CORPORATE

GOVERNANCE
CORPORATE GOVERNANCE

• Corporate Governance is defined as the system of stewardship and control to guide

organizations in fulfilling their long-term economic, moral, legal and social obligations
towards their stakeholders.
• Corporate governance is the system by which companies are directed and controlled
THERE ARE MANY DIFFERENT DEFINITIONS OF CORPORATE
GOVERNANCE BUT THEY ALL ADDRESS THE FOLLOWING
ELEMENTS:
• systems of controls within the company
• relationships between the company’s board/shareholders/stakeholders
• the company being managed in the interests of the shareholders (stakeholders)
• greater transparency and accountability to enable users of corporate information to
determine whether the business is being managed in a way that they consider appropriate
PURPOSE OF CORPORATE GOVERNANCE?

• To facilitate effective, entrepreneurial and prudent

management that can deliver the long-term success of
the company.
FORMS OF BUSINESS ORGANIZATION

• sole proprietorship
• Partnerships
There are three kinds of partnership agreements in business:
a. general partnerships
b. , limited partnerships
c. limited liability partnerships
• Corporations
SOLE PROPRIETORSHIP

• is a business unit owned and managed by a single individual. The sole owner has full
legal liability and unlimited power over business activities.
• If the business succeeds, the owner receives all the benefits and 100 percent of the profits.
• If the business fails, the owner shall face the consequences, both legal and financial.
PARTNERSHIPS

• binds two or more people into contributing money, property, or industry to set up a
business or practice a profession to divide its profits and rewards among themselves.
• A partnership is an arrangement between two or more people to oversee business
operations and share its profits and liabilities.
• A partnership is a kind of business where a formal agreement between two or more
people is made who agree to be the co-owners, distribute responsibilities for running an
organization and share the income or losses that the business generates.
THERE ARE THREE KINDS OF PARTNERSHIP
AGREEMENTS IN BUSINESS:
• general partnerships,
• limited partnerships
• limited liability partnerships
GENERAL PARTNERSHIPS,

• all partners share the benefits and drawbacks of the business. For instance, they split the
profits among themselves based on the details of their contract agreement.
• individually they have unlimited control over company operations and management.
• It means that an individual partner can make or negotiate business deals that would bind
the entire company. However, each is personally liable should legal disputes arise from
the company’s operations.
• General partners are directly involved in management operations and are legally liable for
business debts.
LIMITED PARTNERSHIPS

• A limited partnership has a hierarchy in terms of participation and liability.

• limited partners are not involved in or have minimal control over business operations.
• Their personal assets are protected from debts or claims, except for their financial
investments in the company.
• The liability of all partners is based on their
actual participation or role in the company.
They are only legally liable for the operations
they directly handle or are involved in.
CORPORATIONS

• A corporation is a legal entity that is separate and distinct from its owners. Under the law,
corporations possess many of the same rights and responsibilities as individuals. They
can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets,
and pay taxes.
• A corporation is a legal entity created by individuals, stockholders, or shareholders, with
the purpose of operating for profit. Corporations are allowed to enter into contracts, sue
and be sued, own assets, remit federal and state taxes, and borrow money from financial
institutions.
• The 2019 Revised Corporation Code of the Philippines allows the establishment of One
Person Corporations (OPCs) , essentially corporations with a single incorporator or
stockholder.
• limited liability companies (LLCs) are business organizations that shield stockholders
from personal liability but allow the distribution of income as in partnerships.
TYPES OF BUSINESS

• Service Businesses
• Merchandising Businesses
Merchandising businesses belong to two general categories:
a. wholesale
b. retail
. Manufacturing Businesses
SERVICE BUSINESSES

• A type of business that delivers intangible products to its clients is called a service
business.
• This offers professional skills, expertise, skilled labor, and other essential assistance.
• Examples are accounting firms, physical therapy clinics, handyman services, mechanic
shops, delivery services, transportation, and customer assistance.
MERCHANDISING BUSINESSES

• Companies engaged in merchandising purchase completed or nearly completed items

from manufacturers or suppliers to resell them for profit.
• Grocery stores, appliance centers, drugstores, school supply stores, bookstores, online
sellers, and the like are companies that are engaged in merchandising.
MERCHANDISING BUSINESSES BELONG TO TWO
GENERAL CATEGORIES: WHOLESALE AND
RETAIL.
• Wholesalers are companies that buy directly from the product manufacturers, then sell the
products to retailers.
• Retailers, on the other hand, mainly purchase items from wholesalers then sell them to
their consumers. Other times, they may buy directly from the product manufacturers.
MANUFACTURING BUSINESSES

• A manufacturing business is responsible for producing tangible commodities from raw 3

materials, labor, and machines.
• Manufacturing companies operate factories to mass-produce goods and sell them to
wholesalers, retailers, and occasionally to consumers directly.
• Clothing manufacturers, vehicle manufacturers, food manufacturers, and other enterprises
that produce goods are examples of manufacturing firms.
KEEP IN MIND

• Business organizations exist to meet the needs, wants, and demands of their customers.
Businesses benefit when consumers buy their goods and avail of their services.
• Business structures differ based on the degree of ownership, liability, funding sources,
and distribution of profit. The forms of business organizations are sole proprietorship,
partnership, and corporation.
• The types of businesses according to activity are service, manufacturing, and
merchandising.