GIA Cert Governance Practice key terms

The system of rules, practices and processes by which a company is directed and controlled, allocating rights and responsibilities among boards, managers, shareholders and other stakeholders.

The body elected or appointed to oversee a company's affairs, set strategy, appoint senior executives and hold management accountable on behalf of shareholders and other stakeholders.

A legal obligation requiring a director or officer to act honestly, in good faith and in the best interests of the company, placing the company's interests ahead of personal ones.

The standard requiring directors to exercise the diligence, knowledge and judgement a reasonably prudent person would apply in comparable circumstances when making decisions for the company.

A judicial presumption shielding directors from liability for informed, good-faith decisions made with no personal interest, even where the outcome later proves harmful to the company.

A status confirming a director has no material relationship with the company, its advisers or major shareholders that could reasonably interfere with objective judgement and oversight of management.

A smaller group of directors delegated specific oversight tasks, such as audit, remuneration or nomination, usually with a written charter, defined membership and reporting duties to the full board.

A board committee, normally composed of independent directors, that oversees financial reporting, external and internal audit, risk controls and the relationship with the statutory auditor.

A board committee responsible for identifying candidates, assessing board composition and skills, and recommending director appointments and succession plans to the full board or shareholders.

A board committee that designs and reviews executive pay, incentive structures and related disclosure, aiming to align rewards with long-term performance and shareholder interests.

The director who leads the board, sets its agenda, promotes effective debate and ensures it functions independently of management, ideally separated from the chief executive role.

A periodic structured evaluation of how the board, its committees and individual directors perform, often externally facilitated, producing recommendations for improving composition and processes.

A tool mapping directors' experience, qualifications and attributes against the capabilities the board needs, used to identify gaps and guide recruitment and succession.

The forward-looking process of identifying and developing candidates for key board and executive roles to ensure continuity when vacancies or departures occur.

Any individual or group affected by or interested in a company's activities, including shareholders, employees, customers, suppliers, lenders, regulators and local communities.

Structured dialogue between a company and its investors on strategy, performance, governance and pay, typically reported back to the board so concerns inform decision-making.

The responsible oversight of invested capital by institutional investors, involving monitoring companies, voting shares and engaging constructively to promote sustainable long-term value.

The exercise of voting rights at a general meeting by a representative acting on a shareholder's instruction, including votes cast through custodians or electronic platforms.

The statutory meeting at which shareholders receive accounts, elect or re-elect directors, appoint auditors and vote on resolutions, and where directors answer shareholder questions.

An advisory or binding shareholder vote on a company's executive remuneration report or policy, giving investors a formal channel to express approval or dissent.

The amount and type of risk an organisation is willing to accept in pursuing its objectives, expressed in statements or limits that guide decision-making across the business.

The acceptable level of variation in outcomes the organisation can bear for a specific risk, often quantified as thresholds or limits applied within the broader risk appetite.

A firm-wide, structured approach to identifying, assessing, treating and monitoring risks across all functions, linking risk decisions to strategy and performance.

A living record listing identified risks with their owners, likelihood and impact ratings, existing controls, treatment actions and review dates, used to track risk status.

A governance framework separating management's ownership of risk, independent risk and compliance oversight functions, and internal audit's assurance to the board.

The policies, procedures and activities designed to provide reasonable assurance that operations are effective, reporting is reliable and laws and regulations are complied with.

An independent, objective assurance function that evaluates the adequacy and effectiveness of risk management, control and governance processes and reports to the audit committee.

An independent firm engaged to examine financial statements and express an opinion on whether they present a true and fair view in accordance with applicable standards.

The state in which an external auditor is free from relationships, financial interests or non-audit engagements that could compromise objectivity, supported by rotation and approval safeguards.

The reporting by employees or others of suspected wrongdoing, with protected channels and anti-retaliation safeguards so concerns reach appropriate independent oversight.

A documented framework setting out how concerns can be raised confidentially, how they are investigated and how reporters are protected from detriment or retaliation.

The state of conforming to applicable laws, regulations, rules and internal standards, achieved through identification of obligations, controls, monitoring and remediation.

A structured set of policies, training, monitoring, reporting and governance arrangements designed to prevent, detect and respond to breaches of legal and regulatory obligations.

A systematic evaluation of the likelihood and impact of failing to meet obligations, used to prioritise controls, resources and monitoring across business areas.

A specific duty imposed on an organisation by statute, regulation, licence condition or supervisory direction, which must be captured, assigned and monitored for compliance.

The ongoing process of tracking proposed and emerging laws, rules and supervisory expectations so the organisation can prepare and adapt before requirements take effect.

A written statement of the ethical standards and behaviours expected of directors, employees and representatives, often supported by training, attestation and disciplinary consequences.

A situation where a personal, financial or other interest could improperly influence a person's judgement, managed through disclosure, recusal or removal from the decision.

A transaction between the company and a director, senior manager, major shareholder or their associates, requiring disclosure, independent review and sometimes shareholder approval.

The timely publication of accurate information about a company's governance, financial position and material events, enabling informed decisions by investors and regulators.

Prohibited conduct such as insider dealing, unlawful disclosure or market manipulation that undermines market integrity, typically policed by trading surveillance and controls.

The officer responsible for the company's statutory records, board processes, governance advice and compliance with corporate law, acting as a bridge between board and management.

Mandatory company records, such as those of members, directors, secretaries and charges, which must be maintained accurately, kept available and updated within prescribed deadlines.

The date by which a document or event must be submitted to the companies registry or regulator, with late filing triggering penalties, loss of protection or reputational harm.

The official record of board deliberations, decisions and resolutions, drafted to evidence proper consideration, conflicts declared and the basis for actions taken.

A decision approved in writing by the required majority of eligible members or directors without a meeting, subject to statutory procedures on circulation and lapse.

The minimum number of directors or members who must be present for a meeting to validly transact business, as set by law or the constitutional documents.

The constitutional document governing a company's internal affairs, including share rights, board powers, meeting procedures and decision-making rules binding on members.

The yearly publication combining financial statements with governance, strategy and sustainability information, used by shareholders and regulators to assess performance and accountability.