When opening a bank account in Ireland, organisations may need to provide a copy of their governance policy for onboarding purposes. Those unable to do so may face difficulties during the process.
Given the scrutiny from banks and other key stakeholders, this article will go over how organisations, in particular charitable organisations, can establish and maintain good corporate governance to meet expectations.
What constitutes good corporate governance
In any organisation, good corporate governance is vital for effective management. This involves enforcing policies and procedures that promote responsible, ethical, and transparent operations, enabling the organisation to achieve objectives while maintaining its values. The responsibility of ensuring good corporate governance lies with the organisation’s board of directors.
There are various foundations and principals of good corporate governance which different organisations can adopt. For charitable organisations in Ireland, the Charities Governance Code is based on five main principles:
1. Working effectively
For the organisation to operate at its full potential, the board must be made up of individuals who possess the necessary skills and expertise tailored to their specific roles. With the right people, the organisation can set itself up for effective decision-making and smooth operations.
Having regular, well-organised board meetings may further enhance this by providing a space to address key topics such as performance updates and financial reviews. Decisions made during these meetings must be documented, ensuring transparency and responsibility on follow-up actions.
2. Leading people
To ensure strong leadership within the organisation, it is essential that everyone understands their roles, duties, and responsibilities. To support this, organisations will need to establish detailed processes for onboarding, training, performance evaluation, and termination. Operational guidelines should be crafted and agreed upon to steer the organisation’s activities.
It is also important to formally document the responsibilities, legal obligations, and decision-making authority of key figures within the organisation. This provides clarity on responsibilities, which may foster greater accountability.
3. Exercising control over the organisation
Compliance with all legal and regulatory requirements is imperative and organisations must have effective controls to ensure they meet those requirements. This begins with identifying the organisation’s duties, obligations, and the potential risks it may face.
Once determined, they should be presented to the board of directors at a meeting. This step is vital as it allows the board to seek clarification from the relevant departments if needed. Robust and effective controls should then be implemented to ensure that the organisation is adhering to its legal obligations.
4. Being transparent and accountable
True accountability in an organisation means embracing transparency across all areas of its operations, not just in financial reporting. This level of openness is crucial for building trust. Clear policies, procedures, and communications with stakeholders at every level are central to this. Organisations must understand who their stakeholders are and what they expect.
Many organisations make their policies and procedures available to the public either though their website or their annual report. This allows stakeholders to review them and reach out to the organisation for any concerns.
It is also necessary to have an open line of communication for receiving feedback from the stakeholders. This can be done in a number of ways such as via a dedicated email address or a page on the website.
5. Behaving with integrity
Additionally, organisations must be independent, honest, and fair. It is imperative that a culture of integrity is the norm and not a goal within an organisation. Besides conserving and promoting the organisation’s reputation, it is essential that the code of conduct is followed and that any conflicts of interest are managed appropriately.
It is important to note that conflicts of interest can occur at any level within an organisation, not solely with the board. As such, all employees should be encouraged to operate in an ethical manner in line with the values of the organisation.
Achieve good corporate governance in Ireland
Maintaining best practices for good corporate governance, however, can be tricky and require both time and resources to ensure ongoing compliance. In this case, you may seek expert support to make sure your organisation stays aligned with the corporate governance standards in Ireland.
Hawksford’s team of professional company secretaries can help with a range of governance-related tasks, such as scheduling board meetings and preparing minutes. If you are doing business in Ireland or considering it, connect with our team to discuss how we can help your organisation in meeting the governance standards applicable to your industry.
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