The implementation of effective corporate governance requires the establishment of rules, controls, policies and resolutions that encourage positive corporate behavior and culture. It also protects organisations against business risks and crises such as cyber-security threats, corruption in leadership recessions in the economy, and political instabilities. It also has contingency plans that assist businesses in coping with these business forces and come out the other side stronger and more resilient.
Corporate governance structures and practices differ according to the size of the business and industry, ownership structure and the jurisdiction. These governance structures and practices, despite their differing are all aiming at the same objective: to create long-term value to shareholders. They should also provide flexibility to change and adapt their governance practices as needed to achieve this objective.
The board of directors of a company is accountable for setting strategic goals, appointing senior management and monitoring them, as well as representing shareholders’ interests. The board members must understand their responsibilities and work with the company’s senior management to ensure that their duties are fulfilled in a manner that promotes business growth and financial performance.
Stakeholders need to be encouraged to engage in dialogue and interaction with the board of directors and management. They will be able express their opinions in areas that were traditionally the management and the board the management, such as strategic direction and decision-making. It is crucial that the management and board are honest and open about their governance practices and structures and the reasons they use them.