Corporate Governance has become increasingly important across all aspects of corporate life. It influences corporate activity in accounting, marketing, employment, investment, production, pricing – in fact most aspects of a business. It applies to all enterprises big and small, foreign and indigenous, and it is becoming a priority at national and international level due to globalisation of business.
Good Corporate Governance:
- Assists companies/enterprises to perform better commercially and socially, through structured communications and effective business practice.
- Facilitates the monitoring of corporate risk.
- Encourages the responsible use of company resources.
- Identifies issues before they become problems.
- Protects the interests of all stakeholders.
- Will ultimately enhance shareholder value.
Corporate governance involves not only compliance with laws and regulations but also extends to responsible business behaviour by the board, management, employees, and all others acting on behalf of the company/enterprise. Those involved in corporate decision-making should be aware of, and consider, the consequences of their actions for all stakeholders in the business.
Good Corporate Governance is based on four fundamental principles:
High standards of honesty and integrity are the cornerstone of reputation – a most important business asset and key to survival and prosperity. Integrity implies the highest standards of corporate conduct, and avoiding behaviour and practices that may damage the company’s reputation.
All business transactions conducted by the enterprise should remain confidential. Exceptions may be made only if required by law, or with the authorisation of the party affected by such information, such as a customer, supplier, or employee.
Good corporate governance requires compliance with all relevant laws, as a matter of course. Being compliant with legal obligations is a fundamental necessity for all companies/enterprise. However, best practice companies go beyond minimal legal compliance in their practices. This involves voluntary actions that demonstrate a commitment to high standards of conduct, even if not legally required, along with an awareness of the well-being of all stakeholders. Such best practices build trust and establish a company’s good reputation, so that customers, suppliers, shareholders etc. choose to do business with such a company.
Companies, through their management, have a responsibility to be accountable principally to shareholders. Accountability, however, should also be part of a company’s responsibility to other stakeholders, such as employees, customers, suppliers and local communities.
Do you need practical guidance on the essential principles of corporate governance and how to implement them – then call JBS now and avail of a free, no-obligation consultation.