Brief on corporate governance
The concept of corporate governance, or corporate governance as it is called in English, has its background in the separation between ownership and management of the company. This is a topic that becomes relevant as soon as the company has more than one partner and / or if the operational work is led by a person other than the owner.
Even in smaller entrepreneur-led companies, it is easy to imagine that the different shareholders may have different interests regarding e.g. risk, financing or return. There is thus a need to agree and establish guiding principles for these interests, where the principle of equal treatment is an important one. Of course, it is important not to make decisions that unduly benefit one individual owner, or clearly disadvantage another. Deviations from this principle are the source of many, often bitter, ownership conflicts.
In the same way, it is easy to imagine that there may be conflicts of interest between the company’s (external) owners and the people who are appointed to lead the operational work. It can e.g. apply to remuneration and benefits, return requirements (short vs long term) or strategy. Without guiding principles that clearly describe that the company should be run in line with the owners’ interests, this problem can also give rise to both conflicts and pure corporate scandals.
Successful or good corporate governance is about creating systems and routines for governing the company that provide the best possible conditions for fulfilling a well-balanced ownership interest in the long term. This is done by giving the owners who are entered in the company’s share register the opportunity to appoint a competent board at the AGM. The board should then have a clear and far-reaching mandate to manage the company on behalf of the owners until the next board election. The company’s ability to create (financial) value is determined by how efficiently these systems and routines work. However, it is also common with systems that handle more complex ownership interests such as ethical values or the creation of another form of societal benefit that does not primarily create ownership value of an economic nature.
Within what framework a company can be governed, regulated in functioning democracies through laws and other mandatory regulations. There are usually laws and regulations that specifically deal with the relationship between owner, between owner and board, the work of the board, the relationship between board and management, board representation for employees but also the relationship between the company and other stakeholders such as the state, customers and other stakeholders. In recent decades, non-mandatory regulation in the form of so-called codes of corporate governance has also become common. However, these have become mandatory for all companies whose shares are traded on a regulated stock market. The companies are thus expected to follow this code and, in cases where they deviate from it, openly report this and explain why.
The extent to which the company complies with laws, regulations and directives is the subject of the now accepted term regulatory compliance. This does not only mean avoiding penalized errors, but the purpose is to help all the company’s stakeholders to evaluate the company’s ability to create long-term values.
Together with Hippoly
Do you want to offer the company’s board a good and secure collaboration tool for booking meetings, sharing files and communicating? Then we recommend Hippoly! The service is integrated with NVR and everyone on the board can see the list of owners and distribution directly in Hippoly. The integration is available in both the free and paid versions of Hippoly.
The app is continuously updated with information from the Swedish Companies Registration Office, the Swedish Tax Agency and Creditsafe and contains smart functions for:
- Meeting management with calendar integration
- Distribution of meeting documents
- File and document management
- Electronic signing
- Environmental monitoring
- Communication via posts and chat
- App for iOS and Android
- Encryption of all data
You have access to the app and all your corporate engagements in your mobile, computer and tablet.
If your company or organization is covered by the Money Laundering Act (2009: 62), in the law also called operators, you will find all the information you need regarding money laundering, terrorist financing and the beneficial owner here on the left. You will also find information on what measures you are expected to take to obtain a good customer knowledge.
What is a beneficial owner?
According to the Money Laundering Act, companies covered by the law are obliged to control the so-called ”Beneficial owner’s identity”. The beneficial owner is defined in the Money Laundering Act as:
”A person on whose behalf another person acts, or if the customer is a legal person, the one who exercises a controlling influence over the customer.”
If the customer is a legal person – company or foundation – the operator must check direct and indirect physical owners if the holding amounts to more than 25%.