Governance is the relationship between the company’s shareholders, board of director and management. This framework ensures that the interests of all stakeholders are aligned and allows the company to achieve success in its long-term plan. Transparency, accountability, and responsibility are the foundations of a sound corporate governance. They can aid in building trust among investors, customers and employees, and help to create an environment that is healthy.

A good board of director is comprised of insiders (major investors founders, executives and founders) as well as independent members who have no ties to the business. The outside directors bring a new perspective and expertise, which can be helpful in making business decisions. They can also act as a listening board for the insiders, providing them with additional support and insight.

Another key element of governance is the notion of fairness that requires the company to treat all employees, vendors, and shareholders equally. This is accomplished through the disclosures of information by the company such as major decisions taken as well as financial performance and outcomes of meetings.

A well-run board will have a procedure that allows it to evaluate its effectiveness, and the efficiency of its committees on a regular basis. This can be achieved by self-evaluations and surveys. The board should review the CEO and the senior management on a frequent basis, and, if needed take part in their evaluations. The board should also set the conduct standards for committees, members and the senior management. This will ensure that the leaders of the company and members are accountable for any actions they undertake.

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