A clearly established corporate governance structure can promote fairness and transparency, which helps your business build solid relationships with its shareholders and the local community. It helps determine roles and responsibilities, ensures accountability, and allows for compliance with laws and regulations. It also assists in implementing a company’s long-term growth plan by aligning the interests of shareholders with the interests of the board and management.
There are a variety of corporate governance, but the one that is most effective for you depends on your company’s goals and the culture of Due Diligence your company. A few of the key concepts to be aware of are:
Unitary Board Structure
In this corporate governance system the board of directors is responsible for overseeing and making decisions about company activities. The board is comprised of executive and nonexecutive directors. This type of structure is common in mid-sized and small businesses.
Continental Model
Continental’s two-tiered structure is a structure that grants control to both a managerial board, and an oversight panel. The management board consists of insiders from the business such as executives and managers. The supervisory board consists of outsiders such as bankers and union representatives with stakes in the company.
Stakeholder-Oriented Governance
In contrast to traditional structures that place emphasis on shareholder interests, this type of governance structure takes into account the needs of all stakeholders, including employees, customers, vendors and the community. It encourages directors to adopt policies that address environmental and social concerns and to create relevant engagement programs. The board should be transparent and open about its decision-making processes and communicate this information to all parties. It is also important to ensure that there are clear lines of communication between the board, the company management and shareholders.