Corporate Governance In The Post-Lockdown Economy

26 November 2021 
3 minutes
Corporate Governance

Throughout the pandemic, companies have had to make important and often difficult operational decisions. With the gradual removal of Covid-related restrictions, decision-making has moved to focus on regeneration and the desire for growth. With these considerations in mind, there is no better time for businesses to ensure that they have good corporate governance in place.

Corporate governance is not limited to the concerns of multi-billion-pound companies. According to government statistics, there are roughly 5.9 million businesses operating in the UK, 2 million of which operate as a company. The majority of these operate as private limited companies, and many are small to medium-sized businesses with a varying number of stakeholders.

All corporations can face major issues when a lack of accountability, transparency, or regulatory standards exist within. The interaction between, and control held by shareholders, directors and managers can have a substantial impact on all aspects of a business. For example, the following are signs that poor corporate governance exists:

  • Excessive control is held by one board member who disregards the advice and opinions of other directors at the expense of a company’s success.
  • The directors of a company have taken decisions that are beneficial to them (e.g., remuneration) but unfavourable to the company’s shareholders.
  • Board members have been appointed who lack the relevant expertise for the role undertaken.
  • Irregularities are visible in company accounts and financial planning that has been purposefully overlooked by management.

The consequences of poor corporate governance can be severe. Risky investment decisions and poor financial planning for example, can expose a business to insolvency and potential bankruptcy. Lack of adherence to industry-specific regulatory standards can lead to potential litigation and investigation by relevant authorities.

Good corporate governance can help prevent all the above issues from arising. The key to ensuring good corporate governance and ultimately the success of a business is to promote accountability, transparency, organisational strategy, and the effective balancing of interests. This can be achieved when the correct advice is sought.

MKB Law can ensure your company is practicing good corporate governance by advising on various aspects of corporate law. The following are just some of the areas that we specialise in, which will ensure promotion and sustainability of good corporate governance:

  • Drafting of bespoke articles of association: Bespoke articles can provide arrangements for things like the allotment of new shares, transferring of existing shares and organisation of director/shareholder meetings and the decision-making processes therein.
  • Drafting of Shareholder Agreements: These agreements can provide arrangements for potential dispute resolution, provide formulae for share valuation when members wish to sell and place appropriate restrictions on the activities of shareholders.
  • Advice on the rights of directors and shareholders.
  • Advising on and aiding with the incorporation of new companies and their subsequent requirement to periodically file at Companies House.
  • Provision of secretarial support, including preparation and maintenance of a company’s statutory books.
  • Compliance with all aspects of the Companies Act 2006.

If you or your company have any queries or wish to attain advice on corporate governance or other aspects of corporate law, please contact the team at MKB Law.

This article is for general guidance only and should not be regarded as a substitute for professional legal advice.

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