It is the separation of powers between ownership, governance and management and it has a clear separation of powers, ie. Ownership – shareholders, governance – Board of Directors, management – CEO and team of officers, a system of checks and balances and fairness, accountability and transparency.
The benefits of good corporate governance are:
- Economic convergence: a policy of open and free economic systems must be complemented by competitive and modern systems in bank and corporate level.
- Competition for Capital: institutional investors put a premium on good corporate governance systems and practices.
- Increased shareholder activism: shareholders, potential investors and other stakeholders demand more ways of ensuring that their interests will be taken care of.
GOOD GOVERNANCE FOR SUSTAINABLE DEVELOPMENT
- Initiates/decides the DFI’s orientation towards SD
- Keeps the DFI focused on pursuing SD
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