let kick start with corporate governance

so after result announce it is time for all of you to buck up again let start with the followi:

What is Corporate Governance?
Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that appropriate governance structure in place.

The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The board’s actions are subject to laws, regulation and the shareholders in general meeting.
The directors have the free drive to bring their companies forward, but exercise that freedom within a framework of effective accountability. This is the essence of any system of good corporate governance.

In a more complicated explanation why we need corporate governance?

There are three type of business vehicles that is commonly available namely
1. Sole proprietor
2. Partnership
3. Incorporation (Limited Company)

All three types of business vehicles have their own characteristics

Sole proprietor
Sole proprietor is the earliest type of business vehicles set up to conduct business. The key characteristic of a sole proprietor is that the owner of the vehicle is also the worker of the company. The business is conduct on a small capital base and in a smaller scale.

Partnership
Partnership is known as the expansion of the sole trader. Where sole trader is operating in a one owner one runner scale, the partnership is running on more than one owner and more than one operator. The capital requirement for the business is higher and do require more than one operator.

Incorporation
This is what we commonly known as a “Company”. In the operation of a Company, there are two separate parties that exist, namely: Shareholder and the Director. Unlike the other business vehicle mentioned, the ownership and the operator of the Company will be separated.
The Owner of the Company is the shareholder whereas the operator of the Company is the director. The running of the Company will then be regulated by the Companies Act. In simple, the shareholder will invest in the Company and at the same time they also appoint the operator of the Company, the Director to run.

Therefore the Director will be accountable to the Shareholder on the operation of the Company. This also led to the Company being run by Director or manager who is distinct from the owners.
Governance issues do not appear to be serious under the sole proprietor and partnership model. It is when the incorporation model begins to become a force of business entity and due to the collapse and fraud case of several big corporations during the 20th century that lead to the governance issues. At that time, various interest group is concern over the governance issue hence give birth to the concept of corporate governance.