Corporate Governence

Corporate governance is a process or system of structuring, managing and controlling company with the view of achieving company’s long term goals and objectives.

The Financial Times has defined corporate governance as “How a company is managed, in terms of the institutional systems and protocols meant to ensure accountability and sound ethics. The concept encompasses a variety of issues, including disclosure of information to shareholders and board members, remuneration of senior executives, potential conflicts of interest among managers and directors, supervisory structures, etc”.

Corporate governance satisfies the different stakeholders like shareholders, employees, creditors, customers, regulators and complies with the regulatory requirements, prudent norms, best practices and at the same time keeps an eye on environmental and social factors. Corporate governance means carrying its day to day business with great deal of transparency and honesty.

Parties to Corporate Governance

Shareholders : Shareholders own the company and all of its assets. They are the one who need maximum protection from the unethical activities from the board and the management.

Board of Directors : They are elected by the general shareholders and they are there as guardian of the shareholders’ assets. The board is responsible to the general shareholders.

Managers: They are the users of the assets and are responsible to the board. Managers carry out the day to day activities keeping in view of the shareholders’ interests.

Regulators : They are the one enforcing the law and compliance.

Auditors: They are responsible in monitoring and reporting any unethical activities that the management or board is doing.