Types of Corporate Governance

A well-defined corporate governance system is a great way to ensure transparency and fairness, helping your company cultivate a strong relationship with shareholders and the public. It defines roles, provides accountability, and allows compliance with laws and regulation. It also aids in the company’s long-term growth plan by aligning the interests of shareholders with the interests of the board as well as management.

There are a variety of corporate governance, but the one that works best for you will depend on your company’s objectives and culture. A few of the key concepts to keep in mind are:

Unitary Board Structure

In this system of corporate governance, the board of director is responsible for overseeing and making decisions about the company’s activities. The board is comprised of non-executive and executive directors. This structure is common for small- to mid-sized companies.

Continental Model

A two-tiered structure, the Continental model gives control to a management board and a supervisory board. The management board is composed of insiders from the company such as managers and executives. The supervisory board is comprised of outsiders such as bankers who have stakes in the business.

Governance that is stakeholder-oriented

This type of governance structure, which is different from traditional structures, which place emphasis reference on shareholder interests, will consider all stakeholders, including employees, vendors and customers, as well as the community. It encourages boards and committees to develop engaging programs that are meaningful and adopt policies that reflect the larger environmental and social issues. The board should be transparent and open regarding its decision-making processes and make this information available to all stakeholders. It should also ensure that there are clear lines of separation between the management, board members and shareholders.