A clear corporate governance structure ensures transparency and fairness, helping your company cultivate solid relationships with shareholders and other members of the community. It defines roles, provides accountability, and allows compliance with the law and regulations. It also helps to ensure the long-term growth of a company by ensuring that shareholders and management have the same interests.
There are many different types of corporate governance, however the one that is most effective for you depends on your company’s goals and culture. Some of the most important concepts to be aware of are:
Unitary Board Structure
In this corporate governance system the board of directors is responsible for making decisions and oversight of corporate activities. The board is made up of executive and nonexecutive directors. This is a common structure in small to mid-sized businesses.
Continental Model
Continental’s two-tiered model is a structure that grants control to both a management board, and the supervisory panel. The management board is comprised of insiders from the company like managers and executives. The supervisory board consists of outsiders, such as bankers and union representatives who have stakes in the company.
Governance that is based on stakeholder involvement
This type of governance structure, unlike traditional structures, which place emphasis on shareholder interests, is a holistic approach that considers all stakeholders, including employees, customers and vendors and the community. It encourages boards of directors to adopt policies that reflect social and environmental issues and develop relevant engagement programs. The board must be transparent and open about its decision-making process and make this information available to all parties. It is also important to ensure that there are clear lines between the board, management and shareholders.