A clearly defined corporate governance framework promotes fairness and transparency, allowing your company build strong relations with its shareholders as well as the local community. It helps determine roles and responsibilities, ensures accountability and enables compliance with the law and regulations. It also aids in the long-term growth of an organization by aligning shareholder and management interests.

There are a variety of corporate governance, however the one that’s most effective for your needs is determined by the goals of your company and its culture. A few of the key concepts to be aware of are:

Unitary Board Structure

In this corporate governance model the board of directors is responsible for making decisions and overseeing company activities. The board includes both executive and non-executive directors. This type of structure is reference typical in mid-sized and small-sized companies.

Continental Model

Continental’s two-tiered model has a two-tiered structure that grants control to both a management board and a supervisory panel. The management board consists of insiders from the business, such as executives and managers. The supervisory board consists of outsiders, like bankers and union representatives who have stakes in the company.

Governance that is stakeholder-oriented

This type of governance structure, unlike traditional structures which prioritize shareholder interests, takes into account all stakeholders, including employees, vendors and customers as well as the community. It encourages directors to adopt policies that reflect environmental and social concerns and to develop relevant engagement programs. The board must be transparent in its decision-making process and communicate that information to all stakeholders. It is also important to ensure that there are clear lines of communication between the board, the company management and shareholders.