governance risk compliance

The philosophy on basic governance implies the attainment of highest level of accountability, transparency and integrity. The real essence of basic governance lies in satisfaction of different aspiration of all customers, leaders, suppliers, employees, stake holders and the overall expectations of society. Board of Directors has a great role in supporting and maintaining the extensive principles of governance by directing the entire actions of the company to obtain the company’s declared objectives of accountability, transparency and integrity.

The Fundamental Aim of Basic Governance

The fundamental aim of basic governance is to maximize the long term values of shareholders. Consequently, good governance must perform in favor of all those issues that guarantee the addition of value to organization and serve the stakeholders’ interests.

Accountability in Governance

Accountability works in a top down approach. The higher the post is in designation the higher is its responsibilities and this system of accountability works from Chairman and Board of Directors to Chief Executives and so on. They all must accomplish their respective responsibilities to make basic governance a real thing for business and for society as well. In a company with all the good governance practices, accountability is in both directions, i.e. in the bottom up as well as in the top down.

Transparency in Governance

It implies timely disclosure of adequate, accurate and relevant information to company’s stakeholders. In the absence of transparency, no progress could be attained towards good governance. All the company heads should understand that one of the ways to increase the shareholder value is to increase transparency level. But more often than not, information sharing is held back on the excuse of confidentiality. In the present era of globalization, it has been important for the corporate sector to adhere to the information-disclosure norms of international standard. This is also important for the development of public confidence in businesses.

Once a company gets into public shareholding, it becomes imperative on the part of the company to provide a complete financial transparency. As the company acts as a trustee for the money of investors, this system demands full disclosure on the part of company. All corporations in the nation must work with impeccable integrity and transparency because these are the ingredients to maximize the wealth of corporations as well as of entire nation. To sum it up, disclosure and transparency are one of the strongest pillars of basic governance, which provide all the necessary information to the stakeholders to let them judge if their interests are being valued by the concerned corporation.

Merit based Management:

For a merit based management enough support and lead is needed from a well potent board of directors, especially for basic governance. On the other hand, the board of directors must be potent, non-partisan and a strong body, whose only motive should be to make comprehensive decisions by applying the best business prudence. Although corporate management is no match to basic governance, it is very important to have a sound management and administration that can look over the objectives of the company.

Basic governance sees to it that all the long term strategies, objectives and plans of the company are met properly by ensuring an effective and efficient management structure. At the same time, governance also makes sure that the management structure works in compliance with the integrity, responsibility and reputation of the company as well.

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