Much has been said over the past decade about the evolution of the General Counsel. Once best known for administrative duties (whilst complex work was outsourced to law firms), they now have a direct advisory role to the board. Thanks to their unique vantage point, the General Counsel has the ear of the board and a level of independence.
A recurring theme amongst most boards is ensuring sound governance. But why is governance so important? The Organization for Economic Cooperation and Development (OECD) definition of corporate governance is widely accepted: “Good corporate governance helps to build an environment of trust, transparency and accountability necessary for fostering long-term investment, financial stability and business integrity, thereby supporting stronger growth and more inclusive societies.” In other words, it allows for efficient processes, it encourages transparency, and it helps reduce costs. When executed correctly, good governance will have positive cultural and reputational benefits for all stakeholders in relation to the organisation. This in turn helps with succession planning, retention, and EVP when scouting for new talent. Put crudely, a governance programme may help determine the health of an organisation and its possible susceptibility to a merger or acquisition, IPO, or listing. Whilst the governance agenda affects all stakeholders across an organisation, its key sponsors tend to be the Chair and CEO.
So to whom does the responsibility fall? Is it the General Counsel, Company Secretary, or Chief Compliance Officer? It seems that a number of the larger listed businesses are unsure, as they continue to carve out the role of Company Secretary from the General Counsel every few years. Could the role of General Counsel evolve into a Chief Governance Officer (CGO)? In turn, could the CGO become the guardian on all matters relating to governance, both from an internal and external perspective? This would include reputation, compliance, legal, risk, ethics, CSR, and company secretarial. Is it any surprise that governance is at times misunderstood, when it is unclear who is actually taking responsibility?
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