What do you understand by “corporate governance”?

This is the system by which companies are directed and controlled. It is the way the management of a firm is influenced by stakeholders e.g. owners, creditors, managers, employees, suppliers, customers, local residents and the government. The board of directors is responsible for governance of the company.
 The shareholders role in governance is to appoint directors and auditors and satisfy themselves that an appropriate governance structure is in place.
It is the responsibility of the board to set up the company‟s strategic aims, provide leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship.
Principles of corporate governance address five issues:
 Rights of shareholders
 The corporate governance framework must protect the rights of its members.
 Equitable treatment of shareholders
The framework must ensure that all shareholders i.e. majority and minority are treated equally.
Role of stakeholders
 Disclosure and transparency
 Responsibility of the board