September 17, 2024
Effective corporate governance is crucial for the sustainability and success of any organisation, and by adopting good governance practices early it ensures that a company operates within its legal framework, maintains transparency, and meets the expectations of its stakeholders. It can also provide numerous benefits, such as attracting external expertise, improving financial performance, securing funding and attracting investors and buyers if and when the business is subsequently sold.
There is no “one size fits all” when building a governance framework, each company will need to develop practices that fit their organisation, industry and market.
Here are three ways to assess your company’s current governance practices:
The foundation of good corporate governance lies in robust governance frameworks. These frameworks include the company’s articles of association (Articles), which is the key constitutional document regulating the basic governance and decision-making structure of a company. For those operating in the charity sector or as a not-for-profit, the Articles will also set down the objects the company has been set up to achieve.
It is important to review and update the Articles from time to time to reflect any changes in the company’s structure or operations. It is also important that any incoming directors and shareholders familiarise themselves with the terms of the Articles to ensure that they can discharge their duties effectively.
Accurate and up-to-date governance documentation, policies, and procedures are vital for guiding decision-making and ensuring compliance. This includes maintaining records of board meetings, company books, financial statements, and other critical documents, in particular:
Regular audits and reviews of governance documentation can help identify any gaps or areas for improvement, ensuring that your company’s governance practices remain effective and compliant. It is also worth noting that maintaining accurate accounts and company books can also support the due diligence process which is an essential part of any business sale. Accurate and well-organised company records make this process smoother and faster, and prospective buyer will appreciate the ease with which they can verify the company’s financial health, which can expedite the sale process and potentially lead to a higher sale price when the time comes.
Stakeholders play a crucial role in the governance of a company. Engaging with and seeking regular feedback from shareholders, employees, customers, and suppliers, can provide valuable insights into the effectiveness of your governance practices, particularly in relation to risk oversight. This includes:
Where appropriate and commensurate with the size and complexity of your organisation, establishing an effective board can significantly improve governance practices and overall performance.
Summary
Assessing your company’s current governance practices is an ongoing process. By reviewing your governance frameworks, ensuring accurate and up-to-date documentation, and engaging your stakeholders, you can ensure that your company’s governance practices are effective, compliant, and aligned with best practices. This not only enhances the company’s reputation but also contributes to its long-term success.
How Darwin Gray can help?
We conduct comprehensive audits of current governance practices to identify strengths and areas for improvement. This includes reviewing your Articles to ensure they are fit for purpose and updating them if necessary. Our audits can help outline the current rules governing your company and provide recommendations for enhancing your governance framework.
Our team regularly assists companies (especially those operating in the third sector) in the preparation of governance documentation, such as handbooks, to support leadership decision-making. We develop policies that align with best practices and regulatory requirements, ensuring your company can operate efficiently and compliantly.
We provide advice on the structure and functioning of boards and committees. This includes defining roles and responsibilities, establishing best practices, and ensuring effective governance.
We offer tailored training programs for board members and executives on governance issues and legal responsibilities. Our training ensures that leadership teams are well-equipped to handle governance challenges and uphold the highest standards of corporate governance.
Our company secretarial services manage essential administrative tasks, including filing the annual confirmation statement, making updates to directors and maintaining statutory registers. We help you stay organised and compliant with all legal requirements.
If you need advice or assistance with your governance matters, contact Stephen Thompson using the contact form, on sthompson@darwingray.com or via 029 2082 9136 for a free initial chat to see how we can help you and your business.
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