Define the term ‘corporate governance’ and explain its importance to investors?

Corporate governance as ‘the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies.

The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.

The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship.

The board’s actions are subject to laws, regulations and the shareholders in general meeting.