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Corporate Governance for Better Business

03 Sep 2016

Corporate governance: the system by which businesses are directed and controlled

Corporate governance is about better boards and businesses for every size of company. While this does include prosperity and/or profits, it also means complying with the law, regulations and guidelines.

It means accountability, so that decisions about, for example, pay, follow your company guidelines and are agreed by a committee that aren't affected by it. It also means that every level of decision-making has someone to answer to.

It means preparing your accounts correctly and having them audited.

It means the entire business cycle is clear, transparent and works properly, and that you communicate this regularly to anyone with an interest.

It means your staff understanding what your business does, your company values, and the role they play in its success.

It means health and safety and all the other systems, controls and policies you have to take care of to run a business.

It means encouraging diversity and fairness to ensure you get the best people on board – whether that is in the boardroom or in the workforce.

It means communicating what you do and how - with annual reports and meetings.

It means that your leadership is strong but balanced by the board.

It means better business- for you, your staff, and your customers.

Good governance gives your business the best way to live up to its potential. So how can the IoD help?

We can provide guidance and advice on how to understand what good governance is and how to achieve it- through our online fact sheets, business research for our members, and even one to one appointments. Anything from how to set up a company, or a board, or appointing a director, to how to understand the FRC's code. We also provide details of the Corporate Governance Code 2014.

We can provide training and development for you or your team - our courses cover all the essential board positions, as well as more advanced qualifications like the Certificate in Company Direction - and our pinnacle qualification, Chartered Director.

We can lobby on your behalf- we have a powerful voice mandated by our members, to push government and regulatory bodies to make the right decisions that allow businesses to prosper, not be strangled by red tape. We say that a fresh approach to corporate governance is needed.

We can call out bad practice - we believe good governance is for every business. When we see bad practice, we speak out publicly like we did about Sports Direct, BG Group, and Barclays in 2014, and more recently FIFA.

We are working towards developing a "Good Governance Index" for the biggest firms as well as ways to recognise and develop good practice in smaller firms.

We show the way forward - by campaigning for diversity and promoting women on boards.

We listen to you - our members are at the heart of everything we do, so we want to know if something can be improved or changed.

Together we can inspire better business.

IoD Corporate Governance factsheets


A Director is “A member of a board appointed to direct or manage the affairs of a commercial corporation or company.”

A Director cannot be under 16, an undischarged bankrupt, the company auditor or have been disqualified by either court order or the company's Articles of Association. 

There is a legal requirement under S154 of the Companies Act for a private company to have at least one director, and a public company to have at least two directors.

IoD members: request a template Directors Service Agreement

Non-Executive Directors

The non-executive director's (NED) role is to provide a creative contribution to the board by providing independent oversight and constructive challenge to the executive directors.

There is no legal distinction between executive and non-executive directors. As a consequence, in the UK unitary board structure, non-executive directors have the same legal duties, responsibilities and potential liabilities as their executive counterparts.

IoD members: request a template Letter of Appointment for a Non-Executive Director

Specific Roles

All public companies are required to have a Company Secretary, in addition to any private companies that are specifically required to do so by their Articles of Association.

The Company Secretary has specific duties in law and, in many ways, is now seen as the guardian of the company’s proper compliance with both the law and best practice.

Boards & Committees

The board's key purpose "is to ensure the company's prosperity by collectively directing the company's affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders".

The board committees provide oversight of specific strategic decisions that a company makes, in particular relating to remuneration, audit, and appointments to the board, known as nominations.

IoD members: request a template Letter of Appointment for a Non-Executive Chairman

© Institute of Directors. All rights reserved.

The information in this guidance is intended for general information purposes only and does not constitute legal or professional advice. The IoD does not accept any responsibility for any loss which may arise from relying on information contained in this article. It is not a substitute for legal advice and specific and personal legal advice should be taken on any individual matter. IoD does not recommend any firms. The IoD is not accountable for the products, services, acts or omissions on the website(s) linked to this page. Website terms and conditions apply.

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