The Board of Directors and corporate governance
For the “much-used” business people, “corporate governance” is still a fad. For those who want to make the public piracy of alignment with trends, corporate governance is “good”. But for those who want to enter the era of accountability and transparency, this is a must.
Defined as the totality of systems and processes implemented to lead and control a company in order to increase its performance and value, corporate governance removes companies from the gray area of non-reporting, non-performance and arbitrariness and brings them to the area of transparency, performance and accountability through professional management. business.
Five elements support a company’s ability to manage risk and have effective corporate governance: organizational culture, management practices, goal alignment, systems and structure. Thus, in the implementation of corporate governance, clear, staged approaches are needed, targeting both the management team and the Board of Directors, whose main roles and responsibilities are the following:
1. The Board of Directors must bring value
There is a need for a high-performing and efficient Board of Directors, which can oppose the decisions of the executive management. This means that there must be non-executive members on the Board, with different visions and skills and with adequate professional experience. Its structure, therefore, must demonstrate a balance between independence, diversity of skills, knowledge, experience, perspective and gender. It is advisable that the Board of Directors, through its composition, size and commitment, be effective in carrying out its responsibilities and duties properly.
2. Effective management supervision
The Board of Directors must provide strategic guidance to the company and effective management oversight. Clarify the roles and responsibilities of the members of the Board of Directors and the executive directors. Facilitate the exercise of the responsibilities of the Board and the management towards the company and its shareholders.
3. Promoting ethical and responsible decisions
The Board of Directors must ensure that management promotes ethical and responsible decisions and complies with all relevant policies, laws, regulations and codes of good practice. Ethics and operating principles address the following issues: conflicts of interest, corporate opportunities, confidentiality, fair treatment, protection and use of company assets, compliance with laws and regulations, and encouraging reporting of illegal / unethical behavior.
4. Protecting the integrity of financial reporting
By establishing, under the law, the Audit Committee, the Board of Directors has a structure that independently verifies the integrity of the company’s financial reporting, including the work of the internal audit department. The existence of such an independent committee is internationally recognized as a hallmark of good corporate governance.
5. Regular and balanced information
In its work the Board of Directors promotes timely and balanced information on all important issues related to the company. To achieve this, the company implements structures designed to ensure compliance with the relevant legislation and to ensure the responsibility of senior management for this compliance. All investors have equal and timely access to material information about the company, including its financial position, performance, assets and governance. The information is factual and presented in a clear and balanced manner.
6. Respect for shareholders’ rights
The Board of Directors respects the rights of shareholders and facilitates the effective exercise of those rights. To this end, the Board is responsible for ensuring that there is a satisfactory dialogue with shareholders based on effective communication, easy access to balanced and easy-to-understand information about the company. Shareholders’ participation in general meetings is also facilitated.
7. Recognition and management of risk
The Board is responsible for reviewing the adequacy and effectiveness of risk management strategies and for reviewing and approving the risk management framework. The development of risk management policies is supervised and a statement is published on how the risk is managed in the company. The existence of a risk manager at company level is ensured, as well as a Risk Committee that helps with the correct decision making with recommendations.
8. Supporting performance improvement
The Board of Directors is committed to encouraging greater efficiency in the work of the Board and management through regular performance evaluations and reviews. The Board also ensures that directors have the knowledge and information they need to carry out their responsibilities effectively. Management is required to provide the Board with information in a form, timeliness and quality that enables it to carry out its duties and responsibilities.
9. Recognition of the legitimate interests of stakeholders
In addition to its obligations to stakeholders, the company has other obligations to employees, customers and the community as a whole. The Board of Directors has the responsibility to set the standards regarding the corporate social responsibility of the company and to supervise their observance. Ethics and operating principles support the Board in this task and act as a guide for employees and management in managing their business and general behavior.
Corporate governance is a system of rules, practices and processes by which a company is run and controlled. It is the necessary foundation to be able to continuously improve the quality of the decisions of those who run a company. Good quality and ethical decision-making enables companies to produce long-term added value in a sustainable way.
Florentina Șușnea este Managing Partner în cadrul companiei PKF Finconta. Experiența ei profesională de peste 26 de ani cuprinde domeniile de audit statutar și IFRS, consultanță fiscală, probleme de rezidență fiscală, restructurare financiară și fiscală, documentație și politici de Transfer Pricing, fuziuni și divizări, M&A, expertize judiciare, contabile și fiscale, due diligence de achiziții. Florentina este membru acreditat al următoarelor organizații profesionale: Camera Consultantilor Fiscali, Camera Auditorilor Financiari din România, Camera Expertilor și Contabililor Autorizați din România si Association of Certified Anti-Money Laundering Specialists. A absolvit Facultatea Finanțe-Contabilitate din cadrul Academiei de Studii Economice, București, Facultatea de Drept din cadrul Universității ”Titu Maiorescu”, programul MBA de la Tiffin University din SUA, este doctor în economie și a urmat numeroase cursuri naționale și internaționale în domeniul fiscal. firstname.lastname@example.org