Amity Campus

Uttar Pradesh
India 201303
ASSIGNMENTS
PROGRAM: BFIA
SEMESTER-VI
Subject Name
Study COUNTRY
Roll Number (Reg. No.)
Student Name

BUSINESS ETHICS AND CORPORATE GOVERNANCE

SOMALIA LC
BFIA01512010-2013019
Mohamed Abdullahi Khalaf

INSTRUCTIONS
a) Students are required to submit all three assignment sets.
ASSIGNMENT
Assignment A
Assignment B
Assignment C

DETAILS
Five Subjective Questions
Three Subjective Questions + Case Study
Objective or one line Questions

MARKS
10
10
10

b)
c)
d)
e)

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

All assignments are to be completed as typed in word/pdf.
All questions are required to be attempted.
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

Page 2 of 18

BUSINESS ETHICS AND CORPORATE GOVERNANCE ASSIGNMENT- BECG

Part -A
Q: 1).
i.
ii.

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

Role of Company Secretary in ensuring risk management
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
Page 3 of 18

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
o
o
o
o

Board of Directors
Audit Committee
Subsidiary Companies
Disclosures
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;
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;
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.

Page 4 of 18

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
o

o
o
o
o

Sustainable development of all stakeholders to ensure growth of all individuals

associated with or effected by the enterprise on sustainable basis.
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.
Discharge of social responsibility to ensure that enterprise is acceptable to the
society in which it is functioning.
Application of best management practices to ensure excellence in functioning
of enterprise and optimum creation of wealth on sustainable basis.
Compliance of law in letter and spirit to ensure value enhancement for all
stakeholders guaranteed by the law for maintaining socio-economic balance.
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
o
o
o

Corporate Social Responsibility can be explained as under:

Corporate means organized business.
Social means dealing with the people/society including environment.
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
o

CSR means open and transparent business practices that are based on ethical
values and respect for employees, communities and the environment.
Corporate Social Responsibility is also called corporate citizenship or corporate
responsibility.

Page 5 of 18

Q: 5).
i.
ii.
iii.

(a) Describe briefly the following:

Barriers to visionary leadership.
Diligence report in banks.
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:

Page 6 of 18

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

Page 7 of 18

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)
ii)
o
o
o
o
iii)

What are the options? List the alternative courses of action available.
Consider the Consequences: Think carefully about the range of positive and
negative consequences associated with each of the different paths of action
available.
Who/What will be helped by what is done?
Who/What will be hurt?
What kinds of benefits and harms are involved and what are their relative
values?
What are the short-term and long-term implications?
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)

v)

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.
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
Page 8 of 18

(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.
Page 9 of 18

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;
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;
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.

Page 10 of 18

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?

Page 11 of 18

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.

Page 12 of 18

Part -C
Q: 1).
a)
b)
c)
d)

Which markets embody sense of justice?

Mixed markets
Liberal markets
Free markets ().
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)
b)
c)
d)

The absence of prohibitions against an activity

The authorization to do something to secure one's interests
The necessity of doing something required by authority
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)
b)
c)
d)
Q: 4).

Capitalism ().
Socialism
Utilitarianism
None of the above
The most influential economic institutions are designed to achieve?

Select correct option:

a)
b)
c)
d)
Q: 5).
a)
b)
c)
d)

Production of the goods

Distribution of the goods
Both a & b ().
None of the above
According to Aristotles view, how do we learn virtue?
By habit
By dialectical argument
By rational instruction
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)
b)
c)
d)

Kant ().
Mill
Bentham
Rawls
Page 13 of 18

Q: 7).
The concept that there are no relevant differences among people that
can justify unequal treatment is known as?
a)
b)
c)
d)

Egalitarianism ().
Utilitarianism
Socialism
None of the above

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

Instrumental goods
Instrumental values
Intrinsic goods
Intrinsic values ().

Q: 9).
a)
b)
c)
d)

Socialist view on distribution is best described as:

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

Q: 10).
a)
b)
c)
d)

Time bound ().

Accurate
Relevant
Complete

Q: 11).
a)
b)
c)
d)

Factual evidence has the following properties except?

In which country Lockes property rights have been influential?

England
Germany
America ().
Greek

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

Universalizability
Reversibility
Both a & b ().
None of the above

Q: 13).
a)
b)
c)
d)

Utilitarianism is unable to deal with following kind of moral issues?

Rights
Justice
Both a & b ().
None of the above
Page 14 of 18

Q: 14).
a)
b)
c)
d)

Individual
Organizational
Business system
All of the given ().

Q: 15).
a)
b)
c)
d)

Which theory includes means of production and selling one's labor?

Capitalist systems ().

Free economy system
Socialist system
None of the above

Q: 17).
a)
b)
c)
d)

Privacy is an example of?

Positive right
Basic need
Negative right ().
None of the above

Q: 16).
a)
b)
c)
d)

What are the levels on which ethical decision making occurs?

Equality of income and equality of opportunity is refers to:

Equality
Political equality
Economic equality ().
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)
b)
c)
d)

5 ().
4
3
2

Q: 19).
a)
b)
c)
d)

Adam Smith ().

Friedrich A. Hike
Murray Roth bard
Eric Mack

Q: 20).
a)
b)
c)
d)

Who presented the theory of absolute advantage?

Which of the following are components of free market systems?

Private property system

Voluntary exchange system
Both a & b ().
None of the above
Page 15 of 18

Q: 21).
a)
b)
c)
d)

it provides a formal frame of reference for values ().

it is required by the Board
it helps establish a good reputation
it gives employment to HR staff

Q: 22).
a)
b)
c)
d)

Ethics is about

Tangible and intangible benefits ().

only tangible benefits
only intangible benefits
something other than the above

Q: 27).
a)
b)
c)
d)

Ethics is about

improvement in standards
rewards and sanctions
reputation
All of the above ().

Q: 26).
a)
b)
c)
d)

It is the function of an ethics code to:

set standards
apply sanctions
neither
Both ().

Q: 25).
a)
b)
c)
d)

Cultural relativism means

One culture is quite as good as any other nominated culture

Culture is the only reference point for a values system
Activities should be interpreted in terms of one's own culture ().
One culture should be compared to another

Q: 24).
a)
b)
c)
d)

Despite cultural diversity it is important that we consider:

various principles of value

always follow the UN principles
give salience to the dominant national culture
follow only your own religious laws ().

Q: 23).
a)
b)
c)
d)

The most important reason for having a Code is that:

Ethics is the same as

legality
strict compliance
Conformance to agreed values ().
following black letter law
Page 16 of 18

Q: 28).
a)
b)
c)
d)

towards family
Towards agreed principles ().
towards the company
towards professional standards

Q: 29).
a)
b)
c)
d)

Ethics is concerned about

the means of achieving something

the ends to be achieved
neither of those
Both of those ().

Q: 30).
a)
b)
c)
d)

Where does ethical loyalty primarily lie?

Time frames are

Crucial part of ethics ().

irrelevant to ethics
of marginal interest to ethics
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)
b)
c)
d)

Excusing Conditions
Moral reasoning
Mitigating factors ().
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)
b)
c)
d)

Depletion of fossil fuels

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

Social Contract Orientation ().

Principled morality
conventional morality
progressing from selfish

Q: 34).
a)
b)
c)
d)

Which of the following is the type of moral standards?

Utilitarianism
Rights
Justice
All of the above ().
Page 17 of 18

Q: 35).
a)
b)
c)
d)

What are the levels on which ethical decision making occurs?

Individual
Organizational
Business system
All of the given ().

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

reasoning?
Select correct option:
a)
b)
c)
d)

Understanding of reasonable requirement of moral standard

Evidence or information regarding these moral standards
Both a & b ().
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)
b)
c)
d)

Absolute advantage
Comparative advantage ().
Resource efficiency
Natural advantage

Q: 38).
a)
b)
c)
d)

Which one of the following is not a basic type of moral standards?

Utilitarianism
Rights
Justice
Relevant ().

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

Kant ().
Mill
Bentham
Rawls

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

Courage
Temperance
Hope ().
Justice
Page 18 of 18