What Are the Types of Corporate Governance?
Corporate governance refers to the structures, practices and processes businesses employ to ensure accountability and manage risk. Its goal to provide a roadmap for long-term prosperity, while reducing the chance of loss of money, waste, risks and corruption.
Transparence, fairness, and diversity are the core principles of corporate governance. These principles are derived from the belief that all stakeholders including employees and shareholders, must be treated fairly and equally by the management and board. This means establishing, maintaining and the implementation of a formal, transparent procedure to choose, oversee and monitor important board members and executives’ performance. This also includes ensuring that the remuneration of key executives and the board is in line with the company’s long-term interests and ensuring that they have the proper supervision to avoid conflicts of interest.
Transparency means being transparent and willing to share accurate information with all stakeholders, including shareholders. This includes the ability of an organization to disclose positive and negative information. This includes sharing information frequently and making it available.
Depending on the type of company the various boards and comittees could play a role in corporate governance. It is the responsibility of the board to establish and supervise an official governance system. This includes appointing a lead or director who is the presiding one if the board structure is one in which the chair and CEO are combined. It must be independent of the chair, and have a set term. The director in charge must also implement the policies and procedures for governance that conform to the regulatory, legal and corporate culture of the company.