We discussed about Corporate Governance in our previous article as the system by which companies and other entities are directed and controlled. In this article we will discuss about the Principles of Corporate Governance. The boards of directors are responsible for governance of their companies and other entities. The shareholder’s role in governance is to appoint the directors and auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of board include setting the company’s strategic aims, providing the leadership to put into effect, supervising the management of the company and reporting to the shareholders on their stewardship. The board’s actions are subject to laws, regulations and shareholders in general meeting.
The principles of Corporate Governance is very simple – Responsibility, Accountability, Transparency and Fairness (RATF). These four principles can be applied in any situation or issue to check whether the governance is good or not. In corporate form of business, the governance issue arises because of separation of ownership and business. The principles of governance apply to both board of Directors and managers. Let’s discuss these principles:
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