Corporate governance is a key tool for optimising company board and management accountability. It provides a framework for a company’s board of directors to manage its relationships with company stakeholders in a fair and transparent way.
Company stakeholders may include shareholders or investors, customers, the company’s leadership team, employees, the government and community groups.
Corporate governance in Australia covers the regulation of directors and management (through accountability to shareholders), principled governance (through responsible and ethical decision-making), and the protection of investors/shareholder associations.
Directors are personally liable for company breaches in areas such as taxation, environmental laws, occupational health and safety, trade practices, the Corporations Act and more.
Companies measure their governance practices against ASX (Australian Securities Exchange) principles for ensuring ethical and responsible decisions, but most also create their own practices to produce the best outcomes for their shareholders.
In line with the wishes of institutional shareholders (such as insurance companies, superannuation funds, hedge funds and banks), in recent times organisation disclosure requirements have increased to help improve communication between the board, management and investors.