Leadership: Staying on course

by Sorcha Corcoran for Business and Leadership, November 25th, 2010.

Just because your company is small does not mean it is exempt from good corporate governance and in fact having the correct structures in place can protect your firm from a whole host of issues further down the line. Sorcha Corcoran reports.

At a recent Institute of Directors (IoD) workshop on corporate governance for SMEs that he ran, chartered secretary George Bartlett suggested to one of the eight participants that a nonexecutive director could help grow his business.

“It was an eighth-generation business, with he and his wife as directors. Companies are obliged to have two directors in Ireland, but the wife wasn’t directly involved in running the business. The business owner wondered if he should take his wife off the board because of legal exposure,” he explained.

“He hadn’t thought of the non-executive director idea and felt after the workshop that this was maybe the right way to go.” It’s interesting that this issue should come up among such a small group of SME business owners. Recent IoD research shows that SMEs are less likely to have independent non-executive directors in place than larger companies, with less than 38pc of those surveyed having appointed them to their board.

The IoD said this is a worrying feature as “having independent non-executive directors in place on a company board is an integral part of good corporate governance”. Corporate governance has been defined as the “set of processes, customs, policies, laws and institutions affecting the way a company is directed, administered or controlled”. (continue reading… )

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