How Corporate Governance Is The Rules And Systems

1304 Words May 31st, 2016 6 Pages
Corporate governance is the rules and systems, based on which a company is run. These systems are put in place to ensure that a company always runs in the best interest of its stakeholders such as shareholders, management and customers. These rules prevent managers in an organization from participating in a self-interested manner that could be damaging to the company and its stakeholders.
During the time DSH was issuing its prospectus, the company would need a diversified board of directors to prevent corporate governance issues. The board should consist of members who have industry relevant experience. Dick Smith’s board of directors should have a balance of executive and non-executive members to ensure there is balance of power across the board. A CEO or CFO is usually an executive director of a company. Non-executive directors are not involved in company management and provide an outsiders view and expertise to the business. Since CEO’s or CFO’s might put management best interest before shareholders, non-executive directors should conduct some meetings privately to ensure stakeholder’s interests are protected. Both executive and non-executive directors are prone to bias as they are driven by what they believe are the best interests of the company. However, sometimes their decisions are influenced by personal agendas which is why independent directors are an important part of the board. Independent directors are able to provide an unbiased and objective perspective on the…
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