Corporate governance is a set of procedures, structures, and processes that companies employ to manage risk and ensure accountability. Its aim is to offer a model for long-term success while reducing the chance of financial losses, waste risks, and corruption.
Transparence, fairness, and diversity are the fundamental principles of corporate governance. These principles are derived from the belief that all stakeholders, including shareholders and employees, must be treated fairly and equally by management and the board. This means establishing and maintaining an established and transparent process for selecting, supervising and monitoring important board members and executive performance, as well as making sure that the key executives and board remuneration with the company’s longer term interests, and providing the necessary supervision to prevent conflicts of conflicts of interest.
Transparency is about being transparent and willingly sharing accurate information to all stakeholders, including shareholders. This includes the willingness of an organization to make public both good and bad information. This means sharing information frequently and making it accessible.
Based on the type of business the various boards and comittees may play a role in the corporate governance. However, it’s usually the responsibility of the board to establish and supervise a formal system of governance. This includes appointing the lead or director who is the presiding one if the board structure is one in which the chair and CEO are merged. It must be independent of the chair, and serve an established term. The director in charge must also establish guidelines and policies for governance which are in line with the legal, regulatory, and cultural environment of the company.