A clearly defined corporate governance structure promotes fairness and transparency, which helps your business build solid relationships with its other boardroomdirect.blog/maximizing-deal-success-the-strategic-benefits-of-using-m-a-vdrs/ shareholders and the local community. It defines roles, provides accountability, and ensures compliance with laws and regulation. It also supports a company’s long-term growth strategy by aligning the interests of shareholders with the interests of the board and management.
Corporate governance is a complicated concept that is dependent on the objectives and the culture of your company. Keep in mind the following concepts that are essential to understand:
Unitary Board Structure
In this system of corporate governance, the board of director is accountable for taking decisions and overseeing company activities. The board comprises non-executive and executive directors. This is the most common structure in mid-sized and small businesses.
Continental Model
A two-tiered structure, the Continental model gives control to a board of management and the supervisory board. The management board is made up of insiders from the company such as executives and managers. The supervisory board is made up of outsiders such as bankers who have stakes in the company.
Stakeholder-Oriented governance
Contrary to traditional structures that focus on shareholder interests, this kind of governance structure takes into account the needs of all stakeholders, including customers, employees vendors, and the community. It encourages boards of directors to adopt policies that reflect environmental and social concerns and to create meaningful engagement programs. The board should be transparent and open regarding its decision-making process and communicate this information to all stakeholders. It is also important to ensure that there are clear lines between the board, management and shareholders.