Essay: Corporate governance and legal provisions

12 Oct

Essay: Corporate governance and legal provisions

Sample Essay

In most countries in the world, corporations are governed by use of legal provisions enshrined in the law. Individual rules in various corporations are anchored upon the document called the corporate charter and to a less extent the various corporate by laws (La Porta 1999). However, in the United Kingdom, the memorandum and the articles of association can be modified by 75 percent of shareholders to initiate various precatory initiatives, but the results are not binding on the board of directors.

There are several parties who are involved in corporate governance who include the Chief Executive Officer, the Board of directors, employed managerial work force and shareholders (Holton 2006). In this arrangement, the owner of the business (shareholder, has delegated the decision rights to the managerial people to act on behalf of the principle (Easterbrook and Daniel 2004). Due to this, separation, between the business owners and the employed professional management, a system based on corporate governance controls is established to assist in streamlining the rewards available to managers against those of the shareholders (Denis. and McConnell 2003).

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