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Company Law Notes for Company Law Notes

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Controls over the Management

  • Control over the management -by shareholders, by government, by company law Board for good governance of company. Which we know as corporate governance
  • Good governance in political and administration sector.
  • Corporate governance in corporate sector.
  • Control over the management is the way of application of corporate governance in company or corporation. Control is necessary for check and balance of powers role duties and jurisdiction of overall management including BOD and other stakeholders.
  • Corporate governance is set of process, customs policies, law and institution affecting the way of a corporation is directed administered or controlled. Corporate governance also includes the relationship among many stakeholders for which corporation is governed. The principle stakeholders are the shareholders, management and the boards of director, other stakeholders are employee, suppliers, customers, lenders regulatory, the environment and the community at large.
  • Controls of shareholders government and regulatory is essential for check and balance of scope and power of management.
  • There are so many stakeholders in any company or corporation. The harmonies, accountable, fair, credible, trustworthy and responsible relationship is possible from the check and balance. The way of check and balance is controls over the management.
  • Controls by different stakeholders such as by shareholders, by regulatory by government and by court is necessary for the protection of rights of shareholders and customers.

Control is the way of achieving the corporate governance which includes the following key elements.

  • Honesty,
  • Trust and integrity
  • Accountability
  • Responsibility
  • Mutual respect
  • Performance oriented
  • Commitment to the desired goal of corporation.

The important theme of corporate governance is to ensure accountability of certain individuals in a corporation through the mechanism which tries to reduce or eliminate the principal agent problem in corporations.

The corporate governance has some eminent principles which are as follows.

  • Right and equitable treatment to shareholders
  • Interest of shareholders and other stakeholders
  • Role and responsibilities of the board(Management)
  • Integrity and ethical behavior
  • Transparency etc.

Corporate governance is the system of structuring operating and controlling a company in order to achieve the following objectives.

  • To fulfill the long term strategic goals of the owners
  • To consider and take care of the interest of the different stakeholders or company
  • To maintain good relationship to customers and suppliers.
  • To take account of needs of environment and local community.
  • To ensure proper compliance with all applicable legal and regulator’s requirements

Organization of Economic Co-operation and Development) OECD- defines- corporate governance as a system by which business corporations are directed or controlled.

Check and balance of power of management shareholders and investor’s responsibility and accountability of management and board, Transparency and disclosure respect to law and system, respect to code of conduct, equal treatment to shareholder protection of interest of various stakeholders, a effecting accounting and auditing system are basic element or ingredients of corporate governance.

Therefor control over the management is the method of ensuring right and protecting to stakeholders. The concept and legal provision about controls are directly connected with corporate governance.

But controls should be based on law, policy and grounds of reasonableness otherwise controls may lead the management toward the defunct management.

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