The implementation of a sound corporate governance is crucial to the success and growth of your company. It is a way to ensure that decisions are taken in the best interests of the shareholders of the company as well as the company and also to safeguard against mismanagement and corruption. It allows the business to attain its social and financial objectives while remaining compliant with legal requirements as well as environmental, social and governance (ESG), best practices and other legal requirements.
The board of directors (BOD) is the principal actor in corporate governance. In this sense, BOD members are responsible to set the direction of the company and setting the goals and plans while management is responsible for executing against those objectives. While the traditional obligations of the BOD are financial, current trends are leading the BOD to assume greater responsibility in areas such as the promotion of equal and fair treatment for all stakeholders, including employees, shareholders and vendors, as well as the local communities.
Documenting and implementing internal policies and processes is an essential aspect of a successful corporate governance. These policies should reflect the culture of the organisation, be in line with legislation/regulations and help achieve its desired goals. Having policies readily available will also assist in streamlined decision-making and the risk appetite of the organization.
A good corporate governance also involves developing strategies to meet the future issues and opportunities the organization may face. This includes a process known as succession planning, which is basically managing talent with the aim of ensuring that the organization is prepared for the future by creating a strong leadership pipeline.