Corporate governance is the structure and rules which governs the operation of businesses. It includes the accountability of the board of directors and senior managers of a business and preventing conflicts between shareholders and management by encouraging transparent communication and ensuring compliance to laws and regulations. It also promotes fairness between parties involved and assists the company to reach its goals. It is crucial to be aware of the different types of corporate governance in order to choose the best one for your business.
Shareholders own a company and have rights, including the right to vote on matters and receive information that is relevant to their investment decisions as well as voting decisions. As therefore, they expect managers and boards to act as long-term stewards for their investments. Shareholders demand a high degree of transparency from their companies.
There are a myriad of models of corporate management, including the Anglo/US model as well as the German and Japanese models. Each model has a distinct focus and is different in the way it manages risks to business. There are different corporate governance models, as well as national variations.
The continental model is comprised of two groups that oversee the company. The management board is composed by company insiders such as executives, whereas the supervisory board comprises outsiders, such as stockholders or union representatives. The model is renowned for its emphasis on national and government interest and focuses on the corporation’s responsibility to contribute to society and function as a public servant organization.
