Corporate governance

In a young company the owner, the director and the manager are often the same person, and governance is whatever happens around the kitchen table. That changes as the business grows: an outside investor arrives, the bank asks more questions, a manager is hired who holds no shares. Informal habits that worked for years become a weakness the day a decision is challenged and nobody can show who approved it, on what information, or why.

Good governance is less a set of formalities than a way of letting the people who own the company and the people who run it trust each other. It concerns the board, its committees and the information they work with:

• the rules on the size and make-up of the board, and on the place of independent and non-executive members;
• the rules on delegating day-to-day management to a chief executive or a management committee, and on the limits of that delegation;
• the rules on conflicts of interest, and on the procedure to follow when a director has one;
• the rules on board committees for audit, remuneration and appointments, and on what they may decide themselves;
• the rules on the remuneration of directors and senior managers, and on how it is approved and disclosed;
• the rules on internal control, risk management and the information management owes the board;
• the rules on reporting to shareholders, including the governance statement in the annual report;
• the rules on voluntary codes of good governance, and on explaining where the company departs from them.

Our lawyers can support you with this.