ABSTRACT
The term ‘corporate governance’ will be used here, somewhat proscriptively, to refer to the various mechanisms that are imposed, or whose operation is facilitated by company law, that shape the way company managers exercise their discretion.1 These mechanisms rely principally on shareholder voting, the powers of the board, fiduciary duties, and the play of market forces. The function of governance is to achieve compliance with whatever may be the company’s proper objectives. The governance process operates on a different level from the process of managing the business. While senior executives (who may also be directors) run the business day-to-day, governance involves selecting and removing those executives and monitoring their performance. It might also involve collaboration with executive management in making fundamental decisions and formulating long-term strategy.2
