A well-defined corporate governance system is a great way to ensure transparency and fairness as well as helping your business develop a an excellent relationship with shareholders and the community. It helps define roles, assures accountability, and permits compliance with laws and regulation. It also helps to ensure the long-term development of a company by aligning management and shareholder interests.
There are a variety of corporate governance, however the one that’s right for your needs is determined by the goals of your company and its the culture of your company. A few key concepts to be aware of are:
Unitary Board Structure
In this system of corporate governance the board of directors is accountable for taking decisions and overseeing company activities. The board is made up of executive and nonexecutive directors. This type of structure is typical for small- to mid-sized companies.
Continental Model
A two-tiered model, the Continental model gives control to a board of management and a supervisory board. The management board is comprised of insiders from the company like managers and executives. The supervisory board is comprised of outsiders like bankers, and union representatives with stakes in a company.
Stakeholder-Oriented Governance
Unlike traditional structures that prioritize shareholder interests, this kind of governance structure takes into account the requirements of all stakeholders including customers, employees and vendors as well as the community. It encourages boards to create effective engagement programs and to adopt policies that reflect larger social and environmental concerns. The board must be transparent and open regarding its decision-making processes and communicate this information to all parties. It is also important to ensure that there are clear lines of communication between the board, the company management and shareholders.