What is the administrative structure followed by the corporate governance system?
The administrative structure in companies according to the governance system consists of a group of entities that affect and are affected by each other, as any institution includes a group of main parties that determine the form of governance through the mutual relationships between them and the powers and responsibilities that each party possesses, and determines to a large extent the extent of success or failure in applying the rules of governance,
The institution can mainly be represented by three basic entities (shareholders, board of directors, executive management) and these entities affect each other as well as affect various other concerned parties
The main parties that make up the administrative structure in the governance system
1- Shareholders (owners): They are the most important ones who provide capital through their ownership of shares in exchange for appropriate profits for their investments. They have the right to choose the appropriate members of the Board of Directors to protect their rights. The company also provides comprehensive, comprehensive, accurate and timely information to enable them to exercise their rights efficiently. They also have the right to view the minutes of the General Assembly, and they exercise their role by communicating their opinions and inquiries to the Board of Directors and senior management on a regular basis.
2- Board of Directors: They represent shareholders and stakeholders. The Board of Directors appoints and selects executive employees in key positions, supervises senior management, monitors the company’s performance and compares it to the performance objectives set by the Board. Its tasks also include setting goals, formulating strategic plans and supervising their implementation, establishing the internal control system and ensuring its efficiency and effectiveness, and managing risks to assess and monitor risks on an ongoing basis. It also raises the level and standards of governance in the company and ensures compliance with relevant regulations and regulations at all times.
3- CEO: He is the entity directly responsible for the company’s various operations, and is considered the entity responsible in the company for submitting performance reports to the Board Management The executive management is also responsible for maximizing the company’s profits and increasing its value, in addition to disclosure and transparency in the information it publishes to shareholders. The management is responsible for supervising the company and carrying out all necessary work to achieve the purpose for which it was established. Therefore, the executive director plays a vital role in the company as he is primarily responsible for the company’s interests and thus the interests of investors and shareholders.
4- Stakeholders: This includes every party that has interests within the company, such as creditors, suppliers, workers and employees. The interests of these parties may conflict and differ from each other at times, and governance is greatly affected by the relationships between these parties. Therefore, the role of governance is to manage the tasks that help the company provide the goods or services it produces. Without them, neither the management nor even the board of directors nor the shareholders can achieve the goals and strategies set.
5- Audit Committee: It is one of the main factors in evaluating the levels of governance applied. It is a committee emanating from the board of directors that plays a major role in the reliability of the quality of internal and external reports and resisting management pressures and interventions in the auditing process. Moreover, the mere announcement of the company’s formation of the audit committee will have an impact on the movement of its shares in the stock market.
6- Internal Auditor: His job is to evaluate Independent within the organization by evaluating the effectiveness and efficiency of the company’s internal controls, policies, procedures, and reporting mechanism, and the extent of compliance with them and providing recommendations to improve them (this is what the Saudi Arabian Monetary Agency, Insurance Companies Governance Regulations have determined). This task is carried out by a group of employees who have special competence and have extensive study of all aspects of the company’s activity and methods of workflow.
7- External Auditor: This task is performed by a certified accountant outside the facility and independent of it to review its data, as the independence of the external auditor is the basis for performing the audit process, as he expresses his opinion and the independent auditor in the financial statements is neutral, and expresses his neutral technical opinion on the extent of the truthfulness and fairness of the financial statements prepared by the companies through the report he prepares attached to the financial statements. Therefore, the role of the external auditor has become essential in corporate governance because it prevents conflict between shareholders and the company’s management and also reduces the problem of mismatching information
Why do we advise companies to rely on Tatweer Alpha Company to develop the company’s governance system?
Tatweer Alpha Company is a leading company in the field of issuing classification certificates and developing the governance system for all economic establishments in the Kingdom of Saudi Arabia in its various specializations.
Tatweer Alpha Company is distinguished by conducting a preliminary study of companies whose governance system is to be built or developed in order to analyze the strengths and weaknesses, while providing a comprehensive analysis that contains all the necessary steps to build an effective and robust governance system, in order to keep decision-makers in the establishments fully informed of all the procedures that must be followed to improve the establishment’s activity and financial figures, and thus ensure that the governance system is consistent with the company’s activities and administrative structure.
The company develops a plan to establish an administrative structure for each case separately, so that the procedures are consistent with the company’s situation and administrative activities.
High transparency in performance in addition to field experience and extensive relationships has made Tatweer Alpha Company the first choice for major companies from various sectors in the Kingdom of Saudi Arabia
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