A clearly established corporate governance structure can promote fairness and transparency, allowing your business to build strong relations with its shareholders as well as the local community. It helps establish roles and responsibilities, ensuring accountability and helps ensure compliance with the law and regulations. It also supports a company’s growth strategy over the long term by aligning the interests of shareholders with the interests of the board and management.
Corporate governance is a complicated concept that is based on the goals and culture of your company. Be aware of the following key concepts:
Unitary Board Structure
In this corporate governance system the board of directors is accountable for overseeing and making decisions about corporate activities. The board is comprised of non-executive and executive directors. This type of structure is typical in mid-sized to small businesses.
Continental Model
A two-tiered system, the Continental model gives control to a management board as well as a supervisory board. The management board is comprised of insiders from the business like managers and executives. The supervisory board comprises outsiders, such as bankers and union representatives with stakes in a company.
Stakeholder-Oriented Governance
This type of governance structure is different from traditional structures that https://boardroomdirect.blog/maximizing-deal-success-the-strategic-benefits-of-using-m-a-vdrs/ focus on shareholder interests, is a holistic approach that considers all stakeholders, including employees, vendors and customers as well as the community. It encourages boards and committees to develop effective engagement programs and to adopt policies that reflect broader environmental and social issues. The board must be transparent and open regarding its decision-making processes and share this information with all parties. It must also ensure that there is a clear line of communication between the management, board members and shareholders.