Jack should know that the corporate governance produces the following for New Tech Ltd.A good governing body gives clarity to the company's objectives and ensures transparency in management. When new boards of directors are elected, the formation of corporate governance bodies is of greater importance. They will be responsible for the results of the companies throughout the year. To form an effective board of directors, Jack must know that it must have highly competent directors (Carver and Carver, 2009). It means that companies require directors with celebrity status in the business world to add value to management.
Rather, the fundamental criterion on which to base the selection of directors is their actual ability to make strategic contributions to business management (Feld and Ramsinghani, 2014). Executives who have enriching experiences such as having developed successful businesses or saved bankruptcy from a company represent a good approximation to this selection criterion.
The Board of Directors allows in a Family Business, to separate the daily activities of the authentic management of the company, thus facilitating the discussion and analysis of the key issues in an independent and different table, and breaking with inertia, family commitments, etc. These effects can be noticeably better in the case that they participate in the Council, professional managers-consultants independent and outside the company (Hilb, n.d.). Below we explain to you what is the structure of the Board of Directors of a company considering that in general terms the Boards of Directors have a President, several Directors and a Secretary.
The starting point is to visualize where the company will be in the next five or ten years. This context allows us to determine the critical experiences and the training that a director must have to guide the administration towards success. Therefore, the board members should have experience in the relevant technology.
For example, if the strategic plan is to expand the business internationally, with mergers and acquisitions, the board should include experienced directors (Hirschey, John and Makhija, 2004). The board of directors must be constituted taking into account the diversity of the challenges that the company must assume and the directors must be selected in a way consistent with this purpose. It should not be forgotten that in practice, a board is a team. It is not unusual to observe in a team, clashes of personalities, conflicts, members who do not pay attention and members who make decisions on issues they do not know or do not understand. A board of 5 members is a good number to begin with, this is because with a lean board, it is easier to make decisions (Hirschey, John and Makhija, 2004).
The chairman o the board is an integral part of the company. The president role is to establish the agenda of meetings, define roles, facilitate processes and discussions, help resolve conflicts and, above all, set the standards of behavior of directors through the policies set (Jalilvand and Malliaris, 2013).There are also certain dynamics that prevent work. For example, it is possible that issues of importance will be discussed in smaller groups outside the formal meetings without informing the other directors of the facts or the decisions taken. So it is important to hold formal meetings.
Likewise, there may be issues that are not on the table, because they generate discomfort in some directors or in administration, as could be the consequences of bad decisions of the past. In other cases it happens that there is no process that ensures the adequate participation of all the directors, allowing behaviors of passivity or dominance (Lechem, 2003).
Similarly, there are teeth less joints, which prefer not to question management to avoid conflicts. At these meetings discussion is not encouraged and dissent is not welcome. All of these experiences show that the principles guiding the development of high-performance teams also apply to boards. Thus as the chairman to the board, Jack must allow all views to be heard including the dissenting views from members of the board.
The Board of Directors has been closely related to large corporations, but it is not the exclusive property of the same. The creation of a council may even be of greater value in small and medium-sized enterprises like New Tech ltd (most of which make up our business reality) as these are simpler and more flexible organizational structures that would facilitate the Advice. he Board of Directors has been closely related to large corporations, but it is not the exclusive property of the same (Karas, 2005). The creation of a council may even be of greater value in small and medium-sized enterprises (most of which make up our business reality) as these are simpler and more flexible organizational structures that would facilitate the Advice. Although each of the companies has its specific characteristics (size, type of business, location, etc.), in general terms the main functions and responsibilities of the chairman in relation to the board are as follows:
1.Approval of the general strategies. Impulse of the Strategic Plan of the company.
2.The Chairman of a company must control the execution and achievement of the objectives of the strategic plan.
3Establishment and control of budgetary management of the company.
4 Overseeing the Creation of the right mechanisms to obtain truthful and quality management information regarding the company.
5 Giving direction on Decision making in the case of major investments or disposal of assets.
10Establishment of the communication and information policy for the shareholder.
It is clear that in order to form an effective board of directors, attention must be paid both to the selection criteria of its directors and to the team dynamics that must take place between them.The selection criteria for directors must be aligned with the needs and challenges of the long-term strategic business plan, while at the board level an atmosphere characterized by trust, teamwork and Ability to manage conflicts well (Steger and Amann, 2008).
When investment house buys some shares, they will be entitled to a few slots in the board, thus, they will influence major decisions of the board and the direction that New Tech takes.Corporate Governance Concept The agency problem in financial institutions: Members of the Board and Senior Management, May tend to impose their own agenda The problem of agency in the financial sector transcends the interests of the shareholder. The management of New Tech Ltd has effects on depositors or other clients, on the economy and on the fiscal condition of the State There is a large information gap between the participants. Some shareholders are not experts, nor are clients, and oversight may have a lag or ignore aspects of an entity's real performance. Concept of Corporate Governance Several definitions have been adopted, with different approaches: "It is the system (set of rules and internal organs) through which the management of a legal person is directed and controlled, either individually or within A conglomerate. Corporate governance provides a framework that defines rights and responsibilities, within which the governing bodies of an entity, including the highest management body, board or board of directors, legal representatives and other Fiscal auditor and the corresponding control bodies.
Risk management is a strategic pillar of the Organization, whose main objective is to preserve the financial and equity strength of the Group, promoting the creation of value and business development in accordance with the levels of appetite and risk tolerance determined by the Bodies of government (Risk Management and Corporate Governance, 2014). At the same time, it facilitates the tools that allow the valuation, control and follow up of the requested and authorized risk, the management of delinquency and the recovery of the unpaid risks.
The board should ensure that there is a good process for establishing the company's strategy, approving it, and monitoring that it is effective in management decisions. It is important for board members to be aware of the organization's objectives so that they can monitor that the management of the company is taking steps to achieve its objectives. Corporate values ??The governing body must monitor that there is a real understanding of The values ??of the organization. The lack of credibility is a product of the lack of conviction in the values ??of the organization. The board must give the signals of what is right and what is wrong, ethics, transparency and order. The members of the boards must be persons who stand out for their honor and be respected for their character in the face of not tolerating bad practices (Risk Management and Corporate Governance, 2014). Ensure control Ensure that the entity has an appropriate internal control system, that the organization is well conducted and oriented, That there is efficiency, productivity and fulfillment of objectives through order. The management body must also ensure that this is met. Be aware of the risk management and that there are adequate monitoring instruments to ensure the operation of the company.
A common cause of corporate governance inefficiencies is the failure of internal mechanisms, such as shareholders 'meetings, depositors' assemblies, and boards of directors. In some cases, shareholders' meetings, because in the absence of a generalized culture of investment in risky assets (shares), are an ineffective instrument so that shareholders can control opportunistic behavior of managers (Steger and Amann, 2008). Well by the requirement of a minimum number of shares owned or represented to attend the Boards, with the subsequent delegation of voting of the minority shareholders in the banks where they deposited their shares; Or by syndicating the vote of significant packages of shares, with objectives almost never coincident with those of minority shareholders; Or even because the statutes of companies and banks violated the relationship between the capital possessed and the voting rights to exercise.
Announcement to shareholders is very crucial. It is necessary to notify the shareholders of the company’s intent to reorganize the board of directors and the CEO intention to be a Chairman of the board to promote transparency as stipulated by the Company Act.Corporate governance is the essence of the free enterprise system, because it guarantees investors the fulfillment of the goal of value creation and the sustainability of companies by the management teams (Merna and Al-Thani, 2008). But also because the transparency and accountability of these executives must illustrate the decisions of all the interest groups of the companies and allow to evaluate the social responsibility of any business project in the face of taxation, economic growth and employment. And hence the need to also resort to corporate governance mechanisms external to entities, such as the correct and efficient functioning of capital markets, labor markets and products and services, and public regulation and supervision.
The need for a governing body stems from the complexity of business, the ownership structure, and the financing of organizations.A modern board is responsible for the long-term vision and strategy of the company, to identify the environment where it moves and to move and to analyze possible businesses; To evaluate the management, to plan the succession of senior executives and to generate value (Merna and Al-Thani, 2008). The good meetings require time, competent people and with permanent capacity to learn and innovate to generate competitive advantages, product of the quality of the decisions.
Corporate Governance and Financial System Several definitions have been adopted, with different approaches: "It is the process of policy definition, administration and control carried out by different organs belonging to the company (shareholders, directors, management) for the purpose of conducting it Get an end. This process should mitigate the various agency problems that exist between those involved and provide sufficient information to the different stakeholders. Way as the board of directors and senior management head the activities and businesses of the company. Especially in sectors such as technological, where supervisory authorities should exercise a more active role on the entities, verifying their positions of risk. To safeguard the interests of shareholders. One, the improvement of corporate governance with precise rules that demand greater levels of responsibility and transparency in the internal mechanisms of government and mitigate opportunistic behavior of managers. Another, greater regulatory capacity and better supervision of compliance with the recommendations of the Codes of Good Governance.
Carver, J. and Carver, M. (2009). The Policy Governance Model and the Role of the Board Member. Hoboken: John Wiley & Sons.
Feld, B. and Ramsinghani, M. (2014). Startup boards. Hoboken, N.J.: John Wiley & Sons.
Hilb, M. (n.d.). New corporate governance.
Hirschey, M., John, K. and Makhija, A. (2004). Corporate governance. Oxford [etc.]: Elsevier JAI.
Jalilvand, A. and Malliaris, T. (2013). Risk Management and Corporate Governance. Hoboken: Taylor and Francis.
Karas, G. (2005). On earth. New York: G.P. Putnam's Sons.
Lechem, B. (2003). Chairman of the Board. New York, NY: John Wiley & Sons.
Mallin, C. (n.d.). Corporate governance.
Merna, T. and Al-Thani, F. (2008). Corporate risk management. Chichester, England: Wiley.
Risk Management and Corporate Governance. (2014). Paris: OECD Publishing.
Steger, U. and Amann, W. (2008). Corporate governance. Chichester, England: John Wiley & Sons.
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