Page 5 - Al-Rashed Newsletter June 19

POTPOURRI

Principles of Corporate Governance

· Shareholder recognition is key to maintaining a company's stock price.
More often than not, however, small shareholders with little impact on the stock
price are brushed aside to make way for the interests of majority shareholders and
the executive board. Good corporate governance seeks to make sure that all
shareholders get a voice at general meetings and are allowed to participate.
· Stakeholder interests should also be recognized by corporate governance.
In particular, taking the time to address non-shareholder stakeholders can help your
company establish a positive relationship with the community and the press.
· Board responsibilities must be clearly outlined to majority shareholders. All
board members must be on the same page and share a similar vision for the future
of the company.
· Ethical behavior violations in favor of higher profits can cause massive civil
and legal problems down the road. Underpaying and abusing outsourced
employees or skirting around lax environmental regulations can come back and bite
the company hard if ignored. A code of conduct regarding ethical decisions should
be established for all members of the board.
· Business transparency is the key to promoting shareholder trust. Financial
records, earnings reports and forward guidance should all be clearly stated without
exaggeration or "creative" accounting.

Conclusion
Corporate governance is critical issue faced by all companies. The above cases
highlight the fact that poor corporate governance can lead to a downfall of the
largest companies. Regulatory bodies have increased their scrutiny on the firms are
under increased scrutiny by regulatory bodies which increases the importance of
good governance. Digital solutions can help firms implement a robust governance
mechanism to help significantly reduce risk of governance failure.

From multiple sources on the Internet, Bain & Co
Goldy Chadha
Key Accounts Manager