Corporate governance is often thought about in the context of publically listed companies. However, it is just as important for privately held, small to medium sized businesses to adhere to good corporate governance policies and practices.
As a business grows and stakeholders increase, good corporate governance will become even more important as there are many people with a vested interest in your business.
Central to good corporate governance is:
- ensuring that control mechanisms are in place to run with business with care and diligence
- transparency and accountability
- acting ethically at all times.
In a small business, the business owner is often responsible for ensuring that good corporate governance is in place. In larger firms, the company secretary will take on this role. If a business owner becomes overwhelmed with some of the corporate governance responsibilities, this duty can sometimes be outsourced, or combined with another role within the business.
To ensure good corporate governance, firms should develop as a starting point:
Boards of directors can help to ensure that a firm has good corporate governance. Small business owners might consider putting an advisory board together to help with issues related to running the business.
For more information, refer to:
Australian Institute of Company Directors and their publication entitled “Duties and Responsibilities of Directors and Officers”
Australian Stock Exchange’s publication “Principles of Good Corporate Governance and Best Practice Recommendations”
Chartered Secretaries Australia