Corporate Governance Section One

Corporate Governance
Is the system by which companies are directed and controlled

Internal corporate governance

Is the set of rules, guidance and controls that determine the course of individual actions within a collective group.

External and internal

Governance develop and evolve over time as a set of intended or emergent processes.

Corporate Governance is concerned with:

In whose interests is a company governed Who has the power to make decisions for a company? For what aims or purposes are those powers used? In what manner are those powers used? Who else might influence the governance of a company?

Concepts of good governance

Fairness Openness/transparency Independence Honesty and integrity Responsibility and accountability Reputations Judgment

External corporate governance

is the set of mechanisms that regulate, over see, direct and control human behaviour with the intent of ensuring that collective and individual behaviour within a group meets the norms expected by society.

Corporate Governance is concerned with:

Are the governors of a company held accountable for the way in which they used their powers? How are risks managed?

Corporate governance issues

The role and responsibility of the board of directors The composition and balance of the board of directors Financial reporting, narrative reporting and auditing Directors remuneration Risk management and internal control Shareholders rights

Corporate Governance V Management

Management is concerned with running the business operations of company Governance is about giving a lead to the company and monitoring and controlling management decisions, so as to ensure that the company achieves its intended purpose and aims