Manual of Corporate Governance

The Manual of Corporate Governance consists of 8 parts, as follows:

I: Introduction to corporate governance. History and relevance; agency theory, models of corporate governance; dynamics of governance models, and our strategy and business model framework.

II: Family business governance: owner­ship and management, specifics on governance structure and mechanism, the role of the board and senior management and succession planning.

III: Organizational management and governance framework, including models such as the IIA Three Lines Model, The Four Lines of Defense, Internal Control Framework (ICF), Enterprise Risk Management (ERM), among others. Risk manage­ment function, compliance function, and audit functions are detailed. Risk concepts, risk types, risk appetite, and relevance to the insti­tution are discussed. Compliance concepts, including anti-money laundering and taxation, are detailed. It also includes Supervisory Mechanism so that directors or managers in any institutions- not just banks-are aware of how regulators and supervisors like European Central Bank (ECB) and NCA (National Competent Authorities) monitor institutions.

IV: The board. Fit and Proper principles, incorporating guidelines from Banks for International Settlements (BIS) and ECB, includes diversity and inclu­sion and evaluation. The guidelines on board effectiveness are detailed, in accor­dance with the European Banking Authority (EBA), Basel Committee on Banking Supervision (BCBS), Financial Reporting Council (FRC, UK), among others. Decision-making dynamics, roles of the chair, independent/non-executive directors, executive directors, and the importance of board committees are pretty discussed. The concepts of independence, conflicts of interest, and crisis management are provided.

V: Geopolitics. Some of the well-known geopolitical cases in the international con­text are presented. The point of COVID-19 and globalization is exam­ined. The theory and relevance of Foreign Direct Investments (FDIs) and internationalization are well discussed.

VI: Corporate credit rating and why it matters. Acknowledging that sustainability-ESG (Environment, Social and Governance)-is particularly important to businesses in current times, this part also discusses extensively top­ics regarding the business model and sustainable growth. This part also discusses activism by individual shareholders and by institutional shareholders.

VII: Reporting. The concept of corporate reporting is presented comprehensively, along with its importance in maintaining robust communication among stakeholders. The difference in annual reporting of the two main governance models-- monist and dualist models- is discussed. The paradigm shift in corporate report­ing to shareholders or/and stakeholders is also discussed, including the evolution of sustainability reporting and integrated reporting.

VIII: Encapsulates all the topics discussed in the pre­ceding parts and delivers a high-level, holistic governance operating model. The governance case in start-ups or small companies is briefly dis­cussed at the end of the chapter.