“Corporate governance refers to a set of systems and processes to ensure the company is managed to suit the best interest of all the stakeholders” The Corporate Governance structure specifies distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stake holders, and spells out the rules and procedures for making decisions on corporate affairs.
By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance’.
In simple terms Corporate Governance means a company conducting its business in a fair and equitable manner and acting as a responsible citizen. The Company structure of a business enterprise is different from that of any other business organisation in as much as the ownership and control are vested in different hands.
The persons responsible for the functioning of the company are acting in their fiduciary capacity as the guardians of the interests of the shareholders, stakeholders and the society as a whole. The persons entrusted with the management of the company should not use their position for their own individual personal benefits. The duties of the management is not just restricted to compliance with the applicable laws but also towards the society from where the organisations draws its resources like money, machinery and men. It is the good corporate citizenship, which is the essence of Corporate Governance.