Quite a number of private limited companies are owned and controlled by a single individual or family. While maintaining relationships between their board and shareholders may not be as difficult as it is for listed companies, corporate governance is still crucial as a foundation for development and success.
What Is Corporate Governance?
It is the system of rules, practices, and processes by which a firm is directed and controlled. This governance style involves balancing the interests of a company’s stakeholders, such as shareholders, senior management executives, clients, the government, and the community.
Through processes, practices, and policies, corporate governance promotes sound and effective decision-making. Furthermore, it serves as the first line of defense against any allegations of malpractice or breach of corporate duty.
Other Importance of Corporate Governance include:
1. Shareholder Primacy:
Shareholders, which refers to people who buy the company’s stock and fund its operations, have a direct say in how a company is run. Corporate Governance allows them to elect the board of directors. The board of directors hires and oversees the executives who comprise the team that manages the daily operations of a company. This means that shareholders, effectively, have a direct say in how the company is run.
This is an increasingly important aspect of corporate governance. Shareholders and customers/clients need to feel confident that their personal information is not accessible to unauthorized users. It is also critical to ensure the security of the company’s proprietary processes and trade secrets.
Shareholder interest is a major part of corporate governance. Shareholders may reach out to the members of the community which encourages lines of communication that promote company transparency and trust. Transparency means that anyone, whether inside or outside the company, can choose to review and verify the company’s actions.
Like our GMD/CEO, Nonso Okpala rightly said “We believe that corporate governance is not just a requirement but is an enduring strategy for success in the corporate world, and what we have achieved over the years is because we created a platform for people to make investments and for them to feel assured that their investments are managed in their best interest”.