Corporate governance is the structure and rules which governs the operation of businesses. It encompasses the accountability of a company’s board of directors and the senior management, avoiding conflicts of interest between management and shareholders while promoting transparency and ensuring compliance with the laws and regulations. It also promotes fairness between parties involved and assists the company to attain its goals. It is crucial to be aware of the various forms of corporate governance in order to choose the best one for your business.
Shareholders are the owners of a corporation, and they have the right to vote on matters and receiving information that is relevant to their voting and investment decisions. As as such, they expect managers and boards to act as long-term stewards to their investments. Shareholders also demand a high degree of transparency from corporate entities.
There are several different models of corporate governance, including the Anglo-US model as well as the German model, and the Japanese model. Each has a different focus and is different in the way it manages risks to business. In addition to different models, there are diverse national differences in corporate governance.
The continental model is a two-group control system. The management board is comprised by company insiders such as executives, whereas the supervisory board comprises outsiders such stockholders and union representatives. The model is well-known for its emphasis on government and national concerns and emphasizes the corporation’s obligation to contribute to society and serve as a public servant organization.