Corporate governance can be said to be the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board of directors, officers, and shareholders, and spells out the rules and procedures for making decisions on corporate affairs.
A properly defined and enforced corporate governance provides a structure that is supposed to work for the benefit of everyone concerned by ensuring that the corporation adheres to accepted ethical standards and best practices as well as to applicable laws.
The term corporate governance has received attention because of several high-profile scandals involving abuse of corporate power and criminal activity by corporate officers. An important part of an effective corporate governance policy requires an effective manner in which to hold those in power liable for unethical or illegal acts in the performance of their duties.
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