The term «corporate governance» refers to the rules, structures, customs and procedures that govern the way that people direct, manage and supervise a company. This means establishing a long-term business vision and documenting the processes and procedures that support it and regularly reviewing performance. Good corporate governance is founded on the principles of transparency and accountability.
This requires that a company provide all relevant information, including financial results, meeting outcomes and minutes, changes to normal operations, resignations and replacements for key board members and managers. This promotes honesty, trustworthiness, and a willingness to share both good as well as bad news to shareholders, staff and vendors, as well as the general public.
In general, the board’s responsibility is to establish a system that checks and checks and balances the shareholders to ensure they are treated fairly and management decisions are sound. This also includes overseeing the effectiveness of internal controls to ensure compliance with laws and regulations.
All over the world, various models of corporate governance exist. The most well-known is the Anglo-American model, which prioritizes the interests of shareholders in decision-making and management. This model is widely utilized by companies in a variety of countries However, other governance models are also available. Although they differ, all share a few similarities and focus on the same fundamentals.