Corporate governance is the process of setting rules, policies and controls and resolutions to foster a positive corporate culture and behaviour. It also safeguards companies from crises and risks to business like corruption of leadership and cybersecurity threats. It also provides contingency planning that assists companies to deal with these forces of business and emerge stronger and more resilient.
Corporate governance procedures and structures vary according to a company’s sector of operation, ownership structure and the jurisdiction. These governance structures and practices, despite their differing are all aiming at the same goal: building long-term value to shareholders. They must also be able to adapt their governance practices to meet this aim.
The board of directors for a company is responsible for establishing goals for the company’s strategic direction, appointing senior management and evaluating them, and representing the shareholders’ interests. Board members must understand their responsibilities and work with senior management to fulfill them in a manner that aids the growth of the business and financial performance.
Stakeholders must be encouraged to engage in dialogue and interaction with the board of directors and management. This will enable them to make their viewpoints recognized in areas that traditionally, have fallen within the authority of the management and board such as strategic direction and decisionmaking. It is crucial that the board and management are open and honest about their governance structures and practices, and the reasons for using them.