Organization of effective corporate governance is based on the rules, practices and procedures that govern a business, while also taking into account the interests of shareholders, employees, customers, suppliers, lenders, government and the community. These elements are essential for an effective, profitable business.
The people aspect of good governance makes sure that the people involved in the operations of a company are ethical, trustworthy and committed to the goals of the company. This is crucial in the time when people are sick of corruption and demand more transparency, equity and accountability.
Transparent reporting systems are an essential element of good corporate governance. This includes ensuring that the board receives accurate financial reports on a monthly basis which provide a clear view of how the business has performed, and why. It is also best practice for boards to have a system of checks and balances to prevent fraud and mismanagement.
Guidelines and policies are another crucial aspect of good corporate governance. They should reflect the company’s culture, align with legislation/regulations and internal policies, and be clearly available to all stakeholders.
A presiding director is an autonomous director who supervises and directs the board. This is a key aspect of a good corporate governance. This is especially critical when a company’s leadership structure combines the roles of CEO and chair or if there are personal relationships between top leadership. Additionally, a company must ensure that their compensation practices aren’t creating conflicts of interest for directors.