A well-defined corporate governance structure promotes fairness and transparency, helping your company cultivate solid relationships with shareholders and other members of the community. It helps determine the roles and responsibilities of each, as well as accountability and enables compliance with laws and regulations. It also helps a business’s long-term growth strategy through aligning shareholder interests with the interests of the board as well as management.

There are a variety of corporate governance, but the one that’s right for you will depend on your company’s goals and culture. Some of the most important concepts to keep in mind are:

Unitary Board Structure

In this corporate governance system the board of directors is accountable for overseeing and making decisions about the activities of the company. The board includes both non-executive and executive directors. This type of structure is typical in mid-sized and small-sized companies.

Continental Model

A two-tiered model, the Continental model gives control to a board of management and a supervisory board. The management board is composed of employees from the company including executives and managers. The supervisory board consists of outsiders like bankers and union representatives with real estate data room stakes in the company.

Stakeholder-Oriented Governance

Contrary to traditional structures that focus on shareholder interests, this kind of governance structure takes into account the requirements of all stakeholders, including employees, customers, vendors and the community. It encourages boards of directors to adopt policies that reflect social and environmental concerns and develop meaningful engagement programs. The board must be transparent about its decision-making process and share that information with all stakeholders. It should also ensure that there are clear lines of communication between the board, the company management and shareholders.