About Model Code of Conduct
The Confederation of Indian Industry (CII) considers it to be critical for the development and growth of our country - ethical practices in our business dealings.
Five years back, the CII Committee on Integrity and Transparency in Governance came out with a comprehensive Code of Business Ethics which was recommended to members on a voluntary basis.
The Committee this year under my Chairmanship felt the need for a simplified code, which all members would feel comfortable adopting, including the many SMEs in our membership. This simplified Code is attached, and contains the basic principles of doing business ethically. You will note that the emphasis on ethical business practices being a journey, and the adoption of policies and procedures intended to achieve ethical business practices. We see the voluntary adoption of this simplified code as an initial step in this process. We will also shortly launch a course that enables companies to build competence in compliance. And we will shortly propose a code on Good Corporate Citizenship, for those leading organisations that seek to go beyond compliance to systematically contributing to national development goals.
A separate focus is to keep working with the government to remove discretion in decision-making and ambiguity in notifications such that opportunity for ethical conflict is minimised.
We recognise that all our members are at different points in this journey, and that each company will proceed down this road at its own pace. From CII, we seek to enable progress that is as rapid and collective as possible. To inspire each other, we will list companies that have adopted the Code on our website. Members could confirm their adoption of the CII Model Code of Conduct by using the link
Model of Code Of Conduct
MODEL CODE OF CONDUCT
Ethical Business Practices
Ethical Business Practices are a Journey. All Member companies should adopt policies and procedures intended to achieve the following in its business practices:
Accurate Books and Record
The Company will maintain accurate accounts and records which reflect the true and
fair picture of the company's affairs in compliance with accepted accounting principles
and standards for financial reporting
Bribery and Corruption
The Company will prohibit bribery in any form in all its business dealings and will
maintain strong controls to prevent and detect improper payments.
The Company shall comply with anti-money laundering and terrorist financing laws
and report unaccounted cash or suspicious transactions.
Fair and Equitable Treatment
The Company shall not unfairly discriminate on the basis of race, caste, religion, color,
ancestry, marital status, gender, sexual orientation, age, nationality, ethnic origin or
disability.
The Company shall not tolerate harassment, whether sexual, verbal, physical or
psychological against any employee.
Health and Safety
The Company shall provide a safe, clean and healthy work environment.
Quality of Goods and Services
The Company shall strive to ensure that its products and services meet the legally
required safety and quality standards.
Environment and Society
The Company shall strive to be a good corporate citizen by promoting social welfare
activities, promoting sustainability and minimizing the adverse impact of company
operations on the environment.
Business Courtesies - Industry Guidelines
Corruption, bribery and improper payments continue to be high compliance risks in the country. Trends have emerged which show that bribery and improper payments have taken various forms other than a simple exchange of cash. In India, the Prevention of Corruption Act (POCA), 1988 expressly prohibits government officials to accept remuneration, financial or non-financial advantage of any kind other than the legal remuneration for the services rendered by them. Further, the Prevention of Corruption Amendment Bill, 2013, makes giving a bribe a specific offence.
In the private sector also, companies want to ensure that business decisions are made in an objective, unbiased manner, without any apparent or perceived conflict of interest or with a view to obtain improper business advantage.
However, interactions in the usual course of business are inevitable and may require basic courtesies to be provided. These are relevant also in the cultural context in India, where basic courtesies and giving of gifts to business partners is seen as a sign of respect and maybe customary.
Various government, public and private sector enterprises have their own codes of conduct for their employees.
In absence of a common guidance on what business courtesies can be provided during business interactions, CII seeks to provide industry guidelines that CII member companies can consider to assist them to understand the business courtesies and create a reference for their organizations and employees.
The guidelines herein can be adopted by companies as follows:
- For companies which currently do not have any specific guidelines on business courtesies, may adopt these guidelines and/or modify certain industry specific practices for their operations
- For companies with a similar existing policies related to business courtesies, these guidelines can act as reference document. Such organizations may ensure that they have also implemented appropriate monitoring and tracking mechanisms of such courtesies as per guidance set forth in the document
Guidelines
A. Need for an industry wide guidance
Corruption, bribery and improper payments continue to be high compliance risks in the country. Trends have emerged which show that bribery and improper payments have taken various forms other than a simple exchange of cash. In India, the Prevention of Corruption Act (POCA), 1988 expressly prohibits government officials to accept remuneration, financial or non-financial advantage of any kind other than the legal remuneration for the services rendered by them. Further, the Prevention of Corruption Amendment Bill, 2013, makes giving a bribe a specific offence.
In the private sector also, companies want to ensure that business decisions are made in an objective, unbiased manner, without any apparent or perceived conflict of interest or with a view to obtain improper business advantage.
However, interactions in the usual course of business are inevitable and may require basic courtesies to be provided. These are relevant also in the cultural context in India, where basic courtesies and giving of gifts to business partners is seen as a sign of respect and maybe customary.
Various government, public and private sector enterprises have their own codes of conduct for their employees. In absence of a common guidance on what business courtesies can be provided during business interactions, CII seeks to provide industry guidelines that CII member companies can consider to assist them to understand the business courtesies and create a reference for their organizations and employees.
B. Common areas of interactions
Some of the common areas of interaction, where business courtesies are given or expected to be given are:
- Customer meetings or visits held at Company site or outside venue
- Inspection, audits, on-site investigations by government agencies
- Pre and ongoing project discussions (e.g. technical discussions)
- Visits to manufacturing facilities by government officials or regulator
- Interactions during festive season or occasions like weddings, etc
- Company sponsored training or visits to Company facilities
C. Definition of "Business Courtesy"
A business courtesy is any gift given or hospitality extended with the intent of building and maintaining relationships with commercial counterparts or as a cultural expectation or in the course of etiquette in the ordinary course of business. Business courtesies are sometimes referred to as "gratuities."
D. The "Reasonability" Test of business courtesies
In general, business courtesies:
- Must not be given in exchange for any favor or business advantage or for any favorable treatment;
- Must be infrequent and reasonable in amount, under the concerned circumstances.
- Permitted under the rules of the recipient's employer
- Permitted under the giver's and recipient's internal policies
- Should not involve adult entertainment
- Should not be monetary in nature (cash or equivalents e.g. cheques, loans, shares etc.)
- Should be properly recorded/ expensed in Company's books and records.
Must be recorded accurately in the books of the Company to track for subsequent financial and compliance audit purposes
- Timing and context surrounding the business courtesy must be weighed in order to assess, whether any particular courtesy could objectively be perceived to be a bribe.
- Should be avoided in circumstances wherein a bid, deal, approval or decision that involves, impacts or benefits the company is pending with a customer/regulator/government agency and the recipient is involved in the decision making process
Broad Guidance for common types of Business courtesies (not exhaustive, but indicative
1. Gifts & Entertainment:
- Gifts should be of nominal value
- Gifts to be in nature of consumables e.g. flowers, food, fruits etc.
- Gifts should be preferably company monogrammed.
- Gifts should not include cash or cash equivalents, adult entertainment, jewelry, ornaments or art work etc.
- Gifts to family members should be avoided
- For festive occasions or weddings, gifts of nominal value, such as, flower bouquets, box of sweets can be given
2. Transportation:
- Casual lift, ground transportation to and from the company office/facility can be provided in the ordinary course of business. These should be limited to customers/government officials or regulators for this specific purpose.
- Should not be provided to their friends and/or family members
- Mode of transportation should be reasonable and not extravagant. Air fare/Rail fare should be avoided unless mandatory per contractual arrangement
3. Meals/Snacks/Refreshments:
- Meals must only be offered as a casual social hospitality
- Casual meals like lunch or tea and light refreshments during business meetings can be provided at company premises
- Lavish or extravagant meals, meals at venues that do not have a positive reputation or are associates with illegitimate activities should be avoided
E. Awareness and Monitoring mechanisms
Companies are advised to form written policies, regarding extending as well as receiving of business courtesies. Company should ensure ongoing education and awareness of the policy to employees at all levels, as well as targeted communication with employees in functions, where probability of such interactions is high, for example, sales, sourcing and commercial. Company should set up a process to track business courtesies which can reflect the purpose of interactions, actual gift and/or courtesy provided and government officials to whom the courtesies were extended. This will enable an effective management oversight and auditability. Companies should conduct periodic internal audits to ensure that the policies/guidelines are followed and necessary approvals are obtained.