Corporate Governance is a philosophy which requires companies to conduct their affairs in a manner that takes into account the interest of all stakeholders. Towards this end, it is necessary to put in place a set of rules, policies and procedures which help business to be conducted in a straight forward manner. The Board of Directors form an integral part of a company’s governance system, and it is responsible for co-creating the company’s strategy, and making major decisions that impact on the future of the company.
Good Corporate Governance practices are given a lot of importance by well managed and well governed companies. Some of the reasons for this are -
A company should not focus only on profit maximization. It takes a lot of effort to build the image of the company. Corporate Governance practices play an important part in such an exercise. Lack of good Corporate Governance practices has the potential of resulting in losses, which could tarnish the reputation of the company. Corporate Governance is crucial to avoid mis-management, and to enable a company to operate more efficiently, while promoting the interests of all its stakeholders.