PRINCIPLES OF CORPORATE GOVERNANCE
Corporate governance refers to the specific sets of rules and regulation, process or law upheld by a certain company or businesses. This may include with regards to internal forces like the board of directors, management etc. and external factors like stakeholders, government policy, supplier and consumers. These principles include their power and strength, scope of their control, accountability and limitation. This principle is usually determined by underlying factors that embodied a systematic approach to help the company in promoting good governance.
Corporate governance starts with the specific delimitation and scope within their jurisdiction to legally bring about their operating policy upon completion. This means that companies should have a clear sets of requirements presented to the government in compliance with the laws that gives them the privilege to operate as incorporation. All their rules plus supporting documents must be presented before incorporation should take in effect. The real reason why corporate governance is required is to be able to determine the underlying power they have had including but not limited to Capita stocks, manpower and assets the company may possess. Government must anticipate and monitor such power in order to control and protect the rights of every party involved. Government can provide business ethics or social responsibility that must be followed.
Corporate governance can be determined and intended to be simple, easy to understand and accessible even to international community. Good corporate governance can provide basic economic growth and confidence to stakeholder. Imagine if there is no corporate government controlling body, then these corporations will uplift their own law and shall replace the institutional governing body inside their premise to take a bigger advantage on their part. However there can be no legitimate corporate governance guidelines standard, it all depends on the degree of power by the company or according to law of every country they are operating. Here is some of its example to identify such principles;
1. Ensure the framework of corporate governance. This is the overall framework that will encourage and promote economic growth pertaining to company transparency to the market. Their governance should include economic advantage that is fair and just to stakeholder to ensure that they will serve to the highest degree of responsibility ensuring government to perform their duties professionally and objectively and not to monopolize such laws for personal gain. Stakeholders should have confidence that the companies they are into are following such rules and regulation and therefore uncertainty is eliminated and clearly justify.
2. Protect the shareholders right. To be able to gain confidence of investors to their company they must protect such right. Although not exactly the same with bank deposit account, stock holder has a limited guarantee but still companies should protect their rights. Stockholders have the right to monitor and participate in such activities that may involve their concerns including stockholders meeting and election of officers. Their dividend should be delivered on time and must be computed according to their assessment of distribution. Stockholders no matter how big or small their shares should be considered having an equal opportunities and privileges in the company involving policy making.
3. Transparency and Disclosure. This is a very important principles to a good corporate governance when their important documents including financial statements or amount involve in operation, assets and liability has been given or opened to the public not to foresee their strength and weaknesses but to be able to audit such company in a legal way that companies do not evade taxes and that their book is open. Their report must be accurate not to show their high position but to show their responsibility to good governance.
4. Social Responsibility. You may think about social responsibility as a guideline or principles that is optional and not much of importance, this is not true. A company that is exercising good governance especially from big corporation should upheld global standard and develops their moral to uplift economic growth through social responsibility whether included or prescribed by the government. Good governing company reaches out and explores their full potential to help allocate some resources to the basic needs shared to individuals. A simple responsibility they provide should not be limited to dole out. A simple training and giving of information to help customers or people is enough.
All this things mentioned above should give you the importance and a clear idea what Good Corporate Governance is all about. All these principles equate to the success of the companies who upheld such principles, only then you can realize its importance.
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