A clearly defined corporate governance framework is a great way to ensure transparency and fairness which helps your company build a strong relationship with shareholders and other members of the community. It helps establish roles and responsibilities, ensuring accountability and ensures compliance with laws and regulations. It also helps to ensure the long-term development of a company by ensuring that shareholders and management have the same interests.
There are many different types of corporate governance, but the one that is most effective for you depends on the goals of your company and its the culture of your company. Keep in mind the following key concepts:
Unitary Board Structure
In this corporate governance model, the board of directors is responsible for making decisions as well as overseeing company activities. The board is made up of both executive and nonexecutive directors. This structure is common in mid-sized and small-sized companies.
Continental Model
A two-tiered system, the Continental model gives control to a management board and an oversight board. The management board is composed of insiders within the company like executives and managers. The supervisory board is composed of outsiders such as bankers and union representatives with stakes in the company.
Stakeholder-Oriented governance
This type of governance structure, unlike traditional structures that place a high value on shareholder interests, is a holistic approach that considers all stakeholders, including employees customers and vendors as well as the community. It encourages boards to create engaging programs that are meaningful and adopt policies that reflect broader environmental and social issues. The board must be transparent about the process of making decisions and make it available to all stakeholders. It should also ensure that there are clear lines of communication between the board, company management and shareholders.