Corporate Governance
                     CORPORATE GOVERNANCE
WHAT IS CORPORATE GOVERNANCE?
• Corporate governance is something altogether different from the daily operational management 
activities enacted by a company’s executives. It is a system of direction and control that dictates 
how a board of directors governs and oversees a company.
Source: corporatefinanceinstitute.com
Principles of 
corporate governance
EQUAL RIGHT
• All shareholders should be treated equally and fairly. Part of this is making sure shareholders are 
aware of their rights and how to exercise them.
Source: searchcompliance.techtarget.com
RIGHT TO NON-SHAREHOLDER  
• Legal, contractual and social obligations to non-shareholder stakeholders must be upheld. This 
includes always communicating pertinent information to employees, investors, vendors and 
members of the community.
Source: searchcompliance.techtarget.com
TRANSPARENCY
• Shareholder interest is a major part of corporate governance. Shareholders may reach out to the 
members of the community who don’t necessarily hold an interest in the company but who can 
nonetheless benefit from its goods or services.
Source: corporatefinanceinstitute.com
SECURITY
• An increasingly important aspect of corporate governance is security. Shareholders and 
customers/clients need to feel confident that their personal information is not being leaked or 
accessed by unauthorized users. It’s equally important to ensure that the company’s proprietary 
processes and trade secrets are secure.
Source: corporatefinanceinstitute.com
CONFLICT MANAGEMENT IN CORPORATE 
GOVERNANCE
• One purpose of corporate governance is to implement a checks and balances system that 
minimizes conflicts of interest. Conflicts typically arise when two involved parties have opposing 
opinions on the way the business should be conducted. 
Source: corporatefinanceinstitute.com
Regulation of 
corporate governance 
Sarbanes-Oxley Act
• This act was passed after it was found that high-profile companies and their executives were 
committing fraud. As a result, emphasis was placed on corporate governance as a way to restore 
faith in public companies.
Source: corporatefinanceinstitute.com
Gramm-Leach-Bliley Act
• This act regulated the ways that financial institutions handled privation information, making it 
crucial for corporate governance to include how to oversee financial organizations and 
stakeholders.
Source: corporatefinanceinstitute.com
Basel II
• This is a business standard that minimizes the financial effect of risky operational decisions. The 
rights of shareholders are covered under this standard, thus affecting corporate governance.
Source: corporatefinanceinstitute.com