There are arguments in favor of term limits for Directors. By establishing Director tenure limits, organizations make room for rejuvenation and the onboarding of Directors with new skillset and relevant experience. Boards also set tenure limits to allow for membership to be refreshed periodically. As businesses evolve, the skillsets required for Board effectiveness change. Tenure […]
There are some common misconceptions about the role of the Board of Directors. Some people think the Board is a mysterious group of people who waltz into head office and shut themselves in the Boardroom every quarter with stern faces, attending long and boring meetings where they criticize and lambast Management. Another group believes the […]
The role of the Board is a crucial one and as such legislation and a plethora of cases recognize the Board as the alter ego of the Company. Although shareholders are owners, the complex nature of company membership does not allow it to exercise and carry out the far-reaching duties that are consequential to running […]
Many businesses take out insurance to mitigate potential risk exposures and uncertainties – such as flood, hurricane, fire, burglary, etc. They install security systems to safeguard against theft and other threats, and back up data to protect proprietary information. There is a tendency to get too busy with the day-to-day operations to the detriment of making […]
A major responsibility of the Board is selecting the CEO. It must therefore ensure that it picks the right CEO and puts in place a succession plan that allows for smooth transition. With increased responsibilities and more stringent regulatory oversight, Boards need to ensure that they appoint CEOs who will allow them go to sleep […]
“Paying adequate attention to sustainability issues including environment, social, occupational and community health and safety ensures successful long-term business performance and projects the company as a responsible corporate citizen contributing to economic development.” Corporate Governance has long advanced beyond compliance and governance matters to include sustainability issues and other non-financial performance indices. According to the […]
“Full and comprehensive disclosure of all matters material to investors and stakeholders, and of matters set out in this Code, ensures proper monitoring of its implementation which engenders good corporate governance practice.” Corporate Disclosures constitute an important aspect of Corporate Governance. According to Healy and Palepu, the main aim of corporate disclosures is “to communicate […]
“The establishment of policies and mechanisms for monitoring insider trading, related party transactions, conflict of interest and other corrupt activities, mitigates the adverse effects of these abuses on the Company and promotes good ethical conduct and investor confidence” Corporate leaders have to embrace, with significant commitment, the importance of ethical culture. At the forefront of […]
A conflict of interest occurs when an individual is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other. It is inevitable that Directors will face situations of potential conflict of interest with the companies they serve. The “Agency Theory” postulates that Shareholders are principals and Management […]
“The establishment of professional business and ethical standards underscores the values for the protection and enhancement of the reputation of the Company while promoting good conduct and investor confidence.” Corporate governance is an encompassing concept that defines the way a Company or organization is managed and controlled. It prescribes a set of rules which help […]