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Corporate governance standards establish how a business operates and is regulated. These provisions can vary from one business to another, but there are some that are considered common. For example, a corporation often reveals its management structure and business practices. Whistle blowing programs and methods of enforcing violations may be outlined. Transparency and disclosure are also commonly addressed.
Defining a business’s management structure is one of the most common governance standards. The titles of a company’s management positions may be defined in a manner that establishes their level of authority. In addition to that, the responsibilities and the limits of authority for various positions may be disclosed.
Business practices are usually included among the corporate governance standards. This information is beneficial to individuals who are employed by a company and to outsiders. For the employees, it can act as a resource by providing the operational policies and standards that help a company to define itself and to maintain a certain character. Outlining business practices can also provide outsiders with a basis for knowing what to expect from a given company.
Corporate governance standards also commonly outline the procedures to take criminal or civil action against individuals who do not act in accordance with the regulations or principles of the business. These procedures may address the handling of criminal acts, such as fraud and embezzlement, or they may address how individuals will be dealt with when they act unethically. This often includes outlining whistle blowing programs, which provides a method for employees to report violations without having to be concerned about retaliation for doing so.
There are often numerous parties involved in the existence of a corporation. One of those parties may be the company’s owner. In many instances, a business may be owned by someone who does not take responsibility for the operation of it. The role, rights, and limitations of owners are often outlined.
Stockholders are another group whose role is commonly outlined by corporate governance standards. These provisions often acknowledge the rights of individuals to purchase stock and to transfer it. It may be established that stockholders have rights to access certain information. The abilities and methods by which stockholders can participate in shaping the company or expressing concerns may also be outlined.
Transparency and disclosure can technically be referred to as business practices. These topics, however, are often addressed separately when outlining corporate governance standards. The purpose of these provisions is to establish which information will be made available to which parties and how it can be obtained.
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