A clearly defined corporate governance structure encourages fairness and transparency, allowing your business build solid relations with its shareholders as well as the local community. It helps define roles, ensures accountability, and ensures compliance with laws and regulations. It also supports a company’s long-term growth plan by aligning shareholder interests with the interests of the board as well as management.
Corporate governance is a complex concept that is based on the goals and culture of your business. A few key concepts to keep in mind are:
Unitary Board Structure
In this corporate governance system the board of directors is accountable for taking decisions and overseeing the company’s activities. The board is comprised of both executive and nonexecutive directors. This structure is most common in mid-sized or small companies.
Continental Model
Continental’s two-tiered model is a my link structure that gives control to a supervisory board, and an oversight panel. The management board is composed of insiders within the company including executives and managers. The supervisory board comprises outsiders like bankers and union representatives with stakes in a company.
Stakeholder-Oriented Governance
This type of governance structure, in contrast to traditional structures which prioritize shareholder interests, takes into account all stakeholders, including employees, vendors and customers as well as the community. It encourages boards of directors to adopt policies that address environmental and social concerns and to develop relevant engagement programs. The board should be transparent and transparent regarding its decision-making process and share this information with all stakeholders. It should also ensure that there are clear lines of communication between the board, company management and shareholders.