Corporate governance is a set of rules, systems and processes by which a corporate is directed and controlled in its ways of working. Corporate governance involves balancing the interests of many stakeholders in the organisation such as shareholders, customers, suppliers, regulatory agencies, government, investors, lenders, etc. Corporate governance is a much wider term and it provides the broader framework for achieving the company’s objectives. It includes action plans of the management and internal controls to performance management and transparency in corporate disclosures. A company’s senior management that is board of directors are primarily responsible in observing and implementing the corporate governance practises in the organisation.

It is important for the companies to comply with relevant corporate governance requirements due to the following reasons:

· It helps in gaining the investors’ confidence in the management of the company

· It helps in transparency of the firms operations and shows how management is working towards achieving the strategic vision and mission of the firm

· It helps in influencing the shareholders wealth since a well managed company with good corporate governance performs well in the stock market

· It helps in listing the firm in international markets and raising the funds required for international expansion.

· It bring a sense of accountability and responsibility for all employees and work with integrity and ethics in the organisation

· It helps in complying with stock exchanges rules and regulations as part of listing requirements

· Corporate governance increases the disclosures requirements of the company operations in the reporting and makes financial statements more useful to investors

· Corporate governance practices are widely accepted as best practices in the industry for measuring a company’s standard of performance.

· It helps in giving a source a confidence to lenders and bankers for lending money to the firms.