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'Ethics' are the principles governing an individual or a group.They are an illustration of what is good or bad. And so business ethics refers to applying daily morals and ethical norms to the organization. Business ethics are those principles and standards which determine appropriate and decent conduct and behavior in business organizations. The conceptualization of business ethics was initiated in the 1960s as people were acquainted with the fact that their businesses depended on customers because of a rising consumer-based society. They showed concern for the environment, social causes, and corporate responsibilities. The focus on "social issues" was a hallmark of the decade. Therefore, we can state that business ethics is cultured beyond just a moral code of right and wrong, emphasizing the legal aspects too.

It is based on the notion that corporations are responsible to society for their acts. Business ethics is the conduct bound by laws, morality, and discipline which must be followed in the corporate and commercial world. It studies the appropriate business policies and practices, including potentially controversial subjects such as corporate governance and insider trading.

There are few fundamental ethical principles in the corporate and commercial world that

businesses can follow to gain public approval, which are

I. Integrity is the golden characteristic in any field of work

II. Importance of having an objective for achieving the goal

III. Every individual or group involved in the business must maintain confidentiality.

IV. Finance and accounting professionals need to update their professional skills from time to time to provide competent professional services to their clients.

V. Employees and managerial persons must update their professional skills from time to

time to provide competent professional services to their clients.

To establish ethics, various acts have been introduced to regulate the actions of the employees through which it is made sure that a healthy and peaceful environment and work culture persists, the employees do not break the confidentiality rules by disclosing such facts, powers are not concentrated in the hands of one, and there exists a healthy relationship between the customers and employees. Thus, society derives benefits, and the business prospers when businesses are ethically driven.

What Ethics should a business follow?


The concept of Corporate Social Responsibility arose when there was an increase in unethical approaches of individuals and groups towards the customers and corporate frauds started taking place in large numbers emphasizing corporate criminal liability.

More prominently, corporate social Responsibility focuses on the legal and economic aspects.

Economic and legal responsibilities incorporate ethical norms about fairness and justice. Ethical responsibilities embody those activities and practices expected or prohibited by societal members even though they are not codified into law. It focuses on the standards, norms, or expectations reflecting concerns for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders' moral rights. In a sense, changing ethics or values precede the establishment of law because they are the driving force behind the creation of laws as well as regulations.


However, Corporate Governance is another aspect of building a safe and ethical platform in

the business world. It is the formal system of accountability and control for ethical and socially responsible organizational decisions wherein the use of resources and accountability displays the competency of the management. Good corporate governance incorporates aligned and apt decisions and actions in the interest of the company, stakeholders, and investors. Few characteristics portraying good corporate governance are:

(i) Participatory

(ii) Consensus oriented

(iii) Accountable

(iv) Transparent

(v) Responsive

(vi) Effective and efficient

(vii) Equitable and inclusive

(viii) Follow the rule of law.

In India, Companies (Corporate

Social Responsibility Policy) Rules 2014 lays down rules regarding CSR.


OECD stands for Organisation for Economic Cooperation and Development. The guidelines

Which were revised in 2000 are recommendations covering nine areas of business conduct

addressed by Governments to multinational enterprises.

The guidelines cover business ethics on various issues, including Employment, Human rights, Environment, Information disclosures, Combating bribery, Consumer interests, Science and technology, Competition and Taxation.3 Also, the Rights of shareholders, the equitable treatment of shareholders, Role of stakeholders in corporate management governance, Disclosure and transparency and Responsibility of the Board.


Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2018- this made it the businesses mandatory to disclose the financial statements in offer documents for initial public offerings by reducing the volume of disclosures and focusing on what is considered material and relevant to an investor in making an investment decision.

This Act regulates the offers with conditions and also gives guidelines to the issuers as to how it needs to be done.


For establishing good management and maintaining a healthy relationship between the owner and customer, various committees were formulated to give recommendations for better functioning of the corporate and commercial world. Different committees have given suggestions regarding maintaining ethics in business.

Some of them are:-

I) Kotak Mahindra Committee- there were many recommendations given by them. 10

The committee gave mandatory recommendations. These included Gender Diversity,

Minimum Number of Board Meetings, Approval for Non-executive Directors on

Attaining a Certain Age, Separation of the Roles of Non-executive Chairperson &

Managing Director/CEO, Minimum Compensation to Independent Directors,

Minimum Compensation to Independent Directors, Minimum No. of Directors on

Board, Role of Company Secretary.

II) J.J Irani Committee- This committee made recommendations on Independent directors,

Pyramidal Structure, Power to Shareholders, Single person company, Self-regulation,

Stringent Penalties, Accounts and Audits, Composition and role of the Board of

directors, Institution of independent directors, Board committees, and Enhanced

monitoring of group entities

III) Naresh Chandra Committee- The impo