What is the main purpose of corporate governance?

The main purpose of corporate governance is to direct and control company operations. This involves establishing a framework of rules and practices through which a company is directed and controlled, ensuring the organization is run in the best interests of its stakeholders, including shareholders, management, customers, suppliers, and the community. Good corporate governance provides transparency, accountability, and fairness in a company’s relationship with all stakeholders. This structure is essential for effective decision-making and risk management, ultimately supporting the long-term sustainability and success of the company.

While increasing profitability, enhancing employee satisfaction, and reducing competition may be objectives or benefits that arise from effective governance, they are not its primary focus. Corporate governance is chiefly concerned with establishing policies and overseeing their implementation to ensure that the company is well-managed and operates ethically and legally.