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|Total Solutions Middle East is the leading compliance consultancy and training service company in the Dubai established in 2004, We provides HR Solutions, contracting, outsourcing and Payrolling services as well.|
Corporate Governance – why need it?
In advanced economies, Corporate Governance dominates the political and business agenda, but only few Middle Eastern public companies have Corporate Governance in place. A number of governments are considering enforcing it. However, one has to understand the need for such policies.
Corporate Governance (CG) is basically a set of systems, processes or principles about directing or controlling companies. Furthermore, it is also needed to regulate the way boards manage the running of a company by its executives. It also regulates how the board members are accountable to shareholders and the company. Thus, it has a direct impact on the company’s responsibility, accountability and attitude toward all stakeholders also including employees, customers and shareholders.
Superior CG has a fundamental role to play in reinforcing the efficiency and integrity of the financial markets. Inadequate CG, on the other hand, can undermine a company’s potential. At worst, it can lead to financial difficulties and may even result in fraud. A well governed company outshines other companies while attracting new investors whose support is needed for the firm’s substantial growth.
Good principles of CG generally focus on publicly traded companies to ensure transparency in corporate area with the objective to help governments to mend legal and regulatory framework related to CG. The corporate governance Dubai also provide practical guidance and suggestions for relevant entities like investors, stock exchange, corporations and other elements playing a part in the process of developing effective corporate governance.
Experienced accrued from advanced and emerging economies suggest that no single framework for CG can work adequately for all markets. This is because the rules and regulations vary extensively from one country to another. It means that internationally accepted or recognized principles are not compulsory or authoritarian, rather it should be taken as the recommendation which each country can amend to suit their business traditions and market conditions.
Crafting and introducing effective CG policies are important just like encouraging the right culture. Senior executives need to set the agenda to ensure board members feel at ease to participate in open and worthwhile discussion.
A good CG can bring many benefits to a company but it can impede the growth too. For instance, strict policies may negatively impact the mergers and acquisitions as a result of the lengthening of due-diligence process. Fundamentally, there is a level of confidence associated with a company that has good CG. Transparent policies are crucial in sharing information with the investors and shareholders.
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