A clearly defined corporate governance framework is a great way to ensure transparency and fairness which helps your company build solid relationships with its shareholders and the community. It helps define roles, assures accountability, and ensures compliance with the law and regulations. It also aids in the long-term development of a company by aligning shareholder and management interests.

Corporate governance is a complicated concept that is based on the culture and goals of your company. Keep in mind the following essential concepts:

Unitary Board Structure

In this system of corporate governance the board of directors is responsible for overseeing and making decisions regarding the company’s activities. The board comprises non-executive and executive directors. This structure is most common in mid-sized and small companies.

Continental Model

Continental’s two-tiered model is a what are the four types of corporate governance two-tiered structure that grants control to both a management board, and a supervisory panel. The management board is comprised of insiders within the company, such as managers and executives. The supervisory board is made up of outsiders, like bankers and union representatives who have stakes in the company.

Governance that is based on stakeholder engagement

Contrary to traditional structures that focus on shareholder interests, this type of governance structure takes into account the needs of all stakeholders, including customers, employees vendors, and the community. It encourages boards to design effective engagement programs and to adopt policies that reflect larger environmental and social issues. The board should be open about its decision-making process and make it available to all stakeholders. It should also ensure that there are clear lines of communication between the board, the company management and shareholders.