The foundation of good corporategovernance is the intellectual honesty of directors andsenior management. This intellectual honesty is expressed byacting in the best interests of the incapacitated company.The company, on formation, is a person, but it is absolutelyincapacitated until its directors are appointed and theboard in turn delegates to management the implementation ofits collective decisions. It is the quality of governancethat is important and not the quantity. Mindless compliancewith a set of rules is not good governance. Good governanceconnotes acting with responsibility, accountability,fairness and transparency. Transparency has a witheringeffect on misconduct and is absolutely critical incommunicating to stakeholders any decisions of the board. Inthis context, transparency demands that the communicationsconsist of substance over form and contain positive andnegative aspects, if any. The board of directors is the mostimportant element in corporate structures. Issues such asthe composition of the board of directors, the issues thatthe board focuses on, processes they follow for decisionmaking and how they learn to continuously improve thegovernance of the corporation critically influence thequality of decisions and the management quality. The mainresponsibilities of the board are to provide an effectiveoversight for the management and guidance to the corporationwith value creating strategies. The quality of theirdecisions is critically dependent on the quality of theinformation they have. Establishing a culture that sets theright tone at the top is critical for establishing the'trust' for the corporation.
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