Corporate governance is an established set of rules, procedures and methods that companies use to run themselves. This framework of governance provides checks and balances that make companies accountable to their employees, shareholders and other stakeholders.
Corporate governance models differ in the current business environment, and each has an impact on the efficiency of a firm. Certain governance models focus more on the stock market, whereas others have a stronger focus on the company’s customers or its employees.
The primary duties of the board include establishing the company’s strategic vision for the long term and making sure that the company is in the compliance with ethical and legal standards. The board should also provide oversight of management including the CEO. This requires active participation of all directors, as well as preparation for board meetings.
A well-functioning committee structure allows the board to examine and discuss topics in greater depth than can be done in full-board meetings. The board should decide which committees will be dailyboardroom.com responsible for the functions they are assigned and who will sit on each committee.
The corporate governance structure must be fair to all shareholders. This means avoiding decisions that favor one shareholder group over the other. It also means treating vendors, suppliers and communities with respect.
The role of the board varies according to the industry and country. In the United States, for example, the Securities and Exchange Commission (SEC) has created guidelines for boards in areas such as ESG reporting as well as cybersecurity and governance structures. The SEC’s requirements have been complemented by good practice guidance from top universities worldwide centers of excellence in business and leadership.
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