A clearly defined corporate governance framework helps to ensure fairness and transparency which helps your company build an enduring relationship with shareholders and other members of the community. It helps define roles, guarantees accountability, and allows for compliance with laws and regulation. It also aids in the company’s long-term growth plan by aligning shareholder interests with the interests of the board and management.
Corporate governance is a complicated concept that is based on the goals and culture of your company. The most important things to keep in mind are:
Unitary Board Structure
In this corporate governance model the board of directors is accountable to make decisions and supervise the company’s activities. The board is comprised of non-executive and executive directors. This type of structure is common in small and mid-sized companies.
Continental Model
Continental’s two-tiered structure is a structure that grants control to a management board, and an oversight panel. The management board is composed of employees from the company such as executives and managers. The supervisory board is made up of outsiders such as bankers who have stakes in the company.
Governance that is based on stakeholder engagement
In contrast to traditional structures which focus on shareholder interests, this kind of governance structure is designed to consider the needs of all stakeholders, including employees, customers vendors, and the community. It encourages boards of directors to adopt policies that address environmental and social concerns and to create relevant engagement programs. The board must be transparent and open about its decision-making process and share this information with all stakeholders. It is also important to ensure that there are clear lines of communication between management, the board and shareholders.