Corporate governance is the structure and rules which governs the operation of companies. It includes the accountability of the board of directors as well as the top managers of a company, avoiding conflicts between management and shareholders by encouraging transparent communication and ensuring compliance with the laws and regulations. It also promotes fairness between all stakeholders and assists in the achievement of the company’s objectives. It is essential to understand the various types of corporate governance to choose the appropriate one for your business.
Shareholders are the owners of a corporation and have rights that include voting on matters and receiving information material to their voting additional info and investment decisions. As therefore, they expect boards and managers to be long-term stewards of their investments. Shareholders expect a high degree of transparency from their companies.
There are several different models of corporate governance, including the Anglo-US model as well as the German model and the Japanese model. Each model has a different area of focus, and each takes care of business risk in a different manner. There are different corporate governance models as well as national variations.
The continental model is a two-group control model. The management board is comprised of insiders from the company like executives. The supervisory board is comprised of outsiders like workers’ union representatives and stockholders. The model is well-known for its emphasis on government and national interest and the obligation of the company to serve society and contribute to it.