The term corporate governance is widely defined as: “The framework of rules and practices by which a Board of directors ensures accountability, fairness, and transparency in a company’s relationship with all its stakeholders (financiers, customers, management, employees, government, and the community)….”
Furthermore, sound governance involves:
- A broad concept involving the body or rules consisting of the MOI (if applicable to the entity – otherwise the constitution), rules of the company (sometimes referred to as “bylaws” or regulations) and policies;
- This body of rules (in the broad sense) helps to guide the current and future Board of Directors (management) in decision–making, running the company (entity) and ensures that accountability, fairness, and transparency is created and maintained within the entity,
- it strategically contributes to sustainable development and growth within the entity and ensures continuity.
Therefore, the MOI can be viewed as the foundation of the corporate governance structure or, put differently, the framework thereof. The King reports on the other hand – are guidelines for achieving accountability, transparency and generally good governance.
Sound governance pave the way for sustained growth and continued relevance and prosperity in going forward. Small businesses should therefore not think this is not for them.
PocketAdvisor teaches users about key corporate governance structures. In addition, we provide all the relevant legal structures, documents and contracts needed. For more information please contact us or enrol in one of our programs today!