Corporate Governance – Key Elements of Good Corporate Governance

Governance of a company is the relationship between shareholders the board of directors, shareholders and management. This framework aligns the interests of all parties and helps the company succeed in its long-term strategies. Transparency, accountability, and responsibility are the fundamentals of a sound corporate governance. They can help build trust among customers, investors and employees, and help to create a healthy and positive culture.

A good board of director is comprised of insiders (major investors founders, founders and executives) and independent directors with no connection to the business. Directors who are outside the company bring new perspective and expertise which can prove beneficial in making business decisions. They also act as a sounding board for the insiders, providing them with additional guidance and support.

The most important aspect of corporate governance is fairness. This means that the company treats all vendors, shareholders, and employees equally. This is achieved by the disclosures made by the company such as major decisions made along with financial performance and results of meetings.

A good board should have a solid method for reviewing its effectiveness and the effectiveness of committees on an ongoing basis. Surveys or self-evaluations can help achieve this. The board should review the CEO and the senior management on a frequent basis and, when necessary be a part of their evaluations. The board should also set guidelines for its committees, members and the top management. This will ensure that the company’s leaders and members are accountable for any actions they undertake.

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