To ensure effective everyday governance, the Board must define its expectations of its directors and the rules to follow. These rules are gathered in a Code of conduct and ethics and should promote the integrity of directors, prevent errors and ensure its implementation. This Code also helps to guide directors in performing their role for good governance.
Companies whatever the size or the purpose will often be confronted with ethical or legal problems that involves values, obligations and responsibilities. The rules specified in a Code of conduct and ethics establish the company’s values, principles and practices. It guides all Board members by requiring the separation personal needs from those of the company and prevents misconduct.
Other topics may be included such as confidentiality, honesty and fairness to stakeholders (customers, suppliers, shareholders…) but also the respect of various legal standards and technologies such as a board portal.
Finally, the code provides control mechanisms of its rules such as the creation of a committee to oversee the implementation of the rules of the Code.
Establishing a Code of conduct isn’t just a bunch of rules to discourage directors from ambiguities that they might encounter in exercising their responsibilities. The Code should contribute to create value to the company and its governance. For this to happen, all directors and employees must be aware about the Code and respect it in all times and places. The Code can also by useful for a company in times of change when the law may be vague or uncertain.
Creating a code starts by understanding the roles and responsibilities of the Board members and implementing the company’s core values at the Boards level. The Code must be the outcome of active board participation where the roles, responsibilities, expectations and values are discussed and voted. For such discussions and debates, why not use a Board portal where all members can participate, share their arguments and information, by a secure way online.
To conclude, each Code is unique to each company but they all include core values such as honesty, fairness and confidentiality. The Code must also evolve following the changes of the company and its environment. The Board must regularly review and adjust it.