Corporate governance is the set of rules and structures that govern the operations of companies. It covers the accountability of a company’s boards of directors and senior management to avoid conflicts of interest between management and shareholders while promoting transparency and making sure that the company is in compliance with the laws and regulations. It also encourages fairness between stakeholders and helps the company achieve its objectives. To select the most effective corporate governance system for your company it is important to understand the different kinds.
Shareholders are the owners of a company, and they have rights that include voting on issues as well as receiving information pertinent to their investment and voting decisions. They expect that managers and boards will act as long-term stewards for their investments. Shareholders also demand a high level of transparency from corporate entities.
There are a myriad of models of corporate management, including the Anglo/US model as well as the German and Japanese models. Each has a distinct emphasis and differs in how it manages business reference risks. There are many different corporate governance models and also national variations.
The continental model is a control system with two groups. The management board is composed by insiders from the company such as executives, while the supervisory board is composed of outsiders, such as stockholders or labor union representatives. The model is well-known for its focus on national and public interest and the corporate responsibility to serve society and contribute to it.