principle of corporate_governance

May 29th, 2015
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A board of directors is a legal requirement for an incorporated company. For the small, privately owned company, this usually means that the founder and perhaps a family member make up the board, or that the board consists of the shareholders and/or a few friends. The annual meeting generally involves a good lunch, maybe a review of the financial statements, then back to work having had an enjoyable time.

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Corporate GovernanceAssignment: A2. A board of directors is a legal requirement for an incorporated company. For the small, privately owned company, this usually means that the founder and perhaps a family member make up the board, or that the board consists of the shareholders and/or a few friends. The annual meeting generally involves a good lunch, maybe a review of the financial statements, then back to work having had an enjoyable time. The board, in effect, is used only as a nominal body to support theowner's proposals. Given that theoretically a board of directors is charged with looking after the organization's long term future, this potential asset seems very underutilized. The smaller, private company is charting a course in an environment that is increasing in turbulence and becoming less stable. The winds of change can fill your sails or blow you off course. The changing times underline the importance of a dedicated board or advisory group. Running a small company has been described many times as a lonely job. The entrepreneur is, by definition and character, a "loner" and a "doer". There is rarely time for reflection and long range thinking in the daily events of the chief executive officer of a smaller company. However, size unfortunately does not mean that many tasks and challenges are eliminated; they just take on a different dimension. What might seem to be a routine decision in a larger company may take on a greater significance in the smaller business,

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