Corporate Governance

In: Business and Management

Submitted By rasnaroy
Words 1342
Pages 6
Scope of corporate governance: |

Corporate governance is "the system by which companies are directed and controlled". It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees.
Corporate Governance has a broad scope. It includes both social and institutional aspects. Corporate Governance encourages a trustworthy, moral, as well as ethical environment.
Scope of Corporate Governance can be shown in the following picture for at a glance realization:

The rights and obligations of shareholders

A corporate governance framework should protect shareholder rights. It should ensure that there is one vote for one share. It should ensure that management provides sufficient and relevant information. It should encourage shareholders to participate in annual general meetings and vote. Shareholders should be able to share in residual profit (dividends). Minority shareholders should be protected. It should ensure fairness and transparency in the operations of the company.

Obligations: use voting rights.

Equitable treatment of shareholders

A corporate governance framework should ensure equitable treatment of all shareholders, including minority and foreign shareholders;

Same voting rights (within same class of shares etc);

All shareholders of same class should be treated equally.

The role of stakeholders in corporate governance

A corporate governance framework should ensure that the rights of…...

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