By: Mohamed Sanih, Gn. Fuvamulah, Maldives
Dear Readers,
Corporate governance is a systematic way in which most companies are controlled and directed for the interests of all stakeholders and the ultimate the owners of the company, the shareholders.
What are the Key Concepts in Corporate Governance?
The key concepts in corporate governance can be defined best by the synonym (HAIR DRIFT) from the ACCA P1 Paper: Governance, Risk and Ethics
Honesty or (Probity): Create a culture of honesty & ethical stance within the organization.
Accountability: Providing comprehensive information to all concerned stakeholders and effective risk management within the organization.
Integrity: Have a high standard of strict moral and ethical values or codes.
Responsibility: Having a clear responsibility for corporate governance decisions and the clarification of individual roles and responsibilities.
Decision Taking: Take clear cut decisions to improve the wealth of an organization.
Reputation: Maintain a culture to develop reputation and moral stance and also to comply with the corporate governance concepts.
Independence: There should not be a conflict of interest between the executive directors and non-executive directors. NED's or non-excutive directors should be fully free and independent to make their decisions within the organization.
Fairness: All stakeholders should be dealt ethically and equal by the organization and should take into account their legitimate interests.
Transparency: Organization agents or directors should have an honest and open relationship with all stakeholders in their decision making process. And provide full disclosure of all material matters (whether financial or non-financial) which concern the company and this should be done in a ethical and transparent manner.
I am keeping this article short as this will be the first in a series to come in the future.
Sources on Corporate Governance:
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