A clearly defined corporate governance structure promotes fairness and transparency, allowing your company build solid relationships with its shareholders and the local community. It helps define roles, assures accountability, and allows for compliance with the law and regulations. It also helps to ensure the long-term development of a company by aligning shareholder and management interests.
There are many different types of corporate governance, but the one that’s right for you is based on your company’s objectives and the culture of your company. Keep in mind the following key concepts:
Unitary Board Structure
In this corporate governance model the board of directors is accountable to make decisions and supervise company activities. The board consists of executive and nonexecutive directors. This type of structure is typical in small to mid-sized businesses.
Continental Model
Continental’s two-tiered model is a structure that grants control to both a management board and the supervisory panel. The management board consists of insiders from the company, such as executives and managers. The supervisory board consists of outsiders, such as bankers and union representatives who have stakes in the company.
Stakeholder-Oriented governance
This type of governance structure, in contrast to traditional structures that focus on shareholder interests, considers all stakeholders, including employees vendors and customers as well as the community. It encourages boards and committees to develop effective Maximizing Deal Success: The Strategic Benefits of Using M&A VDR engagement programs and to adopt policies that reflect the larger environmental and social concerns. The board should be transparent and transparent about its decision-making processes and communicate this information to all parties. It should also ensure that there are clear lines of communication between the board, company management and shareholders.