Having a robust set of corporate governance policies and procedures in place is one of the key steps required prior to going public. Although related to an internal control examination, corporate governance advisory services differ in the sense that we focus on the rights of shareholders as it relates to a public corporation. This sets the benchmark for corporate governance best practices; however, they are can also be applied in a private company setting.
Corporate governance principles are focused to ensuring shareholder rights are best protected, in particular when the managers of the company are different than the owners. This is often referred to as the agent-principal relationship.
When a company has implemented a robust corporate governance framework, they not only set the stage to go public in the future, but help minimize the cost of capital of the company. If the company is already public, corporate governance ensures conflicts between agents and principals are managed to ensure low operational risk and the long-term sustainability of the company.
The attributes of an effective corporate governance system will:
Clearly define governance responsibilities;
Identify measurable targets;
Provide fairness in dealings with all stakeholders; and
Increase transparency and disclosures.
At Kanaan & Associates, we utilize internationally-recognized corporate governance best practices published by numerous sources, including those issued by the CFA Institute and the Organization for Economic Co-operation and Development (“OECD”).
These publications issue guidance on corporate governance best practices that are utilized by the largest public corporations worldwide and often times stock market regulators require corporate governance standards influencing in large part by these publications.
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