The Importance Of Corporate Governance
Background
The need for corporate governance among listed and unlisted companies and state-run enterprises is so great in Zimbabwe. The drive toward corporate governance has been fuelled by a number of factors. There is wide recognition that corporate governance can contribute to the economic success of corporations and to their long-term sustainability (going concern). It is also recognised that good corporate governance can enhance corporate responsibility and improve the reputation of companies, which in turn can attract local and foreign investors. Corporate governance is also seen as a deterrent to corruption and unethical business practices that has scared our business image.( WOYO MANNERS 2013)
The market discipline and transparency
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The essential focus of the code is that the board should exercise leadership to prevent risk management from becoming a series of activities that are de-punched from the realities from the company‟s spirit or activities. Greater emphasis is placed on the board to ensure that it is satisfied with management of risk. According to Zororo Muranda (2006), it is appropriate for many banks, especially large banks and internationally active banks, to have a board-level risk committee or equivalent, responsible for advising the board on the bank‟s overall current and future risk tolerance/appetite and strategy, and for overseeing senior management‟s implementation of that strategy. The Denmark‟s Recommendations on Corporate governance code (2009) provides that, this should include strategies for capital and liquidity management, as well as for credit, market, operational, compliance, reputational and other risks of the bank.
Question 1
Par (a).
i. Corporate governance issues at Royal bank
Corporate Governance can be summed up as the relationship among stakeholders that is used to determine and control the strategic direction and performance of organizations.
The following are the corporate governance issues at Royal bank.
i. Owners running the entity
The board of directors were running the bank and they had The Board of Directors were supposed to be the governing body for a company that takes all
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• Better utilisation of the talent pool.
• Enhancement of corporate reputation and investor relations by establishing the company as a responsible corporate citizen
Op. cit 2015 further states that Board diversity can be promoted by a number of methods. Measures currently adopted by different regulatory bodies are generally classified into the following approaches: (i) through imposing quotas on the board; and (ii) enhancing disclosures using the 'comply or explain' approach.
Imposing quotas refers to mandatory requirement in appointing a minimum number of directors with different attributes on the board. This legislation enactment mainly deals with gender diversity to tackle the relative underrepresentation of women in the boardroom. For example, since 2008, each listed company in Norway has had to ensure that women fill at least 40% of directorship positions. Spain and France are implementing similar mandatory requirements for gender diversity. This approach increases the number of women on the board at a faster rate and forces companies to follow the legislation.
b. Establish formal processes for evaluation of the board’s
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