Assignment 1

Research and digest the following for this will be discussed next synchronous session:
1. What is corporate governance?

The term ‘Governance’ is derived from the Latin word ‘Gubernare’ which means
‘to steer’. In the context of companies, governance means direction and control of a
company. Corporate governance is the system by which companies are directed and
controlled. Boards of directors are responsible for the governance of their companies.
The shareholders’ role in governance is to appoint the directors and the auditors and to
satisfy themselves that an appropriate governance structure is in place. Corporate
governance is therefore about what the board of a company does and how it sets the
values of the company, and it is to be distinguished from the day-to-day operational
management of the company by full-time executives. The responsibilities of the board
include setting the company’s strategic aims, providing the leadership to put them into
effect, supervising the management of the business and reporting to shareholders on
their stewardship.

2. What is the fundamental objective of corporate governance?

The fundamental objective of corporate governance is to boost and maximize

shareholder value and protect the interest of other stake holders. The purpose of
corporate governance is to facilitate effective, entrepreneurial and prudent
management that can deliver the long-term success of the company.

 Make sure your company’s management considers the best interests of all involved,
from employees to investors, suppliers, and others.
 Focus your business transactions on your company’s values.
 Set up your company to deliver long-term success and economic growth.
 Maintain investors’ confidence so you can raise capital efficiently and effectively.
 Constantly improve control over management and information systems.
 Keep the goals and objectives of the company at the forefront of what you do.
 Minimize waste, risk, mismanagement, and corruption.
 Build and maintain a strong brand reputation by bringing a high level of satisfaction to
your employees, customers, investors, and the community at large.
 Provide adequate reporting to shareholders and other stakeholders through quarterly,
semi-annual, and yearly performance and operating results.

3. What good governance promotes?

 1. Better organizational strategies and plans
2. Improved operational and process effectiveness/efficiency
3. Improved project management and delivery
4. More prudent regulatory compliance, financial and risk management
5. Improved member and stakeholder/employee engagement and communication flow
6. Increased agility to which an organization can deliver on its purpose and goals

Effective governance structures allow organizations to create value, through

innovation, development and exploration, and provide accountability and control
systems commensurate with the risks involved.

4. What are the benefits of good governance.

 Builds morale, reputation, and a legacy: 

Implementing procedures that support good governance enhances a company’s
identity where stakeholders and potential investors are confident to place increased
levels of trust in you, which in turn allows you to develop stronger, longstanding
relationships.

 Increases success rate for financial performance and enhances sustainability: 

Implementing protocol for good governance is intended to assist with being able
to quickly identify issues as well as to quickly make decisions to resolve these potential
issues thus reducing the eventuality of a crisis and the cost it bears.

 Creates a greater ability to attract and retain talent: 

A significant focus has been placed on culture being a key contributing factor to
the success of a company. Maintaining transparency surrounding fairness,
accountability and operations, gives your employees a greater sense of responsibility
and awareness as to where they are positioned to create value within an organization.

 Creates an effective framework aimed at meeting business objectives: 

Decision-making that takes into consideration major stakeholders such as
employees, suppliers and the community alike, has created a wider vision for successful
results. Providing each stakeholder with a percentage of valuable involvement creates a
more accountable culture, generating a higher potential to reach objectives within an
organization.

 Creates more opportunities to gain a competitive advantage: 

 Every industry is either constantly evolving or has the potential to evolve at a
certain point; adopting good governance and creating an environment where its
practices can be sustained is vital to ensuring that your organization is adaptable to
change, thus providing a greater competitive advantage and chance at survival.

 Creates opportunities for investment: 

An organization that represents stability and reliability increases its chances of
attracting premium investors, as well as increasing their opportunity to borrow funds at
a better rate.

 Provides a practical way to guide decision-making at all levels: 

The ability to make informed decisions can quickly improve performance and
reduce the effects of potential failures. One way to promote this kind of decision-
making ability is to ensure that information is readily available to key stakeholders, i.e. a
culture of transparency.