Corporate governance is a collection of rules, practices and processes used to run an organisation.
The trustee and board should adopt and uphold the principles of good corporate governance.
Lack of corporate governance can lead to corporate fraud and even corporate failures. This can erode people’s confidence in the directors who manage the company.
On the other hand, good corporate governance leads to increased accountability, transparency and integrity. This can create value for shareholders and other stakeholders, reduce costs, increase competitiveness and restore confidence.
The board is responsible for the overall corporate governance of the company, including doing corporate planning, establishing management goals and strategy, and monitoring the achievement of these.
The trustee (CTSL) delegates investment management and fund administration functions to external service providers, but keeps legal responsibility for all areas of fund operations.
The board may establish committees to help it meet its responsibilities and prevent the board having to meet often. The number of committees the board needs depends on the size of the Fund and the complexity of the issues that need to be addressed.
The board must also establish an organisational structure according to the prudential standards set by the Bank of Papua New Guinea to manage the company, including:
- internal control framework – a system to ensure accurate accounting
- risk management – procedures for identifying and managing business risks
- ethical standards.