Governance refers broadly to the direction provided to management and operations of your company. In its detail, it refers to the powers given to the owners, the Directors, the Officers, and to the Employees. It looks at who has the power to do what and whether they should have that power. The voting rights of each owner or director and what they have the right to vote on is laid out in the Corporation documents.
The power to use those rights is governed by Federal and State statutes such as the Corporation, LLC, and Partnership statutes and may include Sarbanes Oxley. Ultimately the company must operate in due diligence with respect to the rights of anybody affected by the company's actions. Ultimately the company must show that it properly investigated, deliberated, and chose in the best interests of the company.
The Meeting minutes document these procedures to protect the Board and the Owners from the choices they make. Company policies and procedures can also provide a basis for making decisions in the best intersts of the company. A company should consider the Company's interest, the Owner's interest, the Employees interest, 3rd Parties Interest (such as creditors) and make a decision according to the weight given to each.
In a small one person company this refers to the owner as he acts in all capacities of Owner, Chairman of the Board, President and Employee. As the company grows, it brings in employees, officers, directors and eventually other owners. As this growth occurs, the governance of the company should be updated, documented, and followed.
Ronan R. Blaschko, Bankruptcy Attorney primarily serves the Dakota County, Ramsey County, Hennepin County, Washington County and Scott County areas in Minnesota, including cities Saint Paul, West St. Paul, Inver Grove Heights, Eagan, Apple Valley, Burnsville, Cottage Grove, Mendota Heights, Minnetonka, Richfield, Edina, Eden Prairie, Bloomington, Golden Valley, New Hope, Plymouth, Maplewood, Oakdale, Stillwater, Lake Elmo, Roseville, Little Canada, Minneapolis, Woodbury and Afton in in Minnesota.