What is the purpose of corporate governance?
Corporate governance is a system of laws, policies, and procedures that direct and monitor the activities of a business. It is designed to ensure that the business is operating in accordance with the wishes of its owners (the shareholders) and that the company is compliant with applicable laws. The purpose of corporate governance is to create a fair and open system in which the interests of the shareholders and other stakeholders, such as employees, customers, creditors, and society are taken into account. Corporate governance also seeks to create a system of checks and balances to ensure that no one individual or group can have excessive power over the management of the company. The corporate governance system is designed to protect the rights of the shareholders and keep the company on the right track. Corporate governance sets limits on how much money the company can spend and on how profits are distributed. It also ensures that the company is operating in an ethical manner and that it is providing adequate disclosure of its financial information. By following the guidelines set forth in corporate governance, companies ensure that their decisions and activities comply with the law and are in the best interests of their shareholders. This helps protect the value of an investment in the company and promotes trust in its activities. Additionally, corporate governance helps ensure that the company operates in an environmentally and socially responsible manner.
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