What is corporate governance and how does it work?

Corporate governance is a system of laws, rules, and regulations that govern how a corporation is run. It sets forth rights and responsibilities of both the board of directors and the shareholders. In Tennessee, corporate governance is regulated by the Tennessee Business Corporation Act. The board of directors is responsible for overseeing the corporation’s business and acting in the best interests of the shareholders. The board reviews and makes decisions on major transactions, such as issuing stock, declaring dividends, and merging with another corporation. The board is also responsible for selecting the president, vice president, and other corporate officers, and setting their salaries and other terms of employment. Shareholders own the corporation. They are responsible for electing members to the board of directors, approving major corporate decisions, and voting for or against changes to corporate bylaws. Shareholders can also sue the corporation if their rights are violated, such as being deprived of rightful compensation or ownership in the company. In Tennessee, corporate law is enforced by the Business Corporation Act, which requires annual shareholder meetings, disclosures of financial information, and oversight of the board of directors. The act also outlines certain duties and obligations that must be met for the corporation to remain in compliance. Corporate governance helps to ensure that companies are run in a responsible and ethical manner, protecting the interests of shareholders and the public.

Related FAQs

What is the law on insider trading?
How is intellectual property enforced?
What are the rules for issuing stock?
What is the legal definition of a business partnership?
How is employment contract law enforced?
What legislation governs the regulation of financial services?
What is the purpose of contract law?
What regulations govern the establishment of subsidiaries?
What are the requirements for disclosure of financial information?
What is the process for winding up a company voluntarily?

What is corporate governance and how does it work?

Related FAQs

Related Blog Posts