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What Is Corporate Governance?

What is corporate governance?

Running a company is essentially agreeing with different people about how you will work together. The documents that prove that and the processes on how you control it is what is called corporate governance.

When you get a new supplier, you agree with them on what they will deliver and when – and what you will pay them for it. When you hire an employee, you agree to pay them and they agree to give their time for your company. When you get a new customer, you agree to deliver your product or service and they agree to pay you in some way. When you take out a new loan, you have an agreement between the bank and your company. And when you start a new company, you agree with the government to follow all the laws.

Keeping track of agreements like these is what is at the core of corporate governance. When accounting the documents of your money transactions, corporate governance will document all the agreements that you have made. In accounting, you can build an advanced report, analysis and develop advanced financial processes. You can do the same in administration, risk management, contract and governance processes.

Consider this: you are on vacation for one month. You have hired a manager to run your company while you are away, but you didn’t have time to talk to him. How can he know who to pay? How can he know where to send bills or products? Your manager then sits down and reads all the agreements you have made. After that, he will be able to know.

This is a way of thinking about governance: documenting your company so that you can prove to outsiders (shareholders, creditors, authorities) on what your company is doing.

So what do you need to document? In essence, all the core areas of your company:

  • Board discussions and decisions (meeting minutes)
  • Shareholder decisions (meeting minutes)
  • Your workforce (employment agreements)
  • Contracts (suppliers, customers)
  • What you own (proof of ownership of real estate or shares)
  • What you owe (loans and financing)
  • The rules of your company (articles of association, shareholder agreements)
  • Special permits (licenses to do things regulated by authorities, like a restaurant or using toxic materials)

Given these documents, an outsider can understand what your business is all about. That is the core of corporate governance. These things are not complicated, you just need to get them documented.

Kuveno can help by pointing out what is missing and helping you to get it done.

Kuveno – Admin simplified.

Wikipedia definition

Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and includes the rules and procedures for making decisions in corporate affairs.



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