| | FEBRUARY 2025 9framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations, and society.'Pillars of Good Corporate GovernanceThe principles of good corporate governance can be classified into 5 principles, transparency, accountability, impartiality, awareness, and responsibility. The table below is created by the investment team at Velocity Ventures, after consulting notable sources such as Harvard Law School, Deloitte & Touché LLP, Corporate Governance Institute, Instituto Brasileiro de Governança Corporativa (IBGC) and PwC, amongst others. It compiles the key takeaways and categorizes each practice into one of the 5 key principles. The Principles and Practices of Good Corporate Governance AccountabilityThe first pillar, accountability, emphasises the board's role in explaining the purpose of a company's activities and the results of its conduct. Since the board and management are accountable for the company's capacity, potential, and performance, it is crucial to have prompt and regular communication with the necessary stakeholders i.e., shareholders, regulators. In this pillar, the practices under accountability include: 1. Frequency of internal/ external audits and how issues are handled 2. Employee agreement 3. Active stakeholder engagement 4. Performance managementTransparencyThis pillar highlights the Board's role of providing timely, accurate, and clear information to its stakeholders. Such disclosures include the financial state of the company, potential conflicts of interest, and any risks to shareholders and other stakeholders. The 4 practices highlighted in this pillar are: 1. Reporting of financial performance 2. Good board meeting practices 3. Timely and balanced disclosure practices 4. Audit committee ImpartialityThe impartiality pillar suggests that the board of directors must treat shareholders, employees, vendors, and communities fairly and equally. This could be done by: 1. Ensuring the rights of shareholders 2. Effective communication and provision of ready access to information about the company 3. Ease for them to participate in general meetings. 4. Fair remuneration package for C-suite and senior management 5 . Policies to address reconciling conflicts of interest. AwarenessThis pillar focuses on the board's and management's ability to identify the risks present and execute potential risk mitigation strategies. This entails informing all relevant stakeholders of the existence and nature of existing risks. This can be achieved through: 1. A sound framework for risk management 2. Talent management 3. Strategic planning ResponsibilityThe responsibility pillar, which is the last, explains the board's responsibility on overseeing all corporate matters and management activities. It must be aware of and support the successful, ongoing performance of the company. It must act in the best interests of a company and its investors. The practices under the pillar aim to achieve these objectives, through: 1. Board and management formulation and alignment on company's long-term strategy 2. Appointment and assessment of board of directors 3. Succession planning 4. Ethical climate of the company With the 5 pillars, these principles cover the broad aspects of corporate governance and what it takes for a company to be both profitable and a good corporate citizen. ConclusionWhile there is no one-size fits all approach to corporate governance, this cheat sheet aims to provide founders with an exhaustive to-do list to help them get started. The recommendations provided are also tailored to the startup's growth stage. This ensures that founders are not bogged down by business processes that will impede the firm's growth trajectory but instead build a strong governance framework for the startup's future success.In conclusion, effective corporate governance is essential for a startup's long-term success. Therefore, it is crucial to draw learning points from events such as Zilingo's collapse to avoid similar mistakes in the future. By prioritizing good corporate governance practices, startups can prevent costly mistakes and damage to their reputation, while helping them gain access to capital and provide them with an edge over their competitors.The best time for startups to implement good corporate governance practices is now. To implement good corporate governance practices, it is crucial to balance the interests of the various stakeholders in a company
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