IAC 2014 Annual Conference

Corporate governance & ethics

Eve C Gadzikwa Director General, SAZ Chairman, IoDZ ZSE, Chairman

Presentation Structure

    General Principles Defining corporate governance Defining ethics Conclusion

PRINCIPLES • • • • What causes our downfall in business is usually failure of ethics, governance, customer care, lack of care for the environment and unprofessionalism in the way we perform our roles, responsibilities, duties and functions. It is not so much what we do but how we do it. How we perform our roles must be based on a set of business ethics, morality and professionalism principles Our choices determine our behaviours

Common threads CG and Ethics have the following common characteristics; • Both are developed over time • Have intrinsic value • Can cause irreparable damage

What is corporate governance

“A system by which companies are directed, controlled and held to account Boards of directors are responsible for the governance of their companies. The shareholders’ role is to appoint directors and auditors….” [Sir Adrian Cadbury 1992]

What is corporate governance

“Good corporate governance is essentially about effective, responsible leadership. Responsible leadership is characterised by ethical values of responsibility, accountability, fairness and transparency.” [King III, 2009]

Cont.

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What is the Aim of Corporate Governance It is “concerned with holding the balance between economic and social goals. …the aim is to align as nearly as possible, the interest of the individuals, corporations and society,” [Sir Adrian Cadbury]

Corporate governance rationale

“Good corporate governance helps (organizations) operate more efficiently, improve access to (funding), mitigate risk and safeguard against mismanagement.” IFC

Elements of good corporate governance     Good board practices Effective controls Transparent disclosure Board commitment

Pillars of corporate governance

    Accountability- for decisions and action Fairness- treat all shareholders the same Transparency- timely and accurate disclosure on all material matters and decisions Responsibility- 3 Ps for long-term sustainability

Agency And Stewardship 12

SOURCES OF CORPORATE GOVERNANCE

LAW

For this presentation : • • • • The New Zimbabwe Constitution Companies Act (“Cap 24:03”) Compliance with the law is compulsory Corporate governance premised on the law operates on a “comply or else” basis.

•

CODES

Most developed countries and those in emerging markets have adopted best practice codes, e.g. Combined Code in the UK, Cromme Code in Germany and the King 1, 2 & 3 Codes in South Africa, and • In Zimbabwe: – Corporate Governance Framework for State Enterprises & Parastatals (CGF for SEPS), November 2010 – The National Code on Corporate Governance Zimbabwe (“Zimcode”) – awaiting launch.

– CGF for SEPs – a derivative of the Zimcode.

Ethics

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UBUNTHU • • • “I am because you are and you are because we are” =UBUNTHU.

A person with integrity says “I will do exactly what I say I will do, when I say I will do it. If I change my mind, I will tell you well in advance so you will not be harmed by my actions”.

ETHICAL DILEMMA

•

On one hand the shareholder who provides risk capital naturally needs to look after the investment by participating in managing and directing the business resulting in power being concentrated in one person or small group of persons.

•

Power therefore needs to be balanced among shareholders, managers and Boards of Directors through an appropriate scheme of checks and balances.

Acting ethically entails: • • Responsible deliberation and action, i.e. meeting our own needs and requirements in ways which do not compromise the needs and requirements of others-the triple bottom line as in three Ps-profit, people and planet. see King III Code.

Obeying the law, keeping one’s promises, telling the truth, and being true to one’s values.

DISCLOSURE ON REMUNERATION

Dilemma:

Every company should provide clear disclosure of it remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's Annual Report.

CONCLUSION

a.

“The difference between moral and immoral leaders is as

sharp as the contrast between light and darkness, between

heaven and hell” by Parker Palmer.

b.

As a corporate leader you have a choice to make, your behavior in terms of your ethics and CG will determine your true value