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Who is responsible for Corporate Governance? November 19, 2018

Who is responsible for Corporate Governance?

Who is responsible for Corporate Governance?

The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company. Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies.  The shareholders role in governance is to appoint directors and auditors and also to satisfy themselves that an appropriate governance structure is in place.

The Board of Directors are given authority to act on behalf of the company. They should therefore accept full responsibility for the powers that is given and the authority that it exercises. The Board of Directors are responsible for overseeing the management of the business, affairs of the company, appointing the chief executive and monitoring the performance of the company. In doing so, it is required to act in the best interests of the company.

Accountability goes hand in hand with responsibility. The Board of Directors should be made accountable to the shareholders for the way in which the company has carried out its responsibilities.

It is important that board meetings are held periodically so that directors can discharge their responsibility to control the company's overall situation, strategy and policy, and to monitor the exercise of any delegated authority, and so that individual directors can report on their particular areas of responsibility.

Every meeting must have a chair, whose duties are to ensure that the meeting is conducted in such a way that the business for which it was convened is properly attended to, and that all those entitled to may express their views and that the decisions taken by the meeting adequately reflect the views of the meeting as a whole. The chair will also very often decide upon the agenda and might sign off the minutes on his or her own authority.

Strong elements of corporate governance maintains investors’ confidence, whose support can help to finance further growth. Companies who implement the principles of good corporate governance into working environment life will ensure corporate success and economic growth. They are the basis on which companies can grow.

Want to improve the best practices for corporate governance? Read more about the benefits of corporate governance and browse through the corporate governance course available at London TFE.

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