1. What is corporate governance?
Answer:
Corporate governance is the system of rules, practices and procedures by which a company is directed and controlled. It ensures accountability, fairness, and transparency in a company’s relationship with its stakeholders, including shareholders, management, customers, and regulators.
2. Why is corporate governance important?
Answer:
Corporate governance is critical for the following reasons:
Accountability: Make sure that management acts in the best interests of the stakeholders.
Risk Management: Identify and mitigate operational and financial risks.
Investor Confidence: It will attract investments through strong leadership and ethical practices.
Sustainability: It ensures long-term success of the business and also adheres to legal and ethical standards.
3. What are the main principles of corporate governance?
Answer:
Accountability: Management is answerable to the board and stakeholders.
Transparency: Clear disclosure of financial and operational information.
Fairness: All shareholders, including minority investors, are treated equally.
Responsibility: Ethical decision-making based on the values and long-term goals of the company.
Read Also:
- https://quantumlawsolutions.com/top-10-questions-entrepreneurs-ask-about-corporate-law/
- https://quantumlawsolutions.com/15-essential-questions-and-answers-about-business-incorporation/
- https://quantumlawsolutions.com/7-questions-to-navigate-corporate-mergers-and-acquisitions/
4. What does a board of directors do in corporate governance?
Answer:
A board of directors oversees the company’s strategic direction and ensures the company adheres to governance principles. Key duties include:
Setting corporate policies and objectives.
Hiring and evaluating senior management.
Approving major financial decisions.
Monitoring company performance and risk management.
5. How does corporate governance affect shareholders?
Answer:
Good governance protects shareholder rights by:
Providing transparency in decision-making and financial reporting.
Providing channels for grievance redressal (for example, by voting at annual general meetings).
Treating shareholders equitably, especially minority shareholders.