Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation Good corporate governance incorporates a set of rules that define the relationship between stakeholders, management and the board of directors of a company and influence how the company is operating.
The most basic function of corporate governance is to see that a business strategy is made effective by the company's executives and workers. At a quick glance, the importance of good corporate governance is that it will ensure the board of directors meet regularly, retain control over the business and are clear in the division of their responsibilities, as well as maintaining a system of risk management.
Paragraph on Importance of Corporate Governance
The company secretary will be responsible for duties such as ensuring that board procedures are followed and that all pertinent rules and regulations are abided by. They must also ensure the company keeping Companies House up to date with any necessary filings. Corporate governance can encompass many more duties, although the system of Governance will often vary from company to company.
Employing good corporate Governance helps the company to regulate risk and reduce the opportunity for corruption. Often, scandals and fraud within a company become more likely where directors and senior management do not have to comply with a formal governance code. The board should meet regularly, retain control over the business and monitor those in management, to enable it to see how the company is functioning.
Furthermore, a good corporate Governance scheme will make clear to every officer of the company, his or her duties and will encourage them to keep these duties in mind when making decisions. Implementing an excellent corporate governance system will also ensure that the company protects its members, officers and management. By ensuring that the company retains its records in the company books and maintains its statutory registers, they will be protected. Maintaining these records also means that officers of the company can be held accountable through documentation for their actions if necessary.