Corporate governance has traditionally been associated with large, predominately listed, companies. There is, however, a growing acknowledgment that corporate governance can play a crucial role to support the growth and sustainability of Small and Medium-sized Enterprises (SMEs). In fact, corporate governance is the gate through which SMEs have to pass in order to grow or to be listed. Unlike shareholders in publicly listed companies, investors in SMEs and other non-listed companies have limited options of “voting with their feet” and selling their holdings if they are in disagreement with the company\’s policies and strategy. However, corporate governance is not only about investors and their protection, it is rather about leadership and performance. In a well-governed company, the framework provides clarity of roles and responsibilities within the company and ensures that resources are exclusively devoted to pursuing its defined goals.
The understanding and implementation of a good corporate governance framework presents SMEs a structured path to infusing better management practices, effective oversight and control mechanisms which lead to opportunities for growth, financing, exit strategies and improved performance.