From the time people started to organize themselves as per organization’s goals, the governance has proved an issue. The constant theme has become now the way for ensuring the organization’s power is harnessed for the agreed purpose, instead of diverting it to some other purpose. The governance institutions are providing a framework under which the corporation’s social and economic responsibilities are aligned. The main concern of the corporate governance is to exercise the power in various corporate entities. The most clear and concise definitions for corporate governance are provided by OECD which stated that: “Corporate governance can be defined as the system by means of which the directions and controls are given to the business corporations”(Crawford,2007).
The distribution of different rights and responsibilities is specified by the structure of the corporate governance such as the shareholders, managers, board and other different stakeholders announces the rules and procedures to make decisions on corporate affairs. Through this distribution, two things can be accomplished. Firstly the structures through which the objectives of the company are set are regulated as per these distributions. Secondly the means through which these objectives are achieved can be monitored using these distributions. The corporate governance has implications on a wider scale and it is critical to social as well as economic wellbeing in the following manners. Firstly it helps the business organizations to achieve its business goals in smooth and concise manners and secondly to improve the accountability and transparency in the organizations which in turn ensures the equal distributions of wealth.
Dignam in 2006 gave a broader definition that captures the importance of the corporate governance to maintain stability and equity in the society. According to this definition “The main concern of the corporate governance is to align the interest of social, business and individual’s goals by ensuring equity and stability in the society. It supports the framework which ensures the equal and efficient use of resources by making the people responsible and accountable for their responsibilities. The main purpose is the alignment as near as possible to the interests of the society, corporations as well as of individuals. Hence, this report is written to understand how corporate Governance framework aligns the interest of individuals, corporation and society with the help of various codes and practices designed by various regulatory frameworks.