Strong corporate governance practices are at the heart and soul of running a business. They are designed to establish an organization’s principles, foster transparency among shareholders and in the marketplace, and strengthen brand reputation. Following are several steps to help with developing and maintaining good corporate governance practices.
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1. Establish the Governance Framework.
The governance framework establishes how the company will operate, helps you set up an effective board of directors, and ensures transparency regarding roles, responsibility, and accountability.
2. Keep Governance Documentation Updated.
Keep up to date all documentation that outlines the rules by which the business is governed. These are living documents that detail the rights and obligations of the shareholders/owners.
3. Ensure Policies are in Accordance With the Law and Applicable Regulations.
The policies and practices regarding the day-to-day operation of the company must remain in compliance with current laws and regulations and reflect the organization’s culture as well as its goals and strategies. All policies should be readily accessible so the entire organization is clear on the company’s ethics and values.
4. Evaluate Board Members Regularly.
Each board member should be knowledgeable about regulations and legislation that pertain to the company. Compare the performance of the board to that of your competitors. Board evaluations foster good corporate governance and shareholder value.
5. Establish a Balanced Board Composition.
Board members should have a strong mix of skills, knowledge, experience, and diversity. Board diversity is increasingly an issue that matters to the public, shareholders, and regulators.
6. Provide Reliable Reporting to the Board.
Boards require detailed data and documentation to make well-informed decisions and develop business strategies for the organization’s short- and long-term growth and overall sustainability.
7. Set a Board Meeting Agenda.
An agenda helps set the tone and priorities for board meetings to accomplish their goals in the time allotted. Make sure board minutes are clear and concise, as they represent a definitive record of a company’s decision-making body.
8. Ensure Consistency in Policies Governing Subsidiaries.
Many businesses have multiple locations and operate in multiple states. Ensure that corporate governance principles are consistently and effectively adopted and implemented by all subsidiaries and that subsidiary boards are aware of their responsibilities. Create a subsidiary governance framework/policy; create rules for subsidiary oversight that respect the sanctity of subsidiaries and their decision-making; and provide guidance to subsidiary boards on their roles and responsibilities, as well as reporting requirements to the parent company.
Author name- Kapish Haldia
BIO: Kapish Haldia’s approach to work & life is what makes him successful in what he does. Kapish’s work is personal to him, the people he works with are personal to him, and he loves what he does.