Best practices for corporate governance go beyond more than simply ticking boxes to satisfy the requirements. They are a set of guidelines that aid companies in performing better and build confidence with shareholders and other stakeholders. They provide a path to the future of your company, and they can be applied to large or small businesses whether private or public, and also to businesses of all kinds.
Good governance starts with people. Boards need to select the most qualified candidates, establish a clear process for recruitment and ensure that their employees are committed to the job. They must also make sure they are able to evaluate management practices effectively.
The next step is to develop a system that will minimize conflicts of interest. This includes setting a code of conduct for board directors, the audit committee and the compensation committee, as well as having policies in place to ensure transparency and integrity, as well as ethical conduct.
In addition boards must have an established leadership structure and an independent lead director. This is true regardless of whether the board is comprised of a separate or combined chair and CEO. A strong independent presiding director is crucial to building a culture of collaboration and consensus in the boardroom.
Finally, the best governance practices require boards to communicate with shareholders and other stakeholders on a regular basis and openly. It is crucial to provide their financial statements, along with other information readily available. It also means giving regular updates on new or changing governance standards, and encouraging a dialogue with all stakeholders.