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Corporate Governance Essentials
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Environmental, Social, and Governance (ESG) Criteria
Standards for a company's operations that socially conscious investors use to screen potential investments based on corporate policies and practices.
Minority Shareholder
A shareholder who does not have control over the corporation and typically owns a smaller percentage of the corporation's shares.
Annual General Meeting (AGM)
A yearly gathering of a company's interested shareholders to discuss the company's performance and strategy and to exercise their voting rights.
Shareholder Rights
The entitlements that come with owning shares in a company, including the right to vote on corporate matters and to receive dividends.
Compliance Program
A company's formalized efforts to ensure that it and its employees abide by regulatory standards and ethical practices.
Sarbanes-Oxley Act
A U.S. federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.
Audit Committee
A subcommittee of a company's board of directors that is responsible for overseeing the financial reporting process, audit procedures, and regulatory compliance.
Board of Directors
The group of individuals elected by shareholders to oversee the management of a corporation and make corporate decisions.
Stakeholder
An individual or group that has an interest in the performance and activities of a corporation, which includes shareholders, employees, customers, and suppliers.
Corporate Charter
A legal document that establishes a corporation and outlines its structure and purpose. Also known as articles of incorporation.
Executive Compensation
The financial and non-financial rewards given to the senior executives of a corporation, which may include salary, bonuses, stock options, and other benefits.
Corporate Social Responsibility (CSR)
A self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.
Insider Trading
The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
Takeover Defense
Strategies employed by a corporation to prevent or discourage unwanted takeover attempts.
Corporate Transparency
The extent to which a corporation discloses information about its operations and financial performance to shareholders and the public.
Proxy Voting
A mechanism for shareholders to vote on corporate matters without being physically present, often through the delegation of their voting power to a representative.
Corporate Bylaws
Documents that outline the rules and regulations for the governance of a corporation, including procedures for meetings and electing the board of directors.
Risk Management
The process of identifying, assessing, and controlling threats to a corporation's capital and earnings.
Dividend Policy
A company's stance on how its profits are distributed among shareholders in the form of dividends.
Fiduciary Duty
The legal obligation of one party to act in the best interest of another. In corporate governance, directors and officers have a fiduciary duty to shareholders.
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