A clearly defined corporate governance structure promotes transparency and fairness, helping your business build solid relationships with its shareholders and the local community. It helps determine the roles and responsibilities of each, as well as accountability and enables compliance with laws and regulations. It also helps to ensure the long-term growth of an organization by ensuring that shareholders and management have the same interests.
Corporate governance is a complex concept that depends on the mission and culture of your company. A few of the key concepts to keep in mind are:
Unitary Board Structure
In this corporate governance model the board of directors is accountable for making decisions and overseeing company activities. The board is comprised of executive and non-executive directors. This structure is common in mid-sized and small-sized companies.
Continental Model
A two-tiered model, the Continental model gives control to a management board as well as the supervisory board. The management board is made up of the company’s insiders such as executives and managers. The supervisory board is comprised of outsiders such as bankers and union representatives who have stakes in the company.
Stakeholder-Oriented Governance
This type of governance structure, which is different from traditional structures that place a high value on shareholder interests, considers all stakeholders including employees, vendors and customers as well as the community. It encourages directors to adopt policies which reflect environmental and social concerns and to create relevant engagement programs. The board should be transparent and transparent about its decision-making process and share this information with all parties. It is also important to ensure that there are clear lines of communication between the board, company management and shareholders.
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