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The Three Pillars of Good Corporate Governance

Malcolm Campbell ||

Corporate Governance is a complex issue and often one that is difficult to clearly define. To help explain it, internationally recognised specialist in corporate law, Professor Michael A Adams has developed a theory called The Three Pillars of Good Corporate Governance that focuses on three key areas:

  • Corporate Governance;
  • Due Diligence; and,
  • Compliance Programs.

Each of these are explored in more detail in an article written by Professor Adams, who over the last decade has made a move to International Corporate Governance.

In many ways the precise definitions that an organisation might apply to corporate governance, internal or external due diligence and compliance do not matter. What is important is that the concepts are understood as being an initial part of risk management and that the responsibilities go to both the business entity and the individuals involved.

Many senior officers have tried to hide behind the purported protective barrier of directors’ and officers’ insurance (known as “D&O insurance”), which the courts and regulators can pierce, causing a loss of reputation and financial impact on the individual.

Making sure a company’s board of directors and executives understand the differences between the three distinct yet inseparable pillars of good corporate governance is critical – now more than ever.

As a company director, we urge you to read the Professor Adam’s full article.  You can also listen to Professor Adams explain ‘The Three Pillars of Good Corporate Governance’ theory in this video.

Maybe it is time to be proactive and review your internal due diligence procedures, by whatever name your organisation calls them!

If you’re a Director, you can also find out more about Safe Harbour and Director Responsibilities here.

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