In short
A code of conduct is a written set of rules on how employees, managers and directors must behave, covering areas such as conflicts of interest, gifts, bribery, use of company assets, confidentiality and respectful behaviour. Listed companies must have a code for board members and senior management under Regulation 17(5) of SEBI's Listing Regulations, with annual affirmation of compliance. Enforcing any code needs a clear way to report breaches, a consistent investigation process and recorded corrective action.
What is a code of conduct?
A code of conduct (or code of ethics) sets out the standards of behaviour an organisation expects from everyone who works for it. It turns values into specific rules: what to do when a supplier offers a gift, how to declare a conflict of interest, how to treat confidential information.
The code usually sits above more specific policies such as POSH, anti-bribery, IT security and whistleblower policies, and points people to them.
Is a code of conduct legally required in India?
For most companies, a code of conduct is good practice rather than a legal mandate. Two important exceptions apply:
- Listed companies: Regulation 17(5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires a code of conduct for all members of the board and senior management, published on the website. Under Regulation 26(3), they must affirm compliance every year, and the CEO's declaration appears in the annual report.
- Independent directors: Schedule IV of the Companies Act, 2013 sets out a code for independent directors.
Beyond that, standing orders and service rules define misconduct for workers, and a clear code helps show that a company took "adequate procedures" to prevent bribery and fraud.
What should a code of conduct cover?
- Conflicts of interest: outside jobs, family relationships, investments in suppliers, and how to declare them
- Gifts, hospitality and entertainment: what's acceptable and what must be declared or refused
- Bribery and corruption: zero tolerance for bribes and facilitation payments
- Use of company assets and data: equipment, funds, confidential information and personal data
- Respect at work: harassment, discrimination and bullying, with a link to the POSH policy
- Fair dealing with customers, suppliers and competitors
- Accurate records and financial reporting
- Insider trading rules for listed companies
- How to report a breach, including an anonymous option, and protection from retaliation
- Consequences of violating the code
How to handle a code of conduct breach
- Report: the concern is raised through a known channel, named or anonymously.
- Ethics review: a central ethics committee checks whether it's a code matter or belongs elsewhere (POSH, grievance, whistleblower).
- Investigate: gather evidence and statements, with investigators who have no conflict of interest.
- Decide: record findings and the decision, with reasons.
- Corrective action: discipline, training, process changes or restitution, with a deadline and an owner.
- Close and report: confirm the corrective action happened, and report trends to leadership or the board.
Consistency is everything. If senior people are treated more leniently than junior staff for the same breach, the code loses credibility, and that inconsistency can be used against you in an employment dispute.
How TrustToSpeak enforces your code of conduct
Breaches reported, investigated and closed
- Named or anonymous reporting from any phone, with private follow-up chat.
- One central ethics committee for consistent decisions across the organisation.
- Conflict-of-interest checks before investigators are assigned.
- A corrective-action stage with its own deadline, so actions are completed, not just decided.
- A complete, tamper-evident record for leadership, the board and auditors.
Frequently asked questions
Is a code of conduct mandatory for companies in India?
It's mandatory for the board and senior management of listed companies under SEBI's Listing Regulations, and the Companies Act has a code for independent directors. For other companies it isn't required by law, but it's standard practice and often required by customers and investors.
What is the difference between a code of conduct and a code of ethics?
The terms are often used interchangeably. A code of ethics tends to describe values and principles, while a code of conduct sets out specific rules of behaviour. Many organisations combine both in one document.
Who investigates code of conduct violations?
Usually an ethics committee or compliance team, with investigators chosen to avoid conflicts of interest. Serious financial matters may be escalated to the Audit Committee.
Should code of conduct reports be anonymous?
Offering an anonymous option significantly increases reporting. A good system lets investigators ask anonymous reporters follow-up questions without revealing who they are.
How often should employees acknowledge the code of conduct?
Typically when joining and then annually. For listed companies, board members and senior management must affirm compliance every year.
This guide explains the law in general terms and is not legal advice. Laws, rules and state notifications change; check the current text and take advice from a qualified professional for your situation.