Corporate governance refers to the system of rules, practices, and processes by which a corporation is directed and controlled. It involves balancing the interests of various stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. Corporate governance affairs focus on ensuring transparency, accountability, and fairness in a company's relationship with its stakeholders.
Key Components of Corporate Governance
1. Board of Directors: The board oversees the company’s management and ensures that the company is run in the best interests of the shareholders. It includes executive directors (part of the company’s management) and non-executive directors (independent or outside directors).
2. Executive Management: The senior executives, led by the CEO, are responsible for the day-to-day operations of the company. They implement the board’s strategies and policies.
3. Shareholder Rights: Shareholders have certain rights, including voting on key issues, such as the election of directors and major corporate actions. Effective corporate governance ensures that shareholders can exercise these rights.
4. Stakeholder Engagement: Good corporate governance considers the interests of other stakeholders like employees, customers, suppliers, and the community. This helps build long-term sustainable relationships.
5. Ethics and Compliance: Adherence to ethical standards and compliance with laws and regulations are critical. This includes implementing codes of conduct, whistleblower policies, and compliance programs.
6.Transparency and Disclosure: Companies must provide timely and accurate information to stakeholders. This includes financial reports, operational performance, and risk factors.
