A clearly defined corporate governance structure encourages fairness and transparency, which helps your business to build solid relationships with its shareholders and the local community. It helps define roles, guarantees accountability, and ensures compliance with laws and regulations. It also helps a company’s long-term growth plan by aligning shareholder interests with those of the board and management.
Corporate governance is a complicated concept that is dependent on the mission and culture of your company. A few of the key concepts to keep in mind are:
Unitary Board Structure
In this model of corporate governance, the board of directors is accountable for making decisions and directing the activities of the company. The board is comprised of non-executive and executive directors. This structure is most common in mid-sized and small businesses.
Continental Model
A two-tiered model, the Continental model gives control to a management board and a supervisory board. The management board is made up of insiders from the company, such as executives and managers. The supervisory board includes outsiders like bankers and union representatives with stakes in the company.
Governance that is based on stakeholder engagement
This type of governance structure, in contrast to traditional structures that focus on shareholder interests, is a holistic approach that considers all stakeholders, including employees, vendors and customers in addition to the community. It encourages boards and committees to develop effective engagement programs and to adopt policies that reflect broader social and environmental concerns. The board must be transparent and open about its decision-making processes and make this information available to all parties. It must also ensure that there are clear lines of separation between the management, the board and shareholders.
https://boardroomdirect.blog/what-are-the-four-types-of-corporate-governance/