The paper 'Corporate Governance - One-Tel Company Australia" is a perfect example of a business case study. Corporate Governance is defined as the manner and ways in which finance suppliers to the corporation ensure that they get returns on their investment. Corporate Governance is a collection of relationships between the board of directors, the management, and stakeholders of the company; it provides structures within which the corporate objectives of the company are attained, monitored and performance determined. In order for corporate governance to be sound and effective, it should be practised in an environment where authority is exercised with probity.
For instance, it is extremely paramount for the company directors, non-executive and executive members to ask questions as well as the board’ s chair to guarantee proper information flow within the company up to the directors of the board. This paper discusses the importance of corporate governance and using One Tel’ s corporate governance during its collapse, the company’ s corporate governance is reviewed. Recommendations based on the review will also be provided. Standards of Corporate Governance and their Importance According to OECD, there are six universally accepted principles or standards of corporate governance which are regarded as the basis for corporate governance initiatives globally.
The following are the corporate governance standards and guidelines together with their relevance in reviewing the company’ s practices: Ensuring the basis for an effective corporate governance framework (OECD, 2004): according to this principle, any business organization is required to have a framework of corporate governance that upholds market efficiency and transparency, be in line with the rule of law by articulating clearly the division of responsibilities between different supervisory, regulatory and enforcement authorities (OECD, 2004).
In essence, the framework of corporate governance must be created based on how it will affect the performance of the entire economy, the incentive it will create for participants in the market together with market integrity as well as the promotion of efficient and transparent markets (OECD, 2004) The rights of shareholders and key ownership functions (OECD, 2004): this principle dictates that the framework of corporate governance must have the capacity to protect and facilitates exercising the rights of shareholders (Watts 2001). For instance, some of the fundamental rights of shareholders include; secure ownership registration methods, share transfer, right to obtaining material and relevant information with regard to the company on a timely and regular basis, participates as well as voting in the general meetings of shareholders, right to remove and elect members of the board, and sharing company’ s profits (OECD, 2004). The equitable transparent of shareholders (OECD, 2004): it is imperative for the framework of corporate governance to make sure that shareholders are treated equally regardless of being foreign or minority shareholders (OECD, 2004).
In this regard, shareholders as a whole should be given a chance to obtain effective redress for violation of their rights (OECD, 2004).
For instance, those who belong to a similar series of a class should be equally treated (Brown & Caylor 2009). Accordingly, inside trading together with self-dealing that is abusive must be avoided and abolished from the company. The members of board together with key executives are required to disclose to the board whether they indirectly or directly or on behalf of third parties have anything of interest in any given transaction and/or a matter that has a direct impact on the corporation The role of stakeholders in Corporate Governance (OECD, 2004): it is vitally important for the framework of company’ s corporate governance to understand and recognized the rights of stakeholders as dictated by law while at the same time necessitating cooperation that is active among stakeholders and corporations particularly in job creation and wealth, as well as encouraging a sustainable and financially sound corporation (Gup 2007).
For instance, in the event where interests of stakeholders are legally protected, they will have the chance of obtaining effective redress for their rights’ violation (OECD, 2004).
Furthermore, methods that enhance performance for the participation of employee must be allowed to be nurtured. Disclosure and Transparency: corporate governance for a given business corporation is mandated to ensure accurate and timely disclosure is made with regard to all matters pertaining the corporation comprising of the company’ s financial performance, situation, ownership together with its governance (Farrar 2001). The disclosure should include things such as company objectives, the operating and financial results of the corporation, and ownership of major share and rights to voting (Tregidga & Milne 2006).
The information must be prepared and disclosed based on non-financial and financial standards of disclosure, and high-quality accounting. Accordingly, auditors must be accountable to shareholders and they also owe a duty to the corporation to exercise due professional care particularly during the auditing process. The responsibility of the board (OECD, 2004): the framework of company’ s corporate governance should be one that ensures company’ s strategic guidance, effective management monitoring by the board, and accountability of the board to the shareholders and the company (OECD, 2004).
The members of the board are required to action based on the available information, in good faith, with care and due diligence, and in the company’ s and shareholders’ best interest (OECD, 2004). The board is also required to apply high ethical standards by taking into consideration stakeholders interests. Accordingly, where the board’ s decision affects different groups of shareholders differently, it should make sure that all shareholders are treated fairly (Solomon 2007).
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