Corporate governance is a set of rules and structures that govern the operation of businesses. It entails the accountability of the board of directors and top managers of a company in avoiding conflicts between shareholders and management, encouraging transparent communication, and ensuring compliance to the laws and regulations. It also promotes fairness between stakeholders and helps in the achievement of the company’s goals. It is crucial to be aware of the various types of corporate governance in order to select the right one for your business.
Shareholders own a corporation and have rights, such as the right to vote on issues and receive relevant information regarding their investment and voting decisions. They are hoping that boards and managers will serve as long-term stewards to their investments. Shareholders demand a high degree of corporate transparency.
There are many different models of corporate management, including the Anglo/US model as well as the German and Japanese models. Each model has a distinct focus and differs in the way it manages business risks. There are various corporate governance models, as well as national variations.
The continental model is a two-group control model. The management board is comprised of company insiders, including executives, whereas the supervisory board is comprised of outsiders like stockholders or labor union representatives. The model is well-known due to its focus on national and government interests and the obligation of the company to serve society and contribute to it.
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