where appropriate, should develop a member / client service delivery charter, outlining its standards for service delivery and operational performance and its responsibilities towards members, clients and other stakeholders.

17.1-CAMO.5 CAMOs shall develop a high degree of responsiveness in order to offer need-based, relevant and timely products and services in line with evolving needs of its membership and stakeholders.

17.1-CAMO.6 CAMOs may consider supporting leadership and capacity development with a focus on potential youth, gender equality and/or empowerment of members and/or other disadvantaged individuals within the communities where they operate.

17.1-CAMO.7 In pursuing their own purpose and/or their wider social responsibilities, CAMOs are encouraged to develop coordination, exchange of information & experience, win-win arrangements and/or other types of partnerships with other organisations in Malawi and internationally.

17.1-CAMO.8 CAMOs should, wherever possible, recognize members who contribute their talents and/or resources to the organisation and/or the community at large.



18. SUSTAINABILITY

18.1 Organisations should conduct their operations in a manner that meets existing needs without compromising the ability of future generations to meet their needs. It means having regard to the impact that the organisations‟ operations have on the environment, economic and social life of the community in which it operates. This should include its supply chain i.e. access to the resources and raw materials it needs to carry out its operations.

18.2 Organisations should report on how they have both positively and negatively impacted on the environment and on the economic and social life of the community in which they operate and how they believe they can improve the positive and eradicate or lessen the negative aspects in the coming year.

19. EXTERNAL COMMUNICATIONS

19.1 Society now demands greater transparency, accountability and responsibility from organisations. Organisations should consider making regular, timely, balanced and understandable statements about their activities, performance and future prospects.

19.1-CAMO.1 The Board is, on a yearly basis, responsible for presenting a balanced assessment of the organisation‟s performance, position and prospects. This extends to any public reports, reports to members and regulators (if required).


19.1-CAMO.2 CAMOs and their fund raisers shall be transparent and accountable to their members and donors for the funds raised and/or donations received.

Comments: 19.1- CAMO.2-C1 The Board should ensure that the

organisation has a clearly written policy on the application of capital and funds raised. Funds raised should be properly accounted for, in a timely manner. The co-operative shall keep separate accounts for individual fund-raising exercises.

19.1- CAMO.2-C2 Funds raised should be used in line with members’ and/or donors’ intent. The CAMO should inform and obtain the consent of its members / donors if they intend to use raised funds for alternative purposes.

19.2 Organisations should, where it is in their best interests, disclose publicly their reasons for making decisions which may appear compromised due to a perceived conflict of interest of the members making the decision.

20. INTEGRATED REPORTING AND AUDITING

20.1 Organisations should produce financial statements appropriate to them. To the extent possible the financial statements should be prepared in accordance with nationally recognised standards.

20.1-CAMO.1 CAMOs shall produce their financial statements according to the legal requirements and nationally recognized standards.

20.2 Where there is a requirement for auditing the financial statements, the audit should be done by an independent external auditor, who is provided with the opportunity to raise matters directly with the Board.

20.3 Sustainability reporting and disclosure should be integrated with the organisation‟s financial reporting.

20.4 The financial statements of the organisation should also comply with any obligation to disclose „related party transactions”, as is, for their type of organisation, specified in laws, regulations, directives or guidelines.

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