Corporate Governance Models

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What is Corporate Governance?

The governance model is developed to help staff and management teams run the company, it specifies the rights and duties of each person associated to the company. It is developed focusing on the mission and objectives. Which then forms into media by which management’s plans, rules, intents, and business processes become documented and communicated to all staff.

The benefits of better communication within the company, commitments procedures that would be provided in the governance model are means of communication with employees, units and outsiders.

As company’s procedures are developed it becomes a framework for consistency and fairness. These procedures define management’s standards for making decisions on various commitments and obligations. Clearly defined procedures and standards, spawned from polices that are well thought out, express the company’s intent to make consistent and even-handed decisions, so that defiantly all rights and obligations would become obvious and will be preserved on behalf of the company.

The purpose of Corporate Governance Model is to ensure the following are accomplished in a most due professional care:

  • Rights and equitable treatment of shareholders: The Company through this document should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings.
  • Interests of other stakeholders: The Company through this document should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers.
  • Role and responsibilities of the board & management: The board and management needs sufficient relevant skills and understanding to review and challenge the performance. The board also needs adequate size and appropriate levels of independence and commitment.
  • Integrity and ethical behavior: Integrity should be a fundamental requirement in choosing Chairman, Managing Director and board members. Through the Corporate Governance, the Company will develop a code of conduct for its directors and executives that promotes ethical and responsible decision making, this will result in no fraud or unethical ways to be used in the Company choosing the higher team management.
  • Disclosure and transparency: The Company should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. It should also implement procedures to independently verify and safeguard the integrity of the company’s financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information. This would result in more stake holders showing interest in the company thus more investment.