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Corporate governance rules and principles
Corporate governance rules and principles
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A reflect essay of 1000-1200 words analyzing the 3 most important elements of corporate governance within family business. Corporate governance most often refers to a set of rules and principles by which a company is directed. It will provide a guideline for directing a company in order to fulfil its goals and objective and finally brings add value to the company and also be beneficial to the shareholders in long terms. The rules and principals of corporate governance may be different in every company, but some of these rules exist in every one of them such as accountability and responsibility towards the shareholders or commitment to conducting business in an ethical manner and more important is to put a difference between what are personal and corporate funds and assets while managing a company which is essential in family-owned firms. Family-owned companies are the leading form of the business organization in most of the world. In Middle East, over eighty percent of the business are either owned or run by families. This is also applied to the other parts of the world, like in Latin American, Brazil, over 51.1 percent of 200 largest companies are family-control. A significant number of these business started in 1950 to early of 1960 and they are going into generational change phase over five to ten years, which make the corporate governance more essential as the family-owned businesses are more complex and the needs of rules and principles in them are more necessary and required than professionally run business. There are many different elements in corporate governance, some of them are major and the others are minor. As the author points of view, the three most important elements in corporate governance are family governance,... ... middle of paper ... ... in the market. But as every other aspects, it has its own disadvantages such as lost of the privacy, Loss of Autonomy, Increased Liability and Possibility of a Takeover. Therefore, to overcome these disadvantages, the family needs a set of strict rules and framework in order to secure the family control and on the other hand bring a trust to the foreign investor that their rights won't abuse by the family. In conclusion, it can be said that corporate governance is a most essential and crucial to the family-owned firms. This essay has been able to analyse just three elements, but there are a lot more elements and rules which a company needed in order to be sustainable and successful during ages and these elements is like chain circle and the presence of every one of them is necessary to fulfil the purpose of the corporate governance.
Shivdasani, A., & Zenner, M. (2004). Best practices in corporate governance: What two decades of research reveals. Journal of applied corporate finance, 16(2/3), 29-41.
Finally, I will discuss which type of corporation I prefer. A Review of Corporate Roles and Duties The Role of the Board of Directors. The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s have access to independent advisors as each considers necessary or appropriate.
There are at least three areas that encompass ‘weak corporate governance’, 1. Multiple Prime Ministers from different parties 2. Inconsistent and ineffective policies and 3. Leadership.
The mister and misses of the family are the owners of the company and the key management. Employees include oldest children and other family members over the age of 18. Board members and advisors: Again, since this is a family owned company, each eldest member along with the owners, are those who taken time as board members to discuss all importation operations, budgets, and fundamentals of the company, and together, decide on which routes to take. Advisors are considered to be the business bank accountant and lawyer.
Corporate gorverance as a system are directed and controlld by companies. Initially, their board of directors should take responsible for the gorverance of companies, which include setting strategic aims of companies , guarantee an effective leadership, supervising the proformance of business management and reporting on it to shareholders. The board's action should comply with the law, regulations and shareholders. In addition, the shareholders also play an important role in gorverance and they have right to decide who can be employed as the companies' directors and auditors to provide good governance structure for them. Therefore, corporate goverance can be regarded as what the board of a company does and how it sets the values of the company.
Corporate governance implies governing a company/organization by a set of rules, principles, systems and processes. It guides the company about how to achieve its vision in a way that benefits the company and provides long-term benefits to its stakeholders. In the corporate business context, stake-holders comprise board of directors, management, employees and with the rising awareness about Corporate Social Responsibility; it includes shareholders and society as well. The principles which...
Yan, Jun, and Ritch Sorenson. "The effect of Confucian values on succession in family business." Family Business Review 19.3 (2006): 235-250.
Vocation Ltd as an Australian education and training provider had entered into voluntary administration just over 12 months since the company was suspended of almost $20 million government funding in 2015 (KEATING, 2015). ASX (2014) principles are set for better regulation on corporate governance which is believed as an essential factor to achieve good governance outcomes. Therefore, this essay will focus on how a better application of Corporate Governance (CG) Principles can possibly prevent the failure of Vocation.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
Tsui, J., & Gul, F. A. (2002). Consultancy on a Survey on the Corporate Governance Regimes in Other Jurisdictions in Connection with the Corporate Governance Review. Hong Kong: CityU Professional Services Ltd.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
The Cadbury Committee (1992) defined CG as a system, by which companies are managed, controlled and power exercised by executive elites in the management of resources for sustainable development (OECD, 2004). It also involves a set of relationships in an organization between its management, board, shareholders and other stakeholders (OECD, 2004). The CEO as the ring leader define the goals the organization pursues develop control systems that guide and monitor the organization's destiny. They construct an organizational structure and rules that appropriately govern the tasks to be undertaken and motivate their subordinates to complete these tasks (Kehinde, et al. 2012). The CEO as the ring leader is the one who designs and implement by way of instructing the subordinates, enthusiastically, motivating, encouraging and guiding them towards the achievement of the set goals. The CEO as the ring leaders sits at the apex of Governance structure and is the ultimate decision maker on how best the future state of affairs can be attained through the governance structure (Pettigrew, 1992). Corporate governance structure provides an opportunity through which different leadership styles could be explicitly exhibited by the executive as he seeks to promote efficiency, effectiveness, transparency,
Nonetheless, those who are not direct members of the family can also handle a family business. Family members are frequently taking active involvement in the business operations, and members of the family tend to take up top positions within the organization, but this is dependent on the succession strategy within the business. Some family businesses turn into public companies in order t...
The office of the Director of Corporate Enforcement (ODCE, 2015), Ireland defines Corporate Governance as “the system, principles and process by which organisations are directed and controlled. The principles underlying corporate governance are based on conducting the business with integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions and complying with all the laws of the land”. It is the system for protecting and advancing the shareholder’s interest by setting strategic direction for the firm and achieving them by electing and monitoring the capable management (Solomon, 2010). It is the process of protecting the stakes of various parties that have their interest attached with a company (Fernando, 2009). Corporate governance is the procedure through which the management of the company is achieving the goals of various stake holders (Becht, Macro, Patrick and Alisa,
Since this type of business involves family members, it is essential for the elders in the family to prepare the next generation for taking over the business. Some of the ways of preparing next generation are, Firstly, starting at an early age to be confidante they learn the leadership skill from its