Essay On Best Principles Of Corporate Governance

The Importance of Corporate Governance Essay

1024 Words5 Pages

The need for clarification on the board requirements for a majority of independent directors as it relates to corporate governance is of great importance and would be discussed in this write up. According to Shleifer and Vishny (1997), corporate governance is the system, by which corporations are directed and controlled. On the other hand, an independent director is a person that has at no time, worked for the company nor owned shares in the company. This director also would not be related to any of the key employees nor would have worked for any major supplier, customer or service providers, such as consultants, accountants, lawyers, etc. In principle, as retrieved from Wikipedia, “an Independent director, is a director of a board of…show more content…

The need for clarification on the board requirements for a majority of independent directors as it relates to corporate governance is of great importance and would be discussed in this write up. According to Shleifer and Vishny (1997), corporate governance is the system, by which corporations are directed and controlled. On the other hand, an independent director is a person that has at no time, worked for the company nor owned shares in the company. This director also would not be related to any of the key employees nor would have worked for any major supplier, customer or service providers, such as consultants, accountants, lawyers, etc. In principle, as retrieved from Wikipedia, “an Independent director, is a director of a board of directors, who would not have a material or pecuniary relationship with the company or related persons, except sitting fees”. It is the duty of the independent director to ensure that the board is active, effective and performing well. It is also his duty to ensure that the CEO is executing his duty in line with the aims, mission and vision of the company, in accordance with the directives of the board. The importance of independent directors’ roles cannot be over emphasized and the major role being improving the performance of the board and the company as a whole. These roles, however are constrained by various factors, the two most prominent, being the information that is available to the independent directors, and the position / size

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The Rules and Principles of Corporate Governance Essay

913 Words4 Pages

Corporate governance often refers to a set of rules and principles by which a company is directed. It provides a guideline for directing a company in order to fulfil its objective, brings added value to the enterprise, and is beneficial to the shareholders in long-term. (1) The rules and principals of corporate governance to an extent might be different in various companies, but some of these rules are similar in all the firms; such as accountability and responsibility towards the shareholders and commitment to conducting business in an ethical manner. (2)
Family-owned companies are the leading form of business in many countries. In Middle East, over eighty percent of the businesses are either owned or run by families (3). In Latin…show more content…

Corporate governance often refers to a set of rules and principles by which a company is directed. It provides a guideline for directing a company in order to fulfil its objective, brings added value to the enterprise, and is beneficial to the shareholders in long-term. (1) The rules and principals of corporate governance to an extent might be different in various companies, but some of these rules are similar in all the firms; such as accountability and responsibility towards the shareholders and commitment to conducting business in an ethical manner. (2)
Family-owned companies are the leading form of business in many countries. In Middle East, over eighty percent of the businesses are either owned or run by families (3). In Latin America, Brazil, over 50 percent of the largest companies (more than 100 corporations) are family-controlled (2). A significant number of all the family businesses have been created in 1950s or early 1960s that means they are going to experience a generational change over the next five to ten years. There is no need to mention that a generational change makes corporate governance more essential for family-owned enterprises.
As the time passes, a business goes through different stages; initiator, 2nd generation, 3rd generation and so on or as Harvard professor John Davis, according to Family Business Challenges (2) puts them, founder stage, siblings’ partnership, cousins’ confederation, etc. During the founder stage, normally a single person,

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