The concept of corporate governance is to do with the way in which responsibilities are equally shared among the stakeholders, managers and owners of the company. Apart from that, corporate governance structure also determines the kinds of responsibilities, privileges and rights that are allocated to the corporate participants. Corporate governance puts limit on the degree of rights enjoyed by each participant. Usually, the foundation of corporate governance is based on the various factors; all of them help to develop proper structure formation of the company.
Within the organization, the corporate governance structure impacts the departmental activities which are operational within the jurisdiction area. European businesses cannot operate without an organizational structure that meets the eligibility criteria defined by the government jurisdiction. All documents and procedures of the organization must comply with the European business laws in order to get privilege of business incorporation. In some of the jurisdictions, these procedures are imposed by the law to get the initial prints of company formation, which also allows the equal distribution of power within the company.
In order to inculcate right corporate governance in the company, specialists must demonstrate their expertise. The successful corporate governance in the organization needs that employees should not only show their commitments towards work just to get salaries, but they must be accountable for their duties. Most of the companies have employees who have excellent talent and expertise but they fail to perform during work hours. This can affect very badly on the work culture of the company and may discourage the employee morale. Transparency is one of the crucial characteristics of efficient corporate governance and it can be applicable for any type of business, whether it is private or government and profit or non profit.
Acting in the right interest of the shareholders is one of the crucial features of corporate governance. The company’s board of directors has an obligation to supervise the operations of the company. People who sit on the board have a responsibility to govern the functioning of the organization and they must make sure that the goals and fundamental objectives of the company are based on the practical strategies.