Wednesday, 17 August 2016
Corporate guidance: A look inside
Hello readers, so today I will be writing about corporate governance. According to BPP Learning Media, Corporate governance is a system by which companies are directed and controlled. The directors of a company are responsible for corporate governance, however, not one size fits all. Not all businesses can be managed the same way. Corporate governance is designed to monitor managers, it promotes the right of shareholders, it also states that all shareholders must be treated equally. The role and the responsibilities of the board of directors is also stipulated by corporate governance. Corporate governance framework must be designed to disclose the financial situation of the company accurately.
It is also meant to strategic guidance while making the brand of directors accountable for their actions. Since all companies cannot be ran the same way because of the difference in legislation framework and culture. The corporate governance has different models, as such it must reflect those qualities I mentioned above. It also encourages the company to have distribution of power and the power must not be in the hands of only one person. Thus, there must be a chairman who chairs the board and there must be a CEO who is the head of executive directors. While the chairman is responsible for the board of directors, the CEO is responsible for the running of the business organisation. However, the board can override the suggestions of the CEO.
It also encourages companies to give remunerations that are attractive so as to attract good directors and it should also be used to motivate executive directors, as part of their remuneration and should be linked to their performance at work. The right of stakeholders must be recognized when developing the corporate governance model. The corporate governance is concerned about the relationship between internal stakeholders (directors, managers, employees) as well as external stakeholders (shareholders, government, customers, regulators).
Corporate governance also makes sure resources are allocated well between organisations. It aims at ensuring resources are managed well by those charged with control and management. the corporate governance encourages the board to have a good relationship with the shareholders. A good relationship can be maintained with shareholders through annual general meetings. It also helps formulate the objectives of an organisation, as well as the way risks can be managed within the business organisation. It employs corporate governance, however, different models can be developed.
That is all for today, keep checking out my blog regularly. cheers!