Good corporate governance is vital for managing the affairs of a company. In this current climate, stakeholders are increasingly scrutinising their organisations’ policies, procedures, communications and actions. Charities and other organisations in Ireland have found themselves in the spotlight recently with concerns about their corporate governance practices being of primary focus.
In basic terms good governance requires the implementation of policies and procedures in order to run an organisation in an effective and transparent manner to accomplish its objectives whilst maintaining its values. There are various foundations and principals of good corporate governance which organisations can adopt.
In Ireland, the Governance Code is a code of practice for good governance of community, voluntary and charitable organisations.
It is based on 5 main principals:
1. Leading The Organisation
Developing a clear vision, purpose and strategic plan for the organisation is crucial. Policies and procedures should be established and put in place to provide guidance on the organisation’s aims, objectives and values. All policies and procedures should be adhered to and it is important that they are monitored and regularly reviewed to ensure that they remain fit for purpose.
2. Exercising Control Over The Organisation
Compliance with legal and regulatory requirements is imperative and organisations must have effective controls in place to ensure that they meet those requirements. Identifying the organisation’s duties and obligations and any risks that they might face is key. Implementing robust and effective controls, particularly financial and management controls, is fundamental to ensuring that the organisation is suitably controlled.
3. Being Transparent & Accountable
Clear policies, procedures and communications with stakeholders at every level is central to being transparent and accountable. Organisations must understand who their stakeholders are and what they expect. Having appropriate communication systems in place to convey the organisation’s message to the stakeholders is a basic requirement. Good governance demands that communication to the stakeholders is clear, open, direct and relevant. It is also necessary to have an open line of communication for receiving feedback from the stakeholders.
4. Working Effectively
Everyone in the organisation, from volunteer’s right up to board members and the governing body need to understand their roles, duties and responsibilities. With regards to board members, it is especially important that they are fully aware of their duties and that they carry out their roles and responsibilities as per the legislation and the organisation’s procedures and policies. Board members should be recruited, developed and retired in a suitable and effective method.
5. Behaving With Integrity
In a similar vein to accountability and transparency, it is essential that organisations are independent, honest and fair. In addition to conserving and promoting the organisation’s reputation, it is essential that the code of conduct is followed and that any conflicts of interest are declared and managed appropriately. Everyone in the organisation should be encouraged to operate in an ethnical manner in line with the values of the organisation.
Identifying best practice in the area of good governance can be a challenge for many organisations. The process is not straightforward and it is highly recommended that organisations seek professional assistance in order to develop, review and implement their corporate governance policies. As well as providing comprehensive reviews and updates on matters pertaining to amendments to existing company law, Corplaw’s team of dedicated Chartered Secretaries are well placed to advise and provide guidance on standards of Corporate Governance.
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