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INTRODUCTION TO CORPORATE GOVERNANCE, Corporate Governance System, Fadhila…
INTRODUCTION TO CORPORATE GOVERNANCE
Corporate governance definition
IFC:
The structures and processes by which companies are directed and controlled
OECD:
Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined
Core values of corporate governance framework
Fairness:
Protect shareholder rights and ensure the equitable treatment of all shareholders including minority and foreign shareholders
Responsibility:
Recognize the rights of stakeholders as established by law, and encourage active cooperation between companies and stakeholders in creating wealth and jobs and ensuring sustainability
Transparency:
Ensure that timely and accurate disclosure is made of all material matters regarding the company, including financial status, governance structure, performance, and ownership.
Accountability:
Ensure the strategic guidance of the company, the effective monitoring of management by the board, and the board’s accountability to the company and shareholders.
Benefits of good corporate governance
Level:
Compliance with legal and regulatory requirements
Benefit:
Better reputation for the company
Level:
Initial steps to improve corporate governance are made
Benefit:
Lower cost to capital
Level:
Advanced corporate governance system
Benefit:
Access to capital markets
Level:
Corporate governance leadership
Benefit:
Improved operational efficiency
Corporate governance framework in Indonesia
Features
Role of state-owned enterprises
Concentrated ownership
Little separation of ownership and control
Unwieldy holding structures
Inexperienced corporate bodies
Legal and regulatory framework
Chapter 3 of the Indonesia Commercial Code of 1848 (Kitab Undang-Undang Hukum Dagang or KUHD)
Law No. 6 of 1968 on Domestic Investment
Law No. 1 of 1995 on Limited Liability Companies
Corporate Governance System
Fadhila Abidah
09111840000092
Manajemen Risiko dan Tata Kelola B