1. What is Corporate Governance?

Corporate governance is a framework that directs the behavior of employees inside a company as well as the overall course of the business.
It is a system consisting of rules, practices and processes which can direct and manage a company. It also consists of mechanisms by which relationships between company’s management, board of directors, shareholders and stakeholders are protected.

Corporate governance is completely different from the daily operational choices and actions carried out by an organization's management. The Board of Directors are responsible for corporate governance (such as the CEO and other C-suite executives) instead of the management team.The purpose of corporate governance is to ensure sustainability of the company by ethical and responsible operations. The framework should have policies which makes sure that company is complaint with applicable laws, regulations and standards.

Key points on Corporate Governance:

• Corporate Governance is a function (or a mechanism) and not a specific job role.
• Corporate governance as a function has widespread application in different domains, such as risk management, strategic planning, talent management and succession planning.
• The corporate governance functions at businesses are under pressure as a result of changing market dynamics and economic realities of how stakeholder needs are recognised and managed.
• A distinct and explicit division of responsibilities between management and the board is essential for a strong corporate governance function.
• Effective corporate governance requires transparent operations which includes regular reporting on the financial performance, disclosing material information and establishing audit processes.