A clearly defined corporate governance structure encourages fairness and transparency, which helps your company build solid relationships with its shareholders and the local community. It helps define roles, ensures accountability, and ensures compliance with laws and regulations. It also assists in the long-term growth of a business by ensuring that shareholders and management have the same interests.
There are a variety of corporate governance, however the one that works best for you depends on your company’s objectives and the culture of your company. A few key concepts to keep in mind are:
Unitary Board Structure
In this corporate governance model the board of directors is accountable for making decisions and directing the company’s activities. The board is comprised of non-executive and executive directors. This is the most common structure in mid-sized or small companies.
Continental Model
Continental’s two-tiered model is a structure that grants control to both a management board and an oversight panel. The management board is composed of insiders from the business such as managers and executives. The supervisory board is made up of outsiders like bankers and union representatives who have stakes in the business.
Governance that is stakeholder-oriented
This type of governance structure, unlike traditional structures which prioritize shareholder interests, will consider all stakeholders including employees, customers and vendors as well as the community. It encourages boards of directors to adopt policies that address environmental and social concerns and develop effective engagement programs. The board should be open about its decision-making process and communicate that information to all stakeholders. It should also ensure there are clear lines of communication between the management, the board and shareholders.