Corporate Governance

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4 Terms

1
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What is corporate governance?

System by which companies are directed and controlled

2
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Why is corporate governance the responsibility of the board of directors?

  • It is the Board of directors of each company that is legally responsible for the governance of the company

  • The shareholders’ role in corporate governance is to appoint the directors (and the auditors where required) and to satisfy themselves that an appropriate governance structure is in place

3
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What are the key responsibilities of the board of directors?

  • Setting the company’s objectives and aims

  • Determining the strategy to achieve those aims and objectives

  • Providing the leadership to put them into effect

  • Supervising the management of the business

  • Reporting to shareholders on their stewardship of the business

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What are the essential elements of ‘best practice’ corporate governance?

  • The role of CEO and Chairman in public companies should be separated

  • Boards should have at least three non-executive directors, two of whom should have no financial or personal ties to executives

  • Each board should have an audit committee composed of non-executive directors