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Corporate Governance

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Board of Directors

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A group of individuals elected to represent shareholders and govern the corporation by establishing policies and making decisions on major company issues.

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Shareholder Rights

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The entitlements given to shareholders, such as voting on corporate matters, receiving dividends, and inspecting company books.

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Stakeholder Theory

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A theory of organizational management stating that the interests of all stakeholders (not just shareholders) should be considered in corporate decision-making.

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Agency Problem

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A conflict of interest arising between shareholders and management when a company's managers do not act in the best interest of shareholders.

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Fiduciary Duty

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An obligation of company directors to act in the best interest of the company's shareholders or other stakeholders.

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CSR - Corporate Social Responsibility

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A self-regulating business model that enables a company to be socially accountable to itself, its stakeholders, and the public.

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Corporate Structure

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The organizational design and system that defines the relationships between shareholders, directors, and management within a company.

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Risk Management

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The process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions.

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Internal Controls

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Mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability and prevent fraud.

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External Auditor

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An independent auditor not affiliated with the company who examines the financial records and business transactions of a company to provide an unbiased opinion about the financial statements.

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Board Independence

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The concept that board members should be free from conflicts of interest or undue influence from insiders, allowing them to make decisions that best serve interests of the shareholders.

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Executive Compensation

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The financial payments and other benefits given to the top management of a company, which might include salary, bonuses, and stock options.

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Corporate Constitution

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The collection of documents that define the existence of a corporation and regulate the structure and control of the corporation and its members.

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Ethical Business Practices

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Behaviors that businesses adhere to in their daily operations, which are in the interests of the public and company, including fairness, integrity, and respect.

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Proxy Vote

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The authority granted by a shareholder to another individual to vote on his or her behalf during a company's shareholder meeting.

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Whistleblowing

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The act of exposing any kind of information or activity that is deemed illegal, unethical, or not correct within an organization.

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Audit Committee

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A subset of a company's board of directors that is responsible for overseeing the financial reporting process, selection of the independent auditor, and receipt of audit results.

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Corporate Governance Codes

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A set of principles and guidelines by which a company is directed and controlled to increase accountability and avoid massive falls.

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Minority Shareholders

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Shareholders who do not exert control over a company; they own a smaller fraction of the company's shares and therefore have less influence on corporate decisions.

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Mergers and Acquisitions (M&A)

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The consolidation of companies or assets, with Mergers being the combination of two companies to form one entity, and Acquisitions being the purchase of one company by another.

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Corporate Charters

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A legal document created during a company's incorporation process that outlines the organization's purpose, governance structure, and basic operating rules.

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Transparency and Disclosure

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The practice of being open and honest about company operations, allowing stakeholders to make informed decisions regarding their interests in the company.

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