Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It defines the relationship among shareholders, board of directors, management and other stakeholders, and ensures that the company is run in a transparent and accountable manner.
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Corporate governance is needed to protect the interests of shareholders and stakeholders by ensuring fairness and proper control. It improves transparency in reporting and disclosures and reduces chances of fraud, corruption and mismanagement through oversight and audit systems. Good governance increases investor confidence, improves access to capital and supports long-term sustainability and reputation of the company.
Principles of good corporate governance include transparency (accurate disclosures), accountability (answerability of board/management), fairness (equitable treatment of shareholders and stakeholders), responsibility (compliance with laws and ethical standards) and independence (objective judgement and effective oversight, including independent directors and audit mechanisms).
Business organization, an entity formed for the purpose of carrying on commercial enterprise. Such an organization is predicated on systems of law governing contract and exchange, property rights, and incorporation.
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Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It defines the relationship among shareholders, board of directors, management and other stakeholders, and ensures that the company is run in a transparent and accountable manner.
The board provides direction and monitors management. In many companies, committees support governance such as:
Benefits: better control, reduced fraud, improved credibility, better access to funds, sustainable growth.
Limitations: compliance cost, governance may become a formality, conflict among stakeholders, need for ethical culture to work effectively.
CSR refers to the responsibility of business towards society and stakeholders to contribute to social welfare and sustainable development while achieving business objectives. CSR covers economic, legal, ethical and philanthropic responsibilities.
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Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It defines the relationship among shareholders, board of directors, management and other stakeholders and ensures that the company is run in a transparent, fair and accountable manner.
Principles of corporate governance: (1) Transparency—timely and accurate disclosure of financial and non-financial information. (2) Accountability—board and management are answerable for decisions and performance. (3) Fairness—equitable treatment of shareholders including minority shareholders and consideration of stakeholder interests. (4) Responsibility—compliance with laws, ethical standards and proper use of resources. (5) Independence—objective judgement and effective oversight, supported by independent directors.
Mechanisms of corporate governance: Corporate governance is implemented through an effective board of directors and board committees such as audit committee, nomination and remuneration committee and stakeholder relationship committee. Strong internal control systems and internal audit prevent fraud and ensure reliability. External audit provides independent verification of accounts. Proper disclosure and reporting in annual reports and statutory filings increases transparency. Protection of shareholder rights through meetings and voting, and whistle-blower mechanisms to report wrongdoing strengthen accountability.
Thus, good corporate governance builds trust, reduces risk and supports sustainable growth.