Corporate governance is the mechanism in place, processes and relations through which companies are controlled and run. The aim is to ensure that the interests of all stakeholders are taken into account the interests of shareholders as well as senior management executives, customers, suppliers, financiers governments, as well as the community.
There are a variety of arrangements, and businesses frequently change their governance as they grow. But regardless of the structure it is crucial to have a good governance system for any business since it facilitates good communication with its owners which assists in achieving its goals. Governance is also key in ensuring that a business adheres to its legal obligations, and is an essential part of risk management.
Transparency for investors can aid in securing investment for the company. It will also reduce both the cost of capital as well as the cost of equity. A committee structure that is efficient will allow the board to address issues more effectively and efficiently. It will assist the board to determine and prioritize the most pressing issues, as well as providing an avenue for delegating authority to committees or management.
A board should include an equal number of non-executive and executive members with a variety of experience. The members should be professional and business-minded with solid commitment to the company and the ability to challenge and debate. The board should be able assess the CEO and also participate in the assessments of senior managers when appropriate.