Corporate governance in Jordan

Corporate governance in Jordan

Loiy yousef saleh daoud

Corporate governance is the system by which organizations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization – such as the Board of Directors, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making. Corporate governance seeks the continuity of companies functions, and protect companies from sliding into hard situation and collapse; through establishing a set of principles that target the vital elements to the success and continuity within a given the company such as: board of directors, management council, shareholders work strategies and policies.

OECD (2004) has defined corporate governance involves “A set of relationships between a company’s management, its board, its shareholders, and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of achieving those objectives and monitoring performance are determined”.

REO (2004) stated that the corporate governance has organized relationships at the top of the firm the board of directors, the senior managers, and the stockholders.

 This view of governance, widely accepted by many shareholders, managers, and governments, is based on property rights and principal agent theories of the firm. Thus, principals (owners, shareholders) establish governance systems to ensure that agents (managers) run the organization in the best interests of the former.

Principles of corporate governance

There are five groups sections for corporate governance in order to evaluation criteria, The Right of Shareholders: it is includes (a) the right to transfer ownership of shares, (b) voting in the General Assembly, (c) selecting the Board of Directors (BOD) and (d) obtaining profits and their right to participate effectively in the meetings of the General Assembly. Al Jazy (2011)stated that there are five groups we can assess the corporate governance upon it:   

1. The Right of Shareholders
2. Disclosure and transparency
3. The responsibility of the Board of Directors.
4. The role of stakeholders or parties
5. Equal treatment of shareholders:

On the legal front, there is a lot of interest from legal professionals on corporate governance structures and mechanisms

As it works to protect the party’s rights on the company, such us:

Shareholders, board of directors, managers, employees, lenders, banks and owners

Interests..Etc. Therefore, the legal legislation that governs the work of companies is the main legislation for corporate governance.

Corporate Governance structures and Mechanisms .

 Despite the different regulations in corporate governance between countries, but legal systems are the main safety valves to regulate the corporate governance work.

The main principles in corporate governance are disclosure and transparency and accounting standards .

We also note that the rules of corporate governance meet with many laws such as the law of companies and The Stocks Law, the Banking Law, the Law on Competition, Labor, and Accounting, among others related laws.