Principles Of Corporate Governance

INTRODUCTION

The fundamental of corporate governance is to promote fairness, transparency, accountability as well as guide corporate bodies in their action and deed. Good corporate governance and not assets value determine the profitability of organizations.

Governance is a combination of strong commitment of the management to safeguard the interest of various stakeholders, openness in sharing ideas, as such creating an environment for enterprises and corporate ethics to blossom. Therefore, it provides broad parameters of accountability, control and reporting system by the management and it encompasses the interactive relationship among various constituents in determining direction, and performance of the corporate.

DEFINITION OF CORPORATE

This involves a set of relationships between the management of a corporation, its board, its shareholders and other relevant stakeholders. Good corporate governance requires that the board must govern the corporation with integrity and enterprise. While the board is accountable to the owners of the corporation (shareholders) for achieving the corporate objectives, its conduct in regard to factors such as business ethics and the environment for example may have an impact on legitimate societal interests (stakeholders) and thereby influence the reputation and long-term interests of the business

It improves strategic thinking at the top by inducting independent directors who bring a wealth of experience, and a host of innovative ideas iii. It rationalizes the management and monitoring of risk that a firm faces iv. It limits the liability of top management and directors, by carefully articulating the decision making process

v. It has long term reputational effects among key stakeholders, both internally (employees) and externally (clients, communities, political/regulatory agents)

OBJECTIVES OF CORPORATE GOVERNANCE

Good governance is integral to the very existence of a company. It inspires and strengthens investor's confidence by ensuring company's commitment to higher growth and profits.

It seeks to achieve following objectives:

i. That a properly structured Board capable of taking independent and objective decisions is in place at the helm of affairs; ii. That the Board is balanced with regards the representation of adequate number of non-executive who will take care of the interests and well-being of the independent directors and all the stakeholders; iii. That the Board adopts transparent procedures and practices and arrives at decisions on the strength of adequate