Anglo-American Model
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The document discusses different models of corporate governance around the world. It focuses on describing the Anglo-American model, which is used as the basis for corporate governance in countries like the US, UK, Canada, and Australia. The key aspects of the Anglo-American model are that it separates ownership and control of companies, with shareholders appointing directors who then appoint managers. It relies on effective communication between shareholders, the board, and management, with important decisions requiring shareholder approval through voting.
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Anglo-American Model
- 2. • Corporate governance systems vary around the world. This because in some cases, corporate governance focuses on link between a shareholder and company, some on formal board structures and board practices and yet others on social responsibilities of corporations • There is no one model of corporate governance which is universally acceptable as each model has its own advantages and disadvantages.
- 3. MODELS OF CORPORATE GOVERNANCE • ANGLO-AMERICAN MODEL • GERMAN MODEL • JAPANESE MODEL • INDIAN MODEL
- 4. ANGLO-AMERICAN MODEL • This model is also called an ‘Anglo-Saxon model’ and is used as basis of corporate governance in U.S.A, U.K, Canada, Australia, and some common wealth countries. • The board usually consist of executive directors and few independent directors. The board often has limited ownership stakes in the company.
- 5. • The shareholders appoint directors who in turn appoint the managers to manage the business. Thus there is separation of ownership and control. • This system (model) relies on effective communication between shareholders, board and management with all important decisions taken after getting approval of shareholders (by voting).
- 6. FEATURES OF ANGLO-AMERICAN MODEL • Ownership of shares is distributed. • Banks only slightly engage in the operations of the company. • Capital is raised on large and liquid capital markets. • Internal supervisory authority is the Board of directors. • Market is an active mechanism of control over the corporation. • Measure of success is the share price and dividend. • Capital markets are characterized by high transparency.
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