Week 6 - Corporate Governance Flashcards
two purposes of corporate law?
- corp finance
- corp governance
what is corp finance?
to facilitate and regulate the process of raising capital for the comp’s business operations
what is corp governance?
the system of regulating and overseeing corp conduct and of balancing the ints of all stakeholders to ensure responsible behavior
what are two theories on the role of stakeholders?
- pluralist approach
- enlightened SH value approach
what is the pluralist approach?
comps should be controlled for benefit of all stakeholders
what is the enlightened SH value approach?
comps are entitled to consider the ints of other stakeholders only to the extent that it would be beneficial for SH
key governance outcomes of King Code?
- ethical culture
- good performance and value creation in the firm
- adequate and effective control
- trust, good reputation, legitimacy
what is the philosophy of King IV based on?
- sustainable development
- integrated thinking
- corp citizenship
- stakeholder inclusivity
what should a corporate governance system include?
- managing long-term risk
- ethical performance
- sustainable businesspractices
- accountability for relationship w stakeholders
what are the key corp gov sources?
- King IV
- Companies Act
what is the underlying philosophy of the 2008 Companies Act?
- viewing incorporation as a right not a privilege
- incorporate should be simple
- flexibility in the regulation of company affairs through MOI and rules
- provides transparency to SH by holding directors accountable and allowing SH to participate in decisions
how does King help a company achieve adequate and effective control?
by requiring:
- effective board composition
- legal compliance
- fair, transparent remuneration
- performance evaluations
