governance in its subsidiaries that it is required to do for
its parent company. Again this can be evidenced in the
activities of some subsidiaries of multinational companies
in developing countries where enforcement of regulations
is weak. The proliferation of electronic communication
and news channels has meant that the reputations of
some of these multinational companies are coming
under threat as stakeholders perceive this behaviour
as unacceptable and are taking action to vent their
disapproval. Recently the South Africans introduced into
their corporate governance regulations the requirement
for all South African companies to practice the same
level of governance in their subsidiaries outside of South
African as they are required to do in South Africa.
The activities of subsidiaries are also leading to legal
liability for parent companies. For example, European and
US multinationals are struggling with the anti-bribery
legislation that applies not just in their home country but
also globally. How do they ensure that the same ethical
standards required in their home country are applied
wherever they operate.
Multinationals are learning the hard way, that a
requirement in a Code of Ethics or a contract of
employment to comply with laws and regulations is not
PHOTOGRAPHY BY ALEC AALTONEN
enough to make a successful organisation and protect that
company’s reputation. Multinational companies need to
create/develop cultures of good governance at all levels
within the organisation.
The million dollar question is how do they do this?
Good governance requires transparency, accountability,
responsibility and fairness. It also requires reputational
risk to be managed effectively. Multinationals who wish to
practice good governance should therefore have systems
and processes in place that ensure that:
1. Their organisation is open in all of their actions,
relationships, processes and decision-making. Disclosure
of information both within the organisation and
externally to stakeholders should be timely and accurate
on all material matters, including: the financial situation,
performance, ownership and corporate governance.
2. Global training and networking events are held where
they can get across to managers and staff what behaviours
are acceptable. These activities help individuals to realise
their value to the organisation as a whole, cross fertilize
ideas, consider lessons learned and build relationships
with their peers in other countries.
Stakeholder Expectations & Subsidiary Governance
Article by Alison Dillon Kibirige
Hawkamah issue02 56pages.indd 17
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9/19/13 10:07 AM