User:Tanya Vanessa/sandbox

= Corporate Governance and Suitability = Corporate governance is defined as the system of rules, set practices and the process to establish, control and direct an organization. The corporate governance very well defines what the company is about, and who has the power to make decision and influence the others who are involved in the growth of the company and who is accountable to the changes of the company. Corporate Governance is ensuring that the employees know the best management practice and ensure that they are put into practice. Corporate governance is also the compliance of laws and regulations that is needed for the sustainability and to hold responsibility towards all stakeholders and to ensure the right distribution and social responsibility.

Corporate Governance is the relationship made within the participants who has the determination to follow the performance of the corporation. Effective corporate governance is the effective management of relationships among different stakeholders such as shareholders, managers, board of directors, employees, customers, creditors, suppliers and customers.

Any organization needs corporate governance to ensure suitability; here are the most important reasons why we need Corporate Governance;


 * Corporate Governance gives better access to the external finances and wealth.
 * Corporate Governance makes sure the cost of capital and the rate of interests are low.
 * Corporate Governance improves the performance of the company and increase the sustainability of the company.
 * Any company with Corporate Governance ensures that the value of the firm is high and shares the performance.
 * Corporate Governance also reduces the risk of corporate crisis and scandals about the organization.

1.    Principles of Corporate Governance
Sustainable development of all stake holders - Corporate governance ensures growth of all individuals who are associated with and who are affected by the enterprise on the sustainable basis.

Effective management and distribution of wealth - Corporate governance ensures that the organization creates maximum wealth and judiciously uses the wealth that was created to provide returns that would benefit all the stakeholders of the organization and maintains a sustainability of the wealth increase.

Discharge of social responsibility - Corporate governance ensures that the organizations are acceptable to the society that they are functioning in, and wouldn’t take actions that would cause damage to the society.

Application of best management practices - Corporate governance ensures to excel in the functioning of the business and increases the creation of wealth and increase the sustainability of the wealth created.

Compliance of law - Corporate governance ensures that the law and standards of the business are set at right which will increase the value of all stakeholders those grantees the socio-economic balance.

Adherence to ethical standards - Corporate governance ensures that the business hold integrity, transparency and independent to all the stakeholders involved in the business.

2.    Four Pillars of Corporate Governance
Listed below are the four main pillars of the corporate governance that ensure the best practices. These pillars have made the practices of Corporate Governance importance and inevitable.

Accountability

The first principle of Corporate Governance is accountability that is Corporate Governance ensures that the management is accountable to a Board of Directors and the entire stakeholder who are related to the business. By doing this the organization will always know that they need to take responsibility towards any business decision taken by them.

Fairness

The second principle of Corporate Governance is fairness, which makes sure that the rights of the stakeholders are protected by the organization at any given time. By practicing fairness, the company makes sure all the stakeholders of the organization are treated well without the differences, and everyone is given equal chances regardless of the age, gender, social class and their educational level. Corporate governance also ensures that there is effective redress for any violations taken.

Transparency

The third principle of Corporate Governance is transparency, which ensures that all the transaction monetary or non-monetary is taken timely, and accurately disclosed on all material that matters to the stakeholder, which includes the financial situation of the company, performance of the company, and the ownership of the company.

Independence

The fourth principle of Corporate Governance is independence. The procedures and structures of a company who act responsible towards the corporate governance would make sure that the law and order of the organization is at the right place so that they minimize the conflicts among stakeholder or it helps the completely avoid conflicts of interests among the stakeholders. The company is independent which makes sure the directors and advisers are free from the external influence which would damage the goodwill of the organization.

3.   Elements of Corporate Governance
Good Board Practices

Corporate Governance ensures that the board of directors of the company is well structured knowing their duties and responsibilities very well. Each board of director would have clearly defined roles and authorizes which helps in the smooth business process. This set of board would have people with different skills and expertise which will help the company to go back to the board during a time of crisis.

Good Board Procedures

Corporate Governance ensures that the board of director follows the appropriate board procedures, and has the directors who have the remuneration in line with practices which is towards the best interest of the company. And Board will also take time to self-evaluate and conduct trainings that would help them to be a better team to lead the business in this every growing market.

Control Environment

Corporate Governance ensures that the internal control procedures are at the right place, has the best risk management framework, disaster recovery system in place and media management techniques in use. The board also ensures that the business community procedures are in its right places and has independent external auditors to conducts audits which will increase the trust and business continuity.

Well-Defined Shareholder Rights

Corporate Governance makes it the boards’ responsibility to formalize the rights of the minority shareholders, and conduct well-organized meetings to keep them informed. Policies and laws made into the make each party’s tractions better. Polices for the extraordinary transitions are made and clearly defined.

4.    Relationship between Corporate Governance and Business Sustainability
As discussed above there is a strong positive relationship between the corporate governance and the sustainability of the business. The elements of Corporate Governance ensures that the business is conducted as per the laws and has the ethical practices that enables to business to function rightfully, and does not make a negative impact on the society in which they are functioning. In addition to that Corporate Governance also ensures that the stakeholders of the business is treated well and has increase of wealth due to the connection that they have towards the business.