The Different Types of Corporate Governance

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Corporate governance is the set of rules and structures that govern the operation of businesses. It encompasses the accountability of a company’s board of directors and the senior management and avoiding conflicts of interest among shareholders and management as well as promoting transparency and making sure that the company is in compliance with laws and regulations. It also promotes fairness among parties involved and assists the company to achieve its goals. To select the most effective corporate governance system for your company it is important to understand the different kinds.

Shareholders own a company and have rights, such as the right to vote on matters and receive information that is relevant to their investment decisions and voting decisions. As therefore, they expect boards and managers to be long-term stewards to their investments. Shareholders are looking for a high level of corporate transparency.

There are a myriad of models of corporate management that include the Anglo/US model as well as the German and Japanese models. Each model has a distinct focus and differs in the way it manages business risk. In addition to the various models, there are also different national standards for corporate governance.

The continental model is a control system that has two groups. The management board consists of insiders from the company like executives. The supervisory board consists of outsiders like employees and stockholders. The model is well-known due to its focus on national and public interest and the corporation’s duty to serve society and contribute to its improvement.