Outsider Dominated Governance System Within The United Kingdom, Australia, Canada And New Zealand

2250 WordsDec 6, 20149 Pages
First of all, I would like to describe outsider dominated governance system which is mainly being used in the United States, United Kingdom, Australia, Canada and New Zealand. Outsider dominated governance system is associated with the peculiarities of the national stock ownership. The market is characterized by very dispersed corporate capital. Population saves their money by investing in stocks and bonds of companies. Firms sell their securities to the investors to obtain additional funds for business expansion. The main owners of the companies’ capital are private and institutional investors. They are ready to take risks and focus on short-term goals of receiving income thanks to exchange rate differences. To make people invest in a…show more content…
“(Whincop, n.d.) The primary responsibility of the Board of Directors is to protect the interests of shareholders and maximize their wealth, guaranteeing the growth of the value of the corporation. Members of the Board of Directors are responsible for all affairs of the corporation and, in case of its bankruptcy, they may be involved in administrative and criminal proceedings. The Board of Directors dimension shall be determined by the needs of effective management, but the minimum number in accordance with the laws of each state can be from one to three members. The Board of Directors establishes a corporate policy and strategy (especially in the financial sector), appoints officials of the corporation, exercises financial control, evaluates the general manager activity, follows compliance with laws, and maintains corporate ethics. The US corporate governance model is aimed at increasing the value of the company and its profitability in the short term. This model requires a highly flexible management system, which can enable companies to adapt quickly to the greater mobility of the market and to effectively implement innovative and risky projects. “Basic principles of corporate governance in the US are 1) accountability, 2) transparency, 3) equally fair treatment of all shareholders, including foreign ones, 4) clear and fair voting procedure, 5) existence of the codex of relationships with shareholders, which
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