The tax and financial consultancy services that accountants offer to businesses often extend to the field of corporate governance. This encompasses a range of intra-company relationships, including:
- The ability to govern aspects underpinning the contractual balance between different stakeholders.
- The functionality of processes that maintain a balance between ownership and management, majority and minority stakeholders, delegated figures and administrative bodies, and stakeholders with varying responsibilities across different decision-making and organisational models.
- The suitability of frameworks adopted within the corporate framework.
1. THE MEANING OF CORPORATE GOVERNANCE ↑
Commonly used in the business world, corporate governance refers to the various aspects of business management, encompassing numerous facets. This includes the quantitative and qualitative measurement of results generated by the implemented management system.
Corporate Governance Definition
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. It essentially involves balancing the interests of a company’s various stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community. This is achieved through the identification and updating of organisational models, contracts, and procedures that effectively regulate:
- Ownership structure
- Resource allocation
- Risk management
- Business transfer to future generations
2. THE MOST USED CORPORATE GOVERNANCE SYSTEMS ↑
Companies are highly focused on understanding and examining all elements related to management. The need to ensure business efficiency has led to the adoption of three primary governance systems:
- Traditional System: Characterised by a Management Body (Board of Directors or Sole Director) and a Supervisory Body (Board of Statutory Auditors). This model is prevalent in Italy.
- One-Tier System: Comprises a Board of Directors that appoints a supervisory committee from within. This model is typical of Anglo-Saxon systems.
- Two-Tier System: Consists of a Management Board or Board of Directors and a Supervisory Board. This model is characteristic of the German system.
3. CORPORATE GOVERNANCE RULES AND BODIES ↑
This system defines a set of rules to organise management functions and control operations of governing bodies. These rules, encompassing internal company regulations and national laws, must be universally understood and followed within the company. The intermediary must establish the statutory rules and the division of tasks among the various bodies:
- Supervisory Body
- Management Body
- Strategic Supervision Body
- Senior Management
A summary of the specific tasks of the first three bodies follows:
- Supervisory Body – This body is responsible for identifying any anomalies and regulatory violations. It often works closely with operational units conducting internal audits, such as security control.
- Management Body – This body implements corporate and strategic policies, continuously monitoring their adequacy. It defines internal responsibilities and information flows.
- Strategic Supervision Body – This body identifies company objectives and selects strategies for their achievement. It analyses risk profiles, agrees on organisational structure, and establishes production or service delivery processes. Additionally, it analyses the control body structure and information flows.
4. ASPECTS OF CORPORATE GOVERNANCE ↑
The corporate governance approach allows for a focused view of business functions, enabling the identification of critical processes. This is based on strategic objectives, cost considerations, and the added value generated by internal transformations. Corporate governance can refer to several areas of corporate life, such as:
- Investment techniques based on active ownership
- Processes for directing and controlling a company
- Activities encouraging a company to adhere to codes
- Challenges arising from the separation of ownership and control
Elements of Good Corporate Governance
All parties involved in corporate governance, including owners, managers, directors, regulators, and employees, have a vested interest, whether direct or indirect, in the company’s success. The systems and processes of corporate governance are intertwined with mechanisms for delegating authority, measuring performance, reporting, security, and accounting. Good corporate governance is crucial for maintaining a high level of trust among stakeholders. Key elements include principles such as:
- Trust
- Honesty
- Open-mindedness
- Accountability
- Results orientation
- Mutual respect
5. CORPORATE GOVERNANCE CODE ↑
In December 2024, the Corporate Governance Committee approved the Annual Report to enhance the implementation of the Corporate Governance Code. This self-regulatory code for companies listed on the Electronic Stock Market (MTA) managed by Borsa Italiana serves as a soft law instrument, strengthening harmonisation across different legal systems. The Code introduces flexibility and proportionality measures within the framework of corporate discipline. The Report highlights that nearly all companies (96%) have embraced “sustainable success” as their guiding principle for board action, demonstrating a commitment to considering the interests of all relevant stakeholders in the pursuit of long-term value creation.
6. OUR TAX CONSULTANCY FOR CORPORATE GOVERNANCE ↑
One of the essential strategic consulting needs for businesses is guidance on management, organisation, and overall governance. As a trusted business partner, we offer immediate solutions to support companies in creating customised, easy-to-understand, and readily implementable rule systems. We assist companies in evaluating and defining optimal governance structures that effectively mitigate risks associated with business management. Our profound understanding of national, European, and international financial markets enables us to provide targeted advice to our clients.
Over the years, we have accumulated extensive experience and specialised expertise, including assuming roles as directors within corporate governance bodies, members of Boards of Statutory Auditors, and Supervisory Bodies. Our services encompass:
- Planning and managing generational handover in businesses;
- Planning and managing corporate governance;
- Utilising tools like trusts, extraordinary transactions, and family agreements.
