7.2 PRINCIPLES OF CORPORATE GOVERNANCE
Corporate governance refers to the system of rules, practices, and processes through which companies are directed and controlled. It involves the relationships between various stakeholders, including shareholders, management, the board of directors, employees, and other stakeholders.
The principles of corporate governance are as follows;
- Accountability: Companies should be accountable for their actions, decisions, and performance to their stakeholders, including shareholders, employees, customers, and the wider community.
- Fairness: This includes fair treatment of shareholders in terms of their rights and entitlements, fair compensation and opportunities for employees, and fair dealings with customers, suppliers, and other business partners.
- Responsibility: Companies should act responsibly and consider the impact of their decisions and actions on the environment, society, and future generations.
- Independence: The board of directors should be independent and free from undue influence or conflicts of interest.
- Transparency: Companies should maintain transparency by providing accurate and timely disclosure of information to stakeholders.
- Board effectiveness: The board of directors should be effective in its oversight and decision-making roles.