The corporate governance system is a vital component of the capital markets, helping to keep everything running smoothly. A variety of intermediaries are involved in this process, from stock exchanges and brokers connecting buyers and sellers to analysts, institutional investors and credit rating agencies. Integrity and fairness are essential by all of these entities. Corporate governance, which includes strong financial management reporting, is a way to ensure this.
The board of directors of a business plays a crucial role in ensuring a good corporate governance. The board is responsible to select the CEO, determine the strategy and ensure compliance with the law. It also has a direct link with shareholders and must consider their interests when making decisions, as well as the interests of other stakeholders.
Corporate governance best practices include the principle of shareholder supremacy, which means that all decisions made by the board members and senior management should be taken in the best interest of the shareholders of the company. The board should also encourage fairness for all stakeholders, regardless of their level of investment or overall status.
A solid corporate governance structure allows boards to manage their responsibilities and roles effectively. It helps them to set clearly defined, achievable goals and create a sense of trust within the business. This lets the board be able to identify improvement areas and work together with management to make the necessary changes. This requires an annual evaluation that is thorough, which identifies weaknesses and tracks the improvement over time. Boardclic, an online tool for evaluating boards will help you evaluate your board. It will also give you the tools necessary to design a governance framework which will propel your business forward.