What is corporate governance?

The listed companies are an example of how capital can be raised effectively, generating products and services. Its corporate form involves the separation of ownership and control of assets of the business. This separation of ownership (shareholders) and management and control (company management) results in several conflicts of interest between management and shareholders.
 
Corporate governance is the system of set policies, procedures, and clearly defined responsibilities and accountabilities, used by stakeholders to overcome conflicts of interest, inherent in the corporate form.
 
The company with a weak system of corporate governance represents a major operational risk to itself and its investors. It is essential to understand the company’s corporate governance practices to get a better picture of the risks inherent in investing in that company.
Here are a few pointers to start and check for good corporate governance practices:
 
Check the number of independent non-executive board members against executive board members. Higher the number of non-executive independent board members, the better the governance.
Check who chairs the board of directors. It is advisable to have a non-executive independent director as the board chairman. One should also check for the remuneration the management and board members are drawing. The number of board meetings conducted is important, too.
There are various committees like the audit committee and the nomination committee. The member composition of such committees should be seen once to check the proportion of independent directors.
 
The list does not end here; there are many more points to be considered. Nonetheless, you start with these basic ones and see the difference.