Residential Estate Industry Journal 4 - Page 28

GOVERNANCE CHARACTERISTICS OF GOOD CORPORATE GOVERNANCE APPLICABLE TO A HOMEOWNERS’ ASSOCIATION Discipline Corporate discipline is a commitment by an HOA’s senior management to adhere to behaviour that is universally recognised and accepted to be correct and proper. This encompasses a company’s awareness of, and commitment to, the underlying principles of good and external parties such as the auditors. The decisions made, and internal processes established, should be objective and not allow for undue influences. “All processes, decision-making and mechanisms used will be established so as to minimise or avoid potential conflicts of interest.” governance, particularly at senior management level. “All involved parties will have a commitment to adhere to procedures, processes, and authority structures established by the organisation.” Transparency Transparency is the ease with which a member is able Individuals or groups in a company who make decisions and take actions on specific issues need to be accountable for their decisions and actions. Mechanisms must exist and be effective to allow for accountability. These provide members with the means to query and to make meaningful analysis of a company’s actions, its assess the actions of the board and its committees. economic fundamentals and the non-financial aspects “Identifiable groups within the organisation – e.g. pertinent to that business. This is a measure of how good management is at making necessary information available in a candid, accurate and timely manner – not only the audit data but also general reports and press releases. It reflects whether or not members obtain a true picture of what is happening inside the company. “All actions implemented and their decision support will be available for inspection by authorised organisation and provider parties.” Independence Independence is the extent to which mechanisms governance boards who take actions or make decisions – are authorised and accountable for their actions.” Responsibility With regard to management, responsibility pertains to behaviour that allows for corrective action and for penalising mismanagement. Responsible management would, when necessary, put in place what it would take to set the company on the right path. While the board is accountable to the company, it must act responsively to and with responsibility towards all stakeholders of have been put in place to minimise or avoid potential the company. conflicts of interest that may exist, such as dominance “Each contracted party is required to act responsibly by a strong board member or large property owner. These mechanisms range from the composition of the board to appointments to committees of the board, PAGE 26 Accountability to the organisation and its stakeholders.”