A well-defined corporate governance system promotes fairness and transparency and helps your business build a strong relationship with shareholders and the community. It helps define the roles and responsibilities of each, as well as accountability and ensures compliance with the law and regulations. It also helps to ensure the long-term development of a company by aligning shareholder and management interests.
Corporate governance is a complicated concept that is dependent on the objectives and the culture of your company. Some of the most important concepts to be aware of are:
Unitary Board https://boardroomdirect.blog/the-most-useful-checklist-for-board-meetings/ Structure
In this corporate governance system the board of directors is responsible for making decisions and oversight of the company’s activities. The board comprises non-executive and executive directors. This is the most common structure in mid-sized and small companies.
Continental Model
Continental’s two-tiered model has a two-tiered structure that gives control to a management board, and a supervisory panel. The management board consists of insiders from the business like executives and managers. The supervisory board is made up of outsiders, like bankers and union representatives who have stakes in the company.
Stakeholder-Oriented governance
This type of governance structure, unlike traditional structures that place a high value on shareholder interests, is a holistic approach that considers all stakeholders including employees, vendors and customers, as well as the community. It encourages boards and committees to develop effective engagement programs and to adopt policies that reflect broader environmental and social concerns. The board must be transparent in its decision-making process and make it available to all stakeholders. It is also important to ensure that there are clear lines of communication between the management, the board and shareholders.
