Chapter 1 Scope of corporate Governance

　　1.Definition and Concepts of corporate governance

　　1.1 Definition of corporate governance

　　<1> A set of relationships between the company’s directors, its shareholders and other stakeholders

　　<2> The system by which organizations are directed and controlled, in the interests of shareholders and stakeholders

　　1.2 Purpose of corporate governance

　　<1> Set best practice guidelines, provide a framework for an organization to pursue its strategy in an ethical and effective way.

　　<2> Operate an adequate and appropriate system of control for risk management.

　　<3> Attract new investment and safeguard resources owned by investors in a company.

　　<4> Improve corporate performance and accountability, increase shareholder’s value.

　　1.3 Concept of good corporate governance frameworks

　　<1> Fairness: balanced by taking into account all stakeholders and respecting their rights and views.

　　<2> Openness/transparency: voluntary disclosure (above the minimum required by law) of reliable information to stakeholders in F/S, management report and other communication media, set transparent relationship with shareholders to reduce agency cost.

　　<3> Independence: need for independent non-executive directors who can effective monitor the company and promote the interest of shareholder and stakeholder (free from conflicts of interest).

　　<4> Probity/honesty: telling the truth and not misleading.

　　<5> Responsibility: use a system to allow corrective action and penalizing mismanagement, accept liability in decisions making, set the company on the right path

　　<6> Accountability: directors should answerable for consequence of their actions, to shareholders and stakeholders

　　<7> Reputation: public perception or expectations. The price of publicly traded shares is often dependent on reputation and reputation is often a very valuable asset of the organization.

　　<8> Judgment: making decisions that enhance the prosperity of the organization.

　　<9> Integrity: straightforward dealing and completeness, F/S should be honest and give a true and fair view of the company.下载本文