What Are the Types of Corporate Governance?

Corporate governance involves the structures, practices and procedures that businesses employ to ensure accountability and control risk. Its purpose is to provide a plan for long-term growth while minimizing the chance of financial loss, waste, risk and corruption.

Fairness, diversity and transparence are the three fundamental principles of corporate governance. These principles are derived from the notion that all stakeholders including employees and shareholders are treated fairly and equally by the management and board. This means that you must establish and maintain an appropriate and transparent process for selecting, overseeing and monitoring important board members and executive performance, as well as making sure that the key executives and board remuneration with the company’s long-term interests, and providing the necessary oversight to prevent conflicts of conflicts of interest.

Transparency refers to being transparent and willingly sharing accurate information with all stakeholders, including shareholders. This means that the company is willing to an organization to communicate both good and negative news. It also involves sharing this information on a regular basis and making it page readily accessible.

Depending on the company type various boards and committees could have a role to play in corporate government. However, it is typically the duty of the board to establish and oversee a formal process for governance. If the structure of the board is a combination of the chair and CEO, this includes appointing the lead director or presiding directors. The director should be independent of the chair, and serve an established term. The lead director is also accountable for the implementation of governance policies and procedures in accordance with the business’s legal, regulatory and cultural environment.