Explain Approach To Corporate Governance

Corporate Governance Assignment

Topic- Comply or explain approach to Corporate Governance

Corporate governance is the way of governing or controlling a system by following the given rules and practices. It is an art of governing any country, institution or company etc. Corporate Governance is essential for proper functioning of any organization. Corporate Governance includes management by Director, Executives, Mangers, Committee, Shareholders, Stake holders etc. It is the foundation of healthy organization

The term ‘Comply or explain’ approach came in the year 1992, in United Kingdom which was then necessary following the various corporate scandals, thus this code was set. This code is known as the Cadbury code. This regulatory code was introduced as best practice for all the shareholders, whereas the term means- Comply or explain, which means that the companies either have to follow the set norms, regulations or if they do not wish to follow the same then in that case they have to explain their shareholders of the company’s practice and in case of any adverse circumstance they are answerable to all the shareholders. Thus

There cannot be one defined rule to follow for every organization. Each organization deals with different productions or services and hence Corporate Governance norms or way to control are different for every organization. But to decide which approach best suits the particular organization becomes a difficult task for the regulator as well as the managing body to decide. It also becomes practically impossible for the regulatory authority to decide one best approach depending upon the company size and type. Hence, this approach, which is also called as ‘One Size Fits all’. This is uniform type of approach for all companies to