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Corporate Governance:

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Corporate governance is about the management of business enterprises organised in corporate form, and the mechanisms by which managers are supervised. Thus, the topic includes a study of corporate internal rules, and this area of study is dynamic and in a state of continual growth and development. This is because the organisational structure of the company can change and evolve, management is not static and corporate activity is dynamic. Corporate managers have a great deal of power, from managing staff, resources and capital. As a consequence this power entails a great deal of responsibility. Therefore directors and managers owe duties to their company, duties which put legal constraints on their activities. In addition directors and managers may owe duties to the stakeholders. Corporate governance is a structure of rules, regulations and policies to ensure that managers and directors of a company entity conduct their roles in a manner that complies with the law as well as the agreed rules by other stakeholders. Professional legal advice from a Commercial Lawyer may be beneficial to ensure that your company complies with corporate governance.

Corporate governance is a very broad topic, extending to all aspects of the relationships to one another of the stakeholders, managers and auditors of a company. The rationale behind corporate governance can be explained by agency theory. This is because directors and managers manage resources and money that is not their own, therefore will not exercise the same level of vigilance compared to the party who personally owns those resources. Corporate governance is the mechanism to prevent negligence and recklessness in managing the affairs of such a company. Having proper legal and financial advice from a network of skilled tax and finance professionals may be immensely useful if you work within a corporate entity and are affected by corporate governance.

Corporate governance is a topic that gains much traction and exposure during times of excess, corporate collapses and economic down turn. The study of corporate governance extends well beyond legal matters. The law allows managers considerable discretion to organise the affairs of the company in such a manner as to maximise its efficient operation. Management theory provides a multitude of solutions to the management dilemma within the limits set by the law.

Further, corporate governance can be motivated by the interests of efficiency and fairness not just the need to comply with the law, checks and balances and other legal compulsion. For example, a corporation may be persuaded to adopt policies that a certain percentage of board members should be non-executive, independent directors, the chairperson of the board should be a non-executive director, and the board should establish audit and remuneration committees. Although in many companies such things may be legislated and enforced for many other corporations, such measures may be adopted as a matter of choice. Professional legal advice by a Commercial Lawyer may be advantageous to ensure that you fulfill your fulfill any obligations under corporate governance.

If you would like further information or wish to discuss your corporate governance matter with us please do not hesitate to contact us by telephone on (02) 9233 4048 or by email to info@navado.com.au

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