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Corporate Governance TO COMMENT on the article, Corporate Governance
EMAIL the author at eslam_elrayes@hotmail.com

By: Islam Al-Rayes Edited By: Ayman Abdlerahim effective at this stage to strengthen the
Corporate Governance ... required efficiency with less presence than
those of previous guidance practices.
Company Life Cycle 1. Foundation or establishment 2. Growth Renewal and innovation stage:
During this stage, companies seek to
- Increasing number of sharehold-
- Enterprise owned by one or two
persons
ers and adding new customers
- Few employees. - Increaseing number of employ- venture with the goal of increasing
revenue and gain access to new markets
- Simple business cycle ees or create new products. Governance
- Minor complexity of business practices need to be strong at its two
envirnment
sides, guidance and control, to ensure
company continuity and not to take any
ill-conceived adventure.
As in many cases there will be a fifth
stage, i.e. regression stage. As the
company profits and growth begin to
decline, here, control governance practices
must be effective to protect the rights of all
parties from exploitation if the company is
no longer able to continue. Sometimes the
4. Renewal and innovation 3. Stability and maturity cycle may continue again if the company is
- Put to IPO when company Increasing number of sharehold- bought by new investors to start the cycle
decides to become a public ers and increasing competition again and start with a new governance
company - Increase in number of em- culture.
- Possible increase in number of ployees
employees - Average complexity of business CONCLUSION
- Increasing complexity of busi- environment
ness environment At the end of this article, despite the
existence of rules and laws for some
governance practices, corporate
governance is a practice that may vary
to the nature of each company. No one
corporate governance system that fits all
companies.
The extent of applying governance Growth stage:
practices in guidance and control varies Governance practices at this stage must However, the first stage of establishing a
for each stage of a company life cycle. The be supportive for any growth in order to firm has a significant impact on shape and
culture of governance. At beginning of a
following explains importance of practices generate greater revenue by broadening the company, practices will not be a burden, as
for each stage: customer base. The required governance it does not mean that there are committees
Corporate governance is an integrated other stakeholders, in order to achieve apply appropriate rules and practices of Foundation or establishment stage: practices must take into account a proper such as the Nominations Committee, Audit
and Risk Committee, or even an internal
culture and work approach which is not company objectives and preserve rights of governance. Hence, it can develop future company guidance to achieve its strategy audit in place.
simply an adherence to a set of rules and all stakeholders.” plans, with medium and long term rules, so The first stage (foundation or establishment and maintain a supportive supervisory
can not to be interpreted narrowly and Governance evolves as company grows as to be completed. Therefore, governance stage) is one of the most stages affecting the level. Guidance practices must be present What that stage requires is a proper
literally. becomes an integral part of organization corporate governance culture. Applying strongly at this stage, taking into account a guidance to ensure company continuity
and build a governance culture in order to
Companies and organizations are always culture and not just independent rules and governance principles during this stage
Corporate governance is a culture that looking for the best and working hard to greater presence of control practices than achieve an effective and mature governance
must stem from the company itself and practices. means that governance becomes an integral that of the previous stage. system in the future, and it develops along
commensurate with it. For each stage of enhance their competitiveness and aspire Stages of company growth and role of part of company business and becomes a Stability and maturity stage: with it.
company life cycle, a governance system to continuity in a complex and rapidly governance firm belief in employees’ mind, not a mere Effective risk department, strong control
changing business environment. This
must exist to help the company in meeting of laws and legislations to be followed. This stage is characterized by enhanced environment, readiness to deal with
its objectives and to develop and grow, environment is often characterized by All companies, whether small, medium or Governance practices at this stage require performance and improved operational future adventure and process integration
hence, effective governance ensures the emergence of new risks and legislations large go through the same development clear company strategy and good choice of efficiency. During this stage, governance are all required to achieve goals and
enacted recently that must be committed
achievement of the results. stages, usually referred to as “life cycle”, resources to achieve this strategy as well structure is clearly shaped and its governance principles, which are related to
to. The corporate governance system as this cycle varies from one company to responsibility, accountability, transparency
The definition of corporate governance is must be developed to be in line with another with minor differences, and with as considering risk identification, which practices are promoted. Consequently, and justice.
not restricted to mature companies only; company needs. As governance begins at different stage periods. company may face during its journey, and those practices should support company
it is defined as “a group of foundations organization establishment and develops response plans. Guidance practices must be credibility and reputation; hence, it is, Islam Al-Rayes, GRCA, QIA, GRCP
and principles governing the relationship gradually with its development - at The following figure illustrates the stages of strongly present at this stage, while control indeed, a supporter of company presence. Internal Audit, Risk, and Compliance Senior
between the owners of companies and all different stages - in a way that allows it to company life cycle: practices may not have been formed, yet. Control practices must be mature and Consultant - Egypt

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