Although there is no ultimate definition, corporate governance is a collection of rules, practices, and processes that guide and control a corporation. These include the mechanisms of management accountability to shareholders and other stakeholders and methods of setting and meeting objectives.
The legal aspect of corporate governance involves the laws, regulations, and industry standards that govern the operations of a corporation, as well as the legal responsibilities and obligations of the corporation's management and board of directors. Additionally, it includes the oversight and enforcement of these laws and regulations by government agencies and regulatory bodies. Corporate governance is essential for protecting shareholders' rights and interests and for the overall integrity and sustainability of the corporation.
Corporate governance's role in contemporary business is a matter of discussion. On the one hand, corporate governance is essential as it is about controlling risks, ensuring regulatory compliance, and enabling the decision-making process based on viable criteria, which is crucial to achieving objectives. Good corporate governance practices can reconcile and define the relationship between stakeholders, owners, and management of a company and, therefore, permanently influence the company's operations. On the other hand, some see the framework as a bottleneck of regular business flows, discouraging entrepreneurial spirit, and reducing flexibility.
However, the price of non-compliance may often go beyond the regulatory, financial, and reputational. In the long run, a lack of sound corporate governance leads to missed opportunities due to the lack of as a result of poor organization. Therefore, implementing the right size-right shape concept is vital to the success of a business.
Corporate governance rules, regulations, and practices in jurisdictions across the CEE do differ as they address issues of doing business in specific ways. This guide aims to provide a comprehensive overview of some of the region's most critical aspects as this complex area increasingly comes into the limelight. I hope you will find it informative and thought-provoking and that it will contribute to the ongoing discussion in the field. I want to thank CEE Legal Matters for understanding the importance of the topic and the authors for shedding light on it.