Rules of corporate governance are the principles, systems, and procedures that can achieve the best protection and balance among the interests of corporate management, shareholders therein and any other related stakeholders. The main target of applying rules of corporate governance lies in ensuring the Corporate alignment with the targets of the shareholders to enhance the investors’ confidence in Corporate’s efficiency as from performance and ability to face crises.
Rules of corporate governance shall organize the methodology for taking all decisions within the Corporate as well as motivating the transparency and credibility for such decisions. One of the most important targets for adopting the rules of corporate governance is to protect shareholders, separate the authority of executive management that manages the Corporate activities and the Board of Directors that prepares and reviews plans and policies with such Corporate. This confers reassurance and enhances confidence of manner to deal therewith, in addition to enabling shareholders and stakeholders to control the Corporate effectively.
Wise Rules of Corporate Governance are based on strengthening the following:
First: Ethical Attitude
This shall ensure adherence to ethics and rules of wise professional conduct and balance in achieving the interests of parties related to the Corporate as well as transparency upon displaying the financial and non-financial information.
Second: Control and Accountability:
The importance of placing an integrated system of control and accountability to detect transgressions and distractions in addition to the importance of activating the stakeholders’ role to control Corporate as well as asserting the disclosure and transparency as an essential factor for protecting the stakeholders’ rights.
Third: Sound Management Organization:
Sound Management Organization ensures the distribution of Authorities and responsibilities, separation of authority, developing a system of of incentives and rewards through performance appraisal, whether for managers or employees of the Corporate.
The importance and benefits of corporate governance in particular and the financial sector in general are as follows:
- Enhancing the efficiency of corporate administration
The rules of Corporate Governance encourage a correct approach in corporate management, through the application of best practices regarding modern administrative methods, which contribute to the growth of companies and increase their profitability, as well as reduce the risks that these companies may face, as good governance practices ensure that the Corporate’s management is a board of directors and a team of highly experienced and technically qualified managers, in addition to
- Get a better deal on financing.
The application of governance rules creates a pure climate of confidence and security for investors, giving them a strong incentive to subscribe to the Corporate’s new issues in various financial instruments, allowing the Corporate to provide the necessary funding sources at the lowest possible cost.
- Control and audit procedures are being strengthened.
Controlling the practices and attitudes of those in charge of the Corporate, as well as adhering to all laws and instructions issued by the supervisory authorities, as well as adhering to the Corporate’s internal policies and work systems, allows the Corporate to self-monitor its activities, which contributes to reducing the risks that it faces. The Corporate could be put in jeopardy.
- Supporting the corporate social responsibility
The rules of governance encourage companies to play a more effective social role by requiring them to broaden the scope of their activities to include activities that benefit the Corporate, society, environment, and economy, such as the implementation of studies and research that benefit the Corporate, society, environment, and economy, while taking into account the three pillars of development: sustainable economic growth, social progress, and environmental protection.
- Enhancing justice, transparency, and equal treatment.
Governance rules aim to promote justice, transparency, and fair treatment of all parties, including shareholders, investors, and other stakeholders, through the application of the principles they contain.
- Making the concept of conflict of interest more palatable
Governance rules encourage the Corporate to take the correct approach in its dealings with related parties among all of the different groups within the Corporate, whether inside or outside the Corporate, as well as to avoid any improper practices that may lead to a conflict of interest and expose the Corporate to financial problems.
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