What is Corporate Governance

Fraudulent Actions

What is corporate governance?

Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term . This definition seemed more appealing as it gave a broader understanding than the other offered definitions. It explains in plain simple terms what exactly corporate governance is and who it involves. Other definitions were vague and didn’t mention some of the participants involved. Corporate governance is a process and a system, and as with any system, it has many parts. Both internal and external actors can have a role in governance. Some examples of internal actors are directors, the company secretary, sub-board management, which are also known as the ‘middle’ management and employee representatives, otherwise known as trade unions.

The topic chosen is fraudulent actions. A fraudulent action can be characterized by, involving, or proceeding from fraud, as actions, enterprise, methods or gains, for example, a fraudulent scheme to evade taxes . A fraudulent practice means any action or omission, including misrepresentation that knowingly or recklessly misleads, or attempts to mislead, a party to obtain financial benefit or to avoid an obligation . Sometimes the law makes people like officers and directors and those who assist in furthering the fraud liable, even if they didn’t know about the fraud . The Companies Act, also known as the Principal Act 1963 introduced the idea of fraudulent trading under section 297 which cares for the res...

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...e quote by Wearing (2005), it is true that there will never be a perfect system of corporate governance. There does need to be a balance between the regulations, if there is too little, it leads to the abuse of corporate governance and if there is too much it will inhibit wealth creation. It is put in place to deal with the balance of power within a company, nothing is 100% and failure of a system is expected, but if the majority of the time, corporate governance is successful then maybe there should be a few more warning signs as if they are picked up early, action can be taken quickly and a resolution can be had. Throughout the findings of the essay, corporate governance and fraudulent actions are relevant to one another and corporate governance can be used to help deal with any fraudulent actions, so they work well together, which is important for any company.