Corporate governance is central to the operation of any business, so you must make sure it’s handled in a way that is both highly effective and perfectly efficient. Your corporate governance plan will evolve as your company grows, so whether you’re just starting up or have been around a while, at some point you’ll need to work on corporate governance policies.
Here, we’ll go over how to get started with corporate governance and look at the various elements you’ll need to consider.
Determine Your Objectives
Ultimately, your business’s goals will inform your corporate governance strategy. For instance, a startup company will want a plan that will facilitate rapid growth, whereas a well established C-Corporation will emphasize managing risk and keeping its many constituent parts working together seamlessly.
Even if you already have your governance strategy in place, it will need revision as time goes on. Your place on the market, pertinent regulations, and other factors frequently change, so it’s important to keep your plan up to date.
One of the first factors to consider when developing a corporate governance plan is compensation. Executive and board compensation are important aspects of making your corporate governance work, and if they aren’t compensated appropriately, it could have negative impacts on growth, sustainability, profitability, tax burdens, and so forth.
The frequency and nature of shareholder meetings, what those meetings will entail, and similar issues are all important to consider. This will affect how quickly you’ll be able to roll out changes and play a significant role in corporate decision making.
If you don’t meet frequently enough, then changes may be delayed and time may be wasted making plans that ultimately don’t get support. Alternatively, if you meet too frequently, these meetings could become common reporting sessions that don’t achieve much of anything. They should align well with your goals while improving the operations within your company.
The sustainability of your business incorporates nearly every factor at play in your company’s operations, including compensation, employee development, transparency, accountability, and so forth. If your business is not sustainable, then it will fail sooner or later.
Sustainability involves long-term planning and is central to corporate governance. A well-governed company will be able to maintain transparency and growth.
Ethical operations and resource management are central to sound governance. The way you handle operational processes will determine the support you’ll be able to receive from shareholders, the reputation you’ll develop on the market, and the amount of risk you’ll to take on. Good ethical planning will minimize liability and secure a strong spot in your sector.
Federal and State Regulations
There are many laws that affect corporate governance. Federal and state regulations will require you to take certain measures in order to maintain a sustainable company, and while these laws may often be burdensome, compliance is key to minimizing liability and improving transparency.
Since these laws constantly change, you’ll need legal counsel to assist you with developing your corporate governance strategy. Hart David Carson LLP provides general counsel to entities of all sizes, from startups and small businesses to established corporations and nonprofits. For the guidance you need, contact our attorneys today.