Why is governance such a dirty word?

During the throes of incorporating a new entity, governance may seem like a complicated obligation to come back to at a later time - it doesn’t need to be. Even if your corporation has a single shareholder, following governance code is encouraged from the get-go.

In older, larger corporations, governance is a necessity. Whatever size your business, in many circles, the sheer mention of corporate governance is met with a collective grunt. So, why is governance still such a dirty word? What is it about that three-syllable word that makes it so...frustrating? 

Here are my two-cents on the top pain-points surrounding corporate governance: 

It’s time-consuming

A busy board of directors concerned with maximising shareholder profit and share prices may not be interested in the minutia of administration. Board meetings and AGMs where the board approves significant decisions of directors are non-negotiable. If you do not follow corporate formalities, a court can lift the corporate veil (in the UK), and shareholders can be held personally liable for lousy company debts. No one wants that, so proper governance must be upheld at all times. 

It’s paperwork-heavy 

Meeting two of the key markers of good governance - transparency and accountability - means paperwork. Whether you have company secretaries or trust administrators, governance requires an infallible paper trail. Thanks to the digitisation of signatures, voting using blockchain and remote board meetings, it has never been easier to migrate traditional paperwork to superior digital equivalents. 

It’s costly 

Complying with, for example, The UK Corporate Governance Code can become expensive. From the creation and storage of documentation, executing paperwork, printing costs, board member travel and accommodation - expenses can soon stack up. 


 

Do you agree? I’d love to know if you are coming up against resistance when it comes to your company’s governance regulations and practices. Shoot me a line below. 

 

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