A clear corporate governance structure helps to ensure fairness and transparency and helps your business build an enduring relationship with its shareholders and the community. It helps define roles and responsibilities, ensuring accountability and helps ensure compliance with laws and regulations. It also assists in the long-term growth of a business by aligning management and shareholder interests.
There are many different types of corporate governance, but the one that’s right for you depends on the company’s goals and its the culture of your company. Be aware of the following key concepts:
Unitary Board Structure
In this system of corporate governance, the board of director is responsible for taking decisions and overseeing corporate activities. The board includes both executive and non-executive directors. This is a common structure in small to mid-sized businesses.
Continental Model
A two-tiered system, called the Continental model gives control to a board of management https://boardroomdirect.blog/maximizing-deal-success-the-strategic-benefits-of-using-m-a-vdrs/ and supervisory board. The management board consists of insiders from the business like executives and managers. The supervisory board consists of outsiders, such as bankers and union representatives who have stakes in a 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 boards to develop meaningful engagement programs and adopt policies that reflect larger environmental and social concerns. The board must be transparent about its decision-making process and make it available to all stakeholders. It should also ensure that there is a clear line of communication between the management, the board and shareholders.
