A clearly defined corporate governance structure encourages fairness and transparency, allowing your company build solid relationships with its shareholders and the local community. It helps define roles, assures accountability, and allows compliance with regulations and laws. It also helps to ensure the long-term growth of a company by ensuring that shareholders and management have the same interests.
There are many types 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 keep in mind are:
Unitary Board Structure
In this corporate governance model, the board of directors is accountable for making decisions and directing the activities of the company. The board consists of nonexecutive and executive directors. This type of structure is typical in mid-sized and small-sized companies.
Continental Model
A two-tiered model, the Continental model gives control to a board of management and supervisory board. The management board consists of insiders from the business such as managers and executives. The supervisory board is comprised of outsiders like bankers and union representatives who have stakes in the company.
Stakeholder-Oriented Governance
Unlike traditional structures that prioritize shareholder interests, this type of governance structure considers the requirements of all stakeholders, including employees, customers, vendors and the community. It encourages boards and committees to develop effective engagement programs and to adopt policies that reflect the larger environmental and social concerns. The board should be transparent and transparent about its decision-making process and make this information available to all stakeholders. It should also ensure that there are clear lines of communication between the board, the company management and shareholders.
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