VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Are you meeting challenges of corporate governance?

Perhaps one of the greatest difficulties any public U.S. or multi-national corporation faces is walking the fine line between protecting business efforts for growth and fulfilling regulatory requirements on transparency. The fact that standards vary greatly from one government to the next only makes things more challenging.

Good governance is critical to business success, but unlike institutional forms of political governance that have existed long enough to have developed traditions, corporate governance is subject to change - sometimes seismic in nature. Guiding transactions amid evolving environments depends on correctly reading the regulatory landscape.

Business observers hold a wide range of views about what the foremost issues are for corporate boards in the current setting. What rules come into play depends in great measure on what governmental body exercises jurisdictional control.

While different regulatory entities share a measure of common understanding about the elements that comprise good corporate governance, emphasis can vary from agency to agency. For example, in the United States, transparency through adequate reporting is crucial. Meanwhile, in countries like the United Kingdom, eligibility to be traded on exchanges requires boards to follow clear codes of conduct. It should be no surprise that finding the ground that satisfies all requirements can be hard.

Even finding what to prioritize can be difficult. In this regard, here is what one British business watcher sees as significant struggles. They include:

  • Conflicts of interest: If one board member has other business interests that could raise questions about his or her objectivity in making decisions for the company, stakeholder and public confidence can erode and lead to litigation.
  • Consistent application of standards: It is not enough to establish standards of behavior at the top echelons. They must be broadcast throughout the business and be enforced uniformly to be of any use.
  • Short-termism: This observer holds the view that current board structures are too influenced by practices that prioritize short-term gains for investors over long-term sustainability.
  • Diversity: This issue is one that many observers say presents a challenge. The argument runs that board composition should reflect the diversity within a company as a whole, but too often does not.

Beyond these points, many analysts identify oversight of corporate cultural evolution as a major 2018 priority for governance, along with rising concerns over cybersecurity. Through it all, companies will find their financial interests best served by attorneys with a history of effective counsel.

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