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Governance Governance Joseph Leo Attorney 515 242 2462 leo

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Governance Governance Joseph Leo Attorney 515 242 2462 leo Powered By Docstoc
					  Governance
    Joseph Leo, Attorney
       515-242-2462
   leo@brownwinick.com

   Chris Sackett, Attorney
        515-242-2470
 sackett@brownwinick.com

       BrownWinick
      Attorneys at Law
666 Grand Avenue, Suite 2000
    Des Moines, IA 50309
   www.brownwinick.com
                Governance
• Definition:
  – Governance generally is a set of rules that are
    applicable to a system of government or
    management.
  – Corporate governance is a more specifically a
    set of rules that are applicable to corporate
    entities.
 Corporate Governance Generally
• Rules that apply to:
  – Who has the responsibility to make what
    decisions.
  – What are the standards of conduct that are
    applicable to each person.
Recent Developments in Corporate
          Governance
• Sarbanes Oxley Act of 2002
  – New Securities and Exchange Act regulations
    regarding corporate disclosures.
  – Independent auditor requirements.
  – Collapse of the banking system and related
    reforms.
 Basics of Corporate Governance
• Who makes what decisions on behalf of
  the company?
  – Owners/Shareholders
  – Directors/Managers
  – Officers
• Creates a hierarchy of decision-making.
Purpose of Corporate Governance
• Purpose = rules to efficiently and
  effectively operate the company.
  – Would be inefficient and ineffective for
    shareholders to make all decisions for the
    company.
  – Would not be appropriate for officers or
    directors to make certain large decisions at
    the risk of the shareholders.
• Also to provide standards of conduct for
  directors and officers.
           Applicable Laws
• Both state and federal law apply.
• State law applicable to general rules of
  corporate governance and duties.
• Federal law applicable to certain “public”
  companies or other regulated companies.
                 State Law
• In Iowa, there are laws that govern:
  – Corporations
  – Limited liability companies
  – Partnerships
• For the most part, these are default rules.
• Can be altered by the company’s bylaws
  or other corporate governance
  agreements.
  Governance Considerations
• Who will make what decisions?
  – This depends largely on the size of the
    company (now and in the future).
  – Also depends on how actively involved the
    owners/shareholders of the company are.
       Shareholder Decisions
• Typical decisions that are allocated to
  shareholders:
  – Election of directors
  – Sale of all or substantially all assets
  – Merger
  – Liquidation of the company
  – Issuance of shares for less than a set price
  – Entering into contracts with directors/officers
                  Roles
• Role of the owner/shareholder
• Role of the board of directors
• Role of the officers
        Standard of Conduct
• Duties applicable to directors and officers
  – Duty of care
  – Duty of loyalty
  – Duty of good faith and fair dealing
            Indemnification
• Who pays when a director or officer is
  sued for acting on behalf of the company?
• Ability of the company to provide this
  indemnification
  – Who decides whether to indemnify or not?
• Director and Officer insurance policies
• Securities restrictions on indemnification
 Sarbanes – Oxley Act of 2002
• Landmark legislation
  – Reaction to corporate and accounting
    scandals
• New standards for all United States public
  companies
         Significant Provisions
•   Auditor independence
•   Corporate Officer/Director responsibility
•   Enhanced disclosure rules
•   Significant criminal fraud accountability
Questions?

				
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posted:9/4/2011
language:English
pages:16