Types of Corporate Governance

Corporate governance is the term used to describe the structure, procedures, policies, and customs that govern how individuals manage and direct an organisation. This means developing a long-term vision of business and documenting the processes that are in support of it, and regularly reviewing the performance. Corporate governance should be based on the principles of accountability and transparency.

This requires that a business provides all pertinent information, including financial results, meeting minutes and outcomes along with any changes to normal operations and resignations and replacements of key members of the board as well as managers. This encourages honesty, integrity and a willingness to to share both good as well as bad news to shareholders, staff and vendors as well as the public.

Generally, the role of the board of directors of a company is to implement a system of checks and balances to ensure that shareholders are treated fairly and that management decisions are sound. This involves making sure that internal controls are effective to ensure compliance with laws and regulations.

Different models of corporate governance exist all over the world. Anglo-American models that put the interests of shareholders at the forefront of management and decision-making is the most common. This model is widely utilized by companies in a variety of countries, but other governance models exist. These models are all alike and have a common set of principles however they differ.

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