WHAT IS Corporate Governance?

Corporate governance is a system of accountability for a corporation’s board of directors. It ensures that the company stakeholders’ interests are protected in the day-to-day management of the company. 

In a corporate governance system, shareholders own the company. Their main role is to appoint a board of directors and establish an appropriate governing structure. The board of directors act on behalf of the shareholders, ensuring that the company is efficiently run and profitable.

Each company is unique in its operations. Company-specific requirements for the board of directors are established in the company’s bylaws. The board of directors is then responsible for setting out policies and procedures for their management team to implement. Board members also manage company finances and report the financials back to the shareholders.   

Board members are expected to use their role to pursue the financial interests of the company. In the past, however, there have been instances where board members pursue their own interests first. With a business structure that operates on trust, this leaves shareholders vulnerable.

A lack of trust and transparency can threaten a company’s reputation and profit. Setting up the right business structure and internal systems from the start can help to mitigate costs and ensure long-term success.

The Business Law practice at Pihl Law encompasses every aspect of managing a business. From start-ups to established operations, investments, and reporting, we can help you structure a business that is built to last.

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