Ethics IN Corporate Governance PDF

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Summary

DEVINE COMMAND THEORY It is based on the idea that no human being can decide what is morally correct.  The power to decide on such should lie with someone independent of humans like GOD.  What GOD commands is deemed ethical and what GOD deems forbidden is immoral.  Is the act good/moral/ethical ...

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DEVINE COMMAND THEORY     

It is based on the idea that no human being can decide what is morally correct. The power to decide on such should lie with someone independent of humans like GOD. What GOD commands is deemed ethical and what GOD deems forbidden is immoral. Is the act good/moral/ethical because GOD commands it? And if so an act that GOD is yet to command nor forbid cannot be considered ethical or unethical. Does GOD command the act because it is good/moral or forbid it because it is bad? If so, then the morality of an action would seem to in true essence independent of GOD thus contradicting the opinion that morality rests with GOD.

SOCIAL RELATIVISM THEORY   

It is based off the idea that what is moral or immoral varies from culture to culture. The cultural customs are the only basis for morality and these moral standards apply only to people of that culture. The opposing argument is that there is some sort of universal consensus about morality and the cultural diversities account for the different ways we try to reach that moral consensus. For instance, every culture on earth agrees on honouring the dead, how each culture goes about this has nothing to do with morality.

CONSEQUENCIALISM THEORY   

The theory is based off the idea that morality depends on what the consequences of that action will be. Should the probable consequences of an action be just/good then that action is morally correct. Should the probable consequences of an action be negative/bad then that action is immoral.

KENTIANISM THEORY     

The idea of the Kentian theory is to not see people as merely tools to use to get to an end. People should rather be treated as the end and be objectified. Superior value should be placed on human dignity over any personal vendetta one wants use someone else to get to. Our actions or rather source of rules we follow should be ones that we would want as universal laws. Do unto others as you might have them do unto you.

UBUNTU THEORY    

I AM BECAUSE YOU ARE. The community is of greater importance than the individual. As such the individual should always consider how an action will affect the community instead of just thinking about themselves. Does this mean one cannot pursue their own personal interests? In my view I think not, I believe what the theory is trying to stress is that people should be united in a sense that they would rather go out their way to help a fellow human being rather than harming that same human being. This is the idea that what an individual does affects the community in the same way that

the actions of the community affect the individual. So, it is in both parties’ interests to help each other. Utilitarian theory application   

The theory judges the morality of action based on the amount of happiness it brings to the affected parties. It is important to consider all the facts of the scenario at hand and then assess how these would affect people. The assessment is essentially evaluating whether the action would bring more happiness or more pain to the most people.

Effective control Strategy, Performance, and Reporting    

Set out in principle 4 of King IV A company should have an overall strategy that will bring about good performance (profits) in a sustainable manner. The company’s strategy will also come with its risks and opportunities of which the governing body needs to be cognisant. The mitigation of these risks or taking advantage of these opportunities should not comprise the sustainable development part of the strategy.

Structure and functionality of the governing body  

Set out in principles 5-10 of the King IV report. Principle 7: - The GB should comprise a good mix of experience, diversity, independence, and knowledge. - The GB should comprise a majority of non-executive directors, most of whom should be independent. The GB should have the CEO and at least one more executive director in the GB.

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Committee Audit Risk Nominations Remuneration Social & Ethics Succession plan for the chairman position.

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Committees (principle 8) Audit  

Members should all have adequate financial literacy. All members should be non-executive and independent.

Nominations

Can chair be a member? No Yes, can even be chair Yes, can even chair it Yes, but cannot chair it Yes, but cannot chair it

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All members should be non-executive with the majority being independent.

Risk  

Should it occur that the risk and audit committee are separate, the GB should consider allowing some members to have a joint member on both committees for effective control. Should comprise of a good mix of executive and non-executive members majority of which should be non-executive.

Remuneration  

Should comprise of executive directors most of whom should be independent of the organisation. Should be chaired by an independent non-executive director.

Ethics and Social  

Might be mandatory to establish for some companies. Should comprise both executive and non-executive directors most of whom should be nonexecutive....