Corporate Governance

​Corporate Governance

What is Corporate Governance?

​Corporate governance is the system by which directors handle their responsibility toward stakeholders.

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​who are stakeholders?

these are the group of people who are affected by the business.

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for example:

• Investors

• Customers

• suppliers ​

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All organizations, particularly large ones, cannot run themselves or function without some sort of order. Corporate governance provides that order. It is a framework for how the company is managed and includes putting rules, controls, and policies in place that dictate corporate behavior.

​The Board of Directors is usually comprised of both inside directors (employees or major shareholders of the organization) and outside directors (those not affiliated with the organization). These two different types of board members allow the corporate governance structure to have checks and balances and to avoid bias. Checks and balances are mechanisms to make sure that corporate governance will be effective. Checks and balances ensure that no one person or group of people at a company has too much power or responsibility. Instead, many different viewpoints are represented and considered.

Multiple Choice

1. What is the best definition of Corporate Governance?

• 1.    The internal structure designed to allow the organisation to comply with laws and regulations

• 2.    A commitment to economic development by working with stakeholders to improve their lives

• 3.    A set of tools to help management run the day to day activities of the business

• 4.    The same as Corporate social responsibility

• 5. A system by which the organisation is directed and controlled on behalf of its stakeholders

Multiple Choice

2.Who should have overall responsibility for Corporate Governance?

• 1. Risk Management

• 2. The Board

• 3. Internal Audit

• 4. The Strategy Department

• 5. The Compliance function

Multiple Choice

Monitoring by shareholders is usually accomplished through

• management consultants

• government auditors

• the firm’s top managers

• board of directors

Multiple Choice

Who runs the company operations for large companies?

• Shareholders

• Board of Directors

• External auditors

• Stakeholders

Multiple Choice

Define Stakeholder:

• An individual with high power over an organisation.

• An individual or organisation with financial decision making within a company.

• An individual, group or organisation that have a stake and influence over a business.

• An individual, group or organisation that don't have a stake and influence over a business.

Multiple Choice

Which of the following is NOT an example of a stakeholder?

• Customers
• Shareholders
• Local Community 
• Children

Multiple Choice

True or False: stakeholders can be internal and external.

• True
• False

Purpose of corporate Governance​

​The purpose of corporate governance is to help companies reach their objectives and balance the interests of various stakeholders. Corporate governance provides a structure that organizations use to monitor their own actions and decision-making. The intention is to make companies more responsible for their actions and to find and eliminate potential problems. Corporate governance determines roles and responsibilities for owners, managers, employees, and investors. It includes procedures for appointing executives, making important decisions, and setting organizational priorities.

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​Principles of Corporate Governance

While governance policies vary greatly depending on the organization, some principles are commonly upheld and are important aspects of corporate governance. Those include:

·       Shareholder recognition: Shareholder recognition means that all shareholders of a company have a voice and are allowed to participate equally. Shareholders should have certain rights and functions that support their ownership of the organization.

·       Stakeholder interests: Organizations need to consider the concerns of all stakeholders, not just top-level executives or majority shareholders.

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​·       Board roles and responsibilities: All board members should have a unified idea about the board’s vision, committee practices, succession planning, and goals. The board should also include diverse viewpoints.

·       Ethical behavior: Corporate governance should include developing a code of conduct/code of ethics that guides the actions and decisions of employees. The corporate governance structure might also include policies on corporate social responsibility and sustainability.

·       Transparency: Transparency is maintaining open and honest communications. Transparency is an important aspect of corporate governance because it builds stakeholder trust. All stakeholders deserve to have a clear picture of the financial standing of the company.

Multiple Select

Which is NOT TRUE about the needs for corporate governance?

• To avoid mismanagement

• To enable companies operate more efficiently, to improve access to capital, mitigate risk and safeguard stakeholders

• To increase the accountability of your company and to avoid massive disasters before they occur

• To analyze of an organization's operations and maintenance of systems of internal controls can help detect and prevent various forms of fraud and other accounting irregularities.

Multiple Select

What is it means by good board practices?

• Board of Directors clearly defined roles and authorities.

• Planning appropriate Board procedures

• Risk management framework present

• Director remuneration in line with best practice

Open Ended

do you understand what is corporate governance

Multiple Choice

What are the two types of stakeholders?

• Internal, Investor

• Internal, External

• International, domestic

• Private, Public

Multiple Choice

Identify an external stakeholder:

• Investor

• Employee

• Employer

• Client

Multiple Choice

Identify an internal stakeholder:

• Government

• Community

• Consumer

• Markring Advisor

Open Ended

What type of stakeholder within a company do you aspire to be?