A clearly defined corporate governance structure promotes transparency and fairness, helping your company to establish solid relationships with its shareholders and the local community. It helps define roles, guarantees accountability, and permits compliance with regulations and laws. It also aids in the company’s long-term growth strategy by aligning the interests of shareholders with those of the board and management.
There are many types of corporate governance, but the one that works best for you is based on your company’s objectives and culture. The most important things 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 the activities of the company. The board consists of executive and nonexecutive directors. This kind of structure is prevalent in mid-sized and small businesses.
Continental Model
A two-tiered system, the Continental model gives control to a management board and the supervisory board. The management board consists of insiders from the business like managers and executives. The page supervisory board is comprised of outsiders like bankers and union representatives with stakes in a company.
Governance that is based on stakeholder involvement
This type of governance structure, in contrast to traditional structures that place a high value on shareholder interests, considers all stakeholders, including employees, customers and vendors as well as the community. It encourages boards to design relevant engagement programs and implement policies that reflect larger environmental and social concerns. The board must be transparent and transparent regarding its decision-making processes and share this information with all stakeholders. It must also ensure that there are clear lines of separation between management, the board and shareholders.