Corporate governance refers to the set of practices, structures, and processes that a company uses to manage risk and ensure accountability. Its aim is to provide a blueprint of long-term success, while reducing the possibility of loss of money, waste, risks and corruption.
Transparence, fairness and diversity are the core principles of corporate governance. These principles stem from the belief that all stakeholders, including shareholders and employees should be treated fairly and equally by the management and board. This includes establishing, maintaining and creating a formal, transparent process to choose the key executive and board members their performance. It is also about ensuring that the compensation of key executives as well as the board is aligned with the long-term interests of the company and ensuring that they have the proper supervision to prevent conflicts of interest.
Transparency refers to being transparent and willing to share accurate information with all stakeholders including shareholders. This includes the willingness of an organization to share positive and negative information. It also involves publishing this information on regular basis and making it accessible.
Depending on the type of company the various boards and comittees can play a part in corporate government. It is the board’s responsibility to establish and supervise the formal governance system. This includes appointing the lead or presiding director if the board structure is one where the chair and CEO are combined. The director is a director who is independent of the chair and be appointed for a time period determined by the board. The director in charge must also implement governance policies and procedures that are compatible with the regulatory, legal, and cultural environment of the business.
