Corporate governance is the set of rules and structures which governs the operation of businesses. It entails the accountability of the board of directors and senior managers of a business and preventing conflicts between management and shareholders as well as promoting open and transparent communication and ensuring compliance to the laws and regulations. It also promotes fairness among stakeholders and helps the company achieve its goals. To select the best corporate governance model for your business it is crucial to know the various types.
Shareholders have ownership of a corporation and have rights, such as the right to vote on issues and receive relevant information regarding their investment and voting decisions. As the shareholders, they are entitled to expect managers and boards to act as long-term stewards of their investment. Shareholders also expect a high level of corporate transparency.
There are several different models of corporate governance, including the Anglo-US model, the German model and the Japanese model. Each model has its own focus and is different in the way it manages business risks. In addition to the various models, there are different national requirements for corporate governance.
The continental model is a two-group control system. The management board is comprised by company insiders such as executives, while the supervisory board is composed of outsiders such stockholders and union representatives. The model is well-known due to its focus on national and government interests and the corporate responsibility to serve society and contribute to it.