A company which applies the core principles of good corporate governance; fairness, accountability, responsibility and transparency, will usually outperform other companies and will be able to attract investors, whose support can help to finance further growth. This blog will briefly outline the role of each principle.

An ownership structure concerns the internal organization of a business entity and the rights and duties of the individual holding the equitable or legal interest in that business. For instance, a shareholder who is also the owner of a corporation has certain rights.

A good corporate governance system: Ensures that the management of a company considers the best interests of everyone; Helps companies deliver long-term corporate success and economic growth; Improves control over management and information systems (such as security or risk management)

The three pillars of corporate governance are: transparency, accountability, and security. All three are critical in successfully running a company and forming solid professional relationships among its stakeholders which include board directors, managers, employees, and most importantly, shareholders.

Three key elements of good corporate governance

• Build a strong, qualified board. While there is no “one size fits all” when it comes to how to structure a board of directors, there are some common key elements:
• Clearly define shareholder rights.
• Transparency, transparency, transparency.

Ownership concentration is a significant internal governance mechanism in which owners can control and influence the management of the firm to protect their interests. This research focuses on the relationship between ownership concentration and corporate governance and disclosure practices of firms.

Effective governance has the following characteristics: it is efficient, allows a respectful conflict of ideas, is simple, is focused, is integrated and synergistic, has good outcomes, preserves community assets, and leads to enjoyment and personal reward for the individual board members.

The board oversees the conduct of the business and supervises management. Corporate statutes allow directors to delegate certain powers to the officers of the corporation such as the CEO or CFO. The board delegates responsibility for the company’s day-to-day affairs to the executives.

Integrity, competence, insight, dedication and effectiveness are vital. Key qualities of a good board member can be summarized as: Passion – deep interest in the mission of your organization.

The basics Just as for any corporation, the board of directors of a nonprofit has three primary legal duties known as the “duty of care,” “duty of loyalty,” and “duty of obedience.”

Traditionally, the issue with nominating a board is that shareholders have had little to no say in electing a board. The SEC allows investors and shareholders to nominate board members by placing them on the proxy ballot mailings before they are mailed out.

5 Tips for Dealing with Difficult Board Members

1. Confront the issue head on…. and in person.
2. Focus on the organization not the person. Ask yourself what will allow you to best meet your organization’s mission and ask your board member to do the same.
3. Use specific examples.
4. Use “I-messages.”
5. Listen.

Commentary: How to deal with a rogue board member

1. Directly communicate with the board member.
2. Hold a special committee session to discuss behavior.
3. Remove the board member, even if it is the Board Chair. No board member is above the mission. Be sure your by-laws are up to date and followed to the letter.

Specifically, Directors can be held personally liable based on three fiduciary duties: the duty of care, the duty of loyalty, and the duty of obedience. Fortunately, however, Directors can only be held responsible for breaches of fiduciary duties if the breach is due to recklessness or willful misconduct.

For your charity’s needs

1. have a sound and up-to-date knowledge of the organisation and its environment.
2. attend meetings and other appointments or give apologies.
3. prepare fully for meetings and for all work for the organisation.
4. actively engage in respectful discussion, debate and voting in meetings.

The Entity — The nonprofit may bring an action against its directors and officers. Examples include claims by current management against a former trustee. In some states, derivative suits are permitted. Directors — A nonprofit director may sue another board member alleging violation of a duty owed to the nonprofit.

While an officer of the board enjoys limited liability for actions taken on behalf of the corporation, if he breaches his fiduciary duties and engages in self-dealing or otherwise puts his own interest or the interests of a related party over his duty to the corporation, the officer may be held personally liable.