Corporate governance refers to actions taken by organizations to improve relationships and interactions with others, including consumers, stakeholders and business partners, such as engaging in community activities and promoting good environmental practices. Corporate governance includes a set of rules, procedures and operational structure that guides the short-term and long-term actions of companies. These actions include establishing codes of conduct for employees and balancing the interests of all stakeholders.
Corporate governance exists in organizations of all sizes, ranging from small companies to multinational firms. It sets a structure for internal operations as well as external affairs. Corporate governance impacts behavior and conduct at all levels of organizational operations, making it a key device for guiding actions of interns, entry-level workers, managers and CEOs in different departments. Corporate governance outlines policies and practices designed to balance the needs and interests of all stakeholders, including management, customers, government, financing organizations and the broader community. In addition to guiding the actions and behaviors of employees and behind-the-scenes operations, corporate governance establishes a public image. Most companies strive for high levels of corporate governance, which includes efforts to improve community relationships and engage in environmentally-sound practices. These organizations express good corporate citizenship, including providing transparency into their operations and promoting ethical practices.
Company stakeholders are demanding more oversight and diligence by boards in a variety of areas. The US Sarbanes-Oxley Act has changed the governance landscape on a global basis with a maze of new rules and regulations for accounting and disclosure, internal controls and risk management. Boards and audit committees have specific new requirements in fulfilling their roles.
Canada is squarely in the limelight with its very own corporate governance failures. As a result, Canada has its own corporate governance rules and regulations under Bill 198 and related guidance from the Canadian Securities Administrators. The resulting financial and reputational repercussions of non-compliance are greater than ever before. The rapidly changing environment and the sheer volume of material make it challenging to understand the rules and best practice of corporate governance. In addition, since much of the guidance is general in nature, boards and management need to carefully determine the specific strategies and actions to undertake.
Our Corporate Governance team is constantly researching the global best practices of governance in North America and across the globe. Our client network helps us to know not only what the latest rules and regulations are but also what the current best practices are in the boardroom. We assist Boards and management by reviewing their current governance practices and comparing them to the relevant rules, guidelines and best practices. For any gaps we identify, we recommend changes.
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