Corporate governance goes beyond just checking the boxes. They are a set of guidelines which help companies perform better and increase confidence with shareholders and other stakeholders. They serve as a roadmap for a company’s future, and they can be applied in small or large companies, public or private, and also to businesses of all types.
Good governance starts with people. Boards must pick the best candidates, design an efficient recruitment process, and ensure that their members are fully engaged in the task. They should also ensure that they have the right abilities to evaluate management practices.
Next, we need to create a system to minimize conflicts of interests. This includes setting guidelines for directors on the board, as well as the audit committee and the compensation committee, and having policies in place that promote transparency integrity, honesty and ethical practices.
In addition, boards need to have a clearly defined leadership structure and an independent lead director. This is true regardless of whether the board includes a separate or combined chair and CEO. A strong, independent presiding director can be key in establishing a culture that encourages co-operation and consensus within the boardroom.
Additionally, best practices in governance require boards to communicate with shareholders and other stakeholders on a regular basis and in a transparent manner. This includes publishing their financial reports as well as other information easily accessible. It also involves providing regular updates about the latest governance practices or developments and encouraging dialogue with the stakeholders.
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