Primary Characteristics Of Good Governance

Question 1

Transparency

Answer 1

Allowing stakeholders to understand all mechanisms and processes involved

Question 2

Independence

Answer 2

Avoidance of any undue influence by interested stakeholders that may contaminate decisions

Question 3

Accountability

Answer 3

Means to be answerable for actions and deciduous. Lack of accountability leads to lack of confidence by stakeholders

Question 4

Fairness

Answer 4

Avoiding bias towards any particular entity or group

Question 5

Integrity

Answer 5

Is a way to measure how those involved in companies are accountable to those that are affected by their decisions. It is about doing business in an honest and truthful manner

Question 6

Discipline

Answer 6

3 aspects:

1.  self discipline: deals with a persons level of integrity and sound business judgement
2.  market discipline: investors are willing to pay a premium for companies that are perceived to be well governed
3. Regulatory discipline: there to reinforce self discipline and to promote high levels of integrity

Question 7

Promoting ethical and responsible business decisions

Answer 7

Companies should look at:
Clarifying standards of ethical behaviour for all stakeholders
Comply with all legal requirements
Have reasonable expectations if stakeholders

Question 8

Social issues

Answer 8

Concerned with fair treatment of society as a whole. Focus is on social equity and sustainable development

Question 9

Duties and responsibilities of directors

Answer 9

Act in good faith, honesty, skill, integrity

Question 10

Sustainability as part of the King Code

Answer 10

• key stakeholders should no longer focus on only the needs of the present but wldo the future needs of generations to come
• sustainable development measures the relationship between the elements of the Triple Bottom line (profit/economical, planet/environment, people/social)
• essentially means that once a company has engaged in a business activity, people need to be better off, the planet must not have degraded and the company’s economic position is strengthened

Question 11

The environment sustainability pillar

Answer 11

• refers to business activities that are concerned with the degradation of the environment
• measures both economic growth snd development
• companies must preserve environmental quality
• this can be done by considering the 4P’s of marketing:
  1. Product: business should consider using recyclable(reusable materials
  2. Processes: assess the activities of the business both internally and externally
  3. Practices: look at operational activities, organisational culture, waste disposal and effective use of energy
  4. Premises: assess the way in which buildings and surrounding are designed