What is a board code of conduct?

by Sean O'Neill on Mar 3, 2022

board code of conduct

All board members must understand the rules of being a board member and the conditions they need to meet to do the job effectively and ethically. This means having a written board code of conduct.

Having a code of conduct can provide numerous benefits for a company. A code of conduct serves to describe the ethical values of a business. The code of conduct plays an essential role within a company’s ethics and compliance program. An effective code will also set good intentions for leadership.

Why it’s important to have a code of conduct

  • A good code can accomplish many things, such as encouraging compliance with legal and regulatory matters and strengthening trust among stakeholders and the community. 
  • It can also be called a statement of values and reflects the organisation’s mission and values.
  • A code of conduct should guide sound decision-making and behaviour and summarise which priorities are essential to your organisation.
  • Since the board of directors helps set the organisation’s tone from the top, a good code of conduct can help foster a climate of ethical leadership.
  • By using a code of conduct, the organisation is setting out clearly to board members the acceptable behaviours, and by setting it out in writing, this will ensure that everyone is aware of it. 
  • There should be no doubt about fundamental conflicts of interest and confidentiality.

How to draw up a code of conduct

Code of Conduct

You can use the internet to find samples and templates for codes of conduct. When putting together a code of conduct, you can include the following:

  • A statement regarding the responsibilities of board members (specifying which governing documents they should be aware of and where these are kept)
  • A statement to the effect that members should act in the best interests of the organisation and that they should manage any conflicts of interest
  • It should mention that members need to respect confidentiality
  • That meetings should be attended on time
  • That decisions should be made jointly
  • That they should be respectful of roles and boundaries
  • It would help if you also considered any other behaviours which you might wish to discourage among board members

Special privileges and ethical standards

In addition, the use of expenses and special privileges could be considered and mentioned within the code of conduct.

As well as general rules, the code of conduct will also discuss the kinds of ethical standards to which the organisation will hold itself. It may also want to state its core values and how the code will be reviewed and enforced.

Lastly, a code of conduct may mention what to do about raising matters of concern or dealing with gifts. Since board members represent the company, they must comply with these rules.

In summary

So, we can see that a board code of conduct is a written statement that sets out the rules and conditions around being a board member, that each board member should be aware of, the company values, and how these terms may be enforced.

It is essential to ensure good corporate governance and that all members act ethically and give the best possible impression of the organisation to external stakeholders.

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Code of conduct

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