Corporate governance, the soul of every corporate body, is indispensable for the survival, growth, and development of any kind of organization. It has significant impact and influence in attaining the confidence of stakeholder. Good governance leads to instill the confidence of stakeholder. The significance of corporate governance has increased globally in past decades due to financial crises, technology advancement, liberalizations, emergence of financial markets, and liberalization of trade and capital mobilization. Corporate boards, academicians, legislators, and in all businesses, corporate governance are believed to be a mainstream concern in corporate structure.
TopBoard Of Directors
Corporate governance, the soul of every corporate body, which is indispensible for the survival, growth and development of any kind of organization. It has significant impact and influence in attaining the confidence of stakeholder. Good governance leads to instill the confidence of stakeholder. The significance of corporate governance has increased globally in past decades due to financial crises, technology advancement, liberalizations, emergence of financial markets, and liberalization of trade and capital mobilization. Corporate boards, academicians, legislators and in all businesses, corporate governance is believed as a mainstream concern in corporate structure (Claessens, Djankov & Lang, 2000). The significance of corporate governance was realized and first time came into fashion in1970s in USA. While in Pakistan, Corporate governance code came into vogue in March 2002 after the operationalization of Securities and Exchange Commission of Pakistan (SECP), in order to make sure prism and accountability in corporate division for safeguarding the stake every stakeholder, particularly those of minority stockholders.
A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set policies for corporate management and oversight. Every public company must have a board of directors. Some private and nonprofit organizations also have a board of directors.
In general, the board makes decisions as a fiduciary on behalf of shareholders. Issues that fall under a board's purview include the hiring and firing of senior executives, dividend policies, options policies, and executive compensation. In addition to those duties, a board of directors is responsible for helping a corporation set broad goals, supporting executive duties, and ensuring the company has adequate, well-managed resources at its disposal.
Board Structure
The structure and powers of a board are determined by an organization’s bylaws. Bylaws can set the number of board members, the manner in which the board is elected (e.g., by a shareholder vote at an annual meeting), and how often the board meets. While there is no set number of members for a board, most range from 3 to 31 members. Some analysts believe the ideal size is seven.
The board of directors should be a representation of both management and shareholder interests and include both internal and external members.
An insider director is a member who has the interest of major shareholders, officers, and employees in mind, and whose experience within the company adds value. An insider director is not typically compensated for board activity as they are often already a C-level executive, major shareholder, or another stakeholder, such as a union representative.
Independent or outside directors are not involved in the day-to-day inner workings of the company. These board members are reimbursed and usually receive additional pay for attending meetings. Ideally, an outside director brings an objective, independent view to goal-setting and settling any company disputes. It is considered critical to strike a balance of internal and external directors on a board.
Board structure can differ slightly in international settings. In some countries in Europe and Asia, corporate governance is split into two tiers: an executive board and a supervisory board. The executive board is composed of insiders elected by employees and shareholders and is headed by the CEO or managing officer. The executive board is in charge of daily business operations. The supervisory board is chaired by someone other than the presiding executive officer and addresses similar concerns as a board of directors in the United States.