Corporate Governance seeks to balance and to increase the likelihood of the return of the invested resources, through mechanisms based on sets of rules embedded in corporate management.
In cases where a direct and personally-controlled management extends for lengthy periods, the only way to create a peaceful and secure transition, capable of providing continuity for thinly-spread control, is through corporate governance. This is typically the case for family businesses that are in the second or third generation stage of existence.
Depending on the business's size and resources, there may be conditions for corporate governance practices to be monitored by specially-dedicated individuals. However, greater than the need to have these individuals, it is necessary to embrace a philosophy, a purpose, which can place small to mid-size companies in a framework of excellence in corporate governance, to be able to reap dividends from this system.
Such situations open-up opportunities for the practice, or for the incorporation of functions, and roles, such as:
Board of Directors;
Professionalism in Work and Capital allocation;
Rules for Sharing and Distribution of Results;
Policies for Participation in Management;
Greater control over the Value and Allocation of Resources.
This topic has growing importance, given the hypothesis that corporate governance structure affects a company's value. Which is surely does.