Corporate Governance – Key Elements of Good Corporate Governance
Governance is the connection between a company’s shareholders, board of director and management. This framework aligns the interests of all parties and allows the company to achieve its long-term objectives. Good corporate governance practices are built on the principles of transparency, accountability and accountability, which help to build trust with investors employees and customers in addition to fostering an environment that is healthy for the company.
A good board of directors consists of of insiders (major shareholders, founders, and executives) and independent members who don’t have close ties to the company. Directors from outside can bring fresh perspectives and experience to business decisions. They also act as a spokesman for the insiders, giving them additional support and insight.
The most important aspect of corporate governance is fairness. This requires that the company treats all shareholders, vendors, and employees equally. This is achieved through the public disclosure of information, such as major decisions, financial performance, and the outcomes of meetings.
A good board should have a meaningful mechanism for reviewing its effectiveness and the effectiveness of committees on a regular basis. This can be done through self-evaluations and surveys. The board should review the CEO and the senior management on a regular basis, and, if needed be a part of their evaluations. The board should also determine the conduct standards for members, committees and senior management. This will ensure that the company’s top executives and members are held accountable for any actions they take.
