Types of Corporate Governance Best Practices

Best practices in corporate governance are not just for businesses that are legally organized as corporations. They’re a framework that leaders are required to do more than execute effectively on well-planned strategic plans–they must also be fair and accountable to all stakeholders. Regardless of whether your business has one or many stakeholders–shareholders, employees, clients, students or the community–your company’s approach to governance will change over time and depend on your unique needs and context. There are some general concepts that you can apply to any size company:

Transparency is among the most important aspects to good corporate governance. This means that your board members and management are open with auditors, shareholders and the public with regard to financial reporting, accounting standards, major decisions, and internal practices. It is also important that your business divulges information regarding its social and environmental impact in ways that can be easily accessible to those who might be interested.

Another aspect of corporate governance is setting clear roles and responsibility for your board. This can be accomplished by creating job descriptions for the board as well as its chairperson and vice-chairperson committees, as well as their chairs, or by establishing terms of reference for directors individually. This ensures a uniform list of responsibilities, as well as clear boundaries to delegate and limits on the authority. It helps to create an environment of open and collaborative communication as well as reducing mistakes and ensure compliance with law. It could result in better growth opportunities as your company expands.

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