Moore governance for SME

THE Gold Coast’s burgeoning SME sector will need to ensure corporate governance is kept in check as the economy starts to click up a gear.

According to the Australian Institute of Company Directors (AICD), the main difference between SMEs and larger public companies is the lack of distinction between owners and managers. In SMEs it’s usually the same people due to the small size and lack of complexity in the operation.

Institute state manager Richard Moore, says many SMEs have an informal approach to governance which could prove risky.

“Reporting and disclosure requirements for SMEs are lower than those for listed companies, yet there is still a considerable regulatory burden surrounding the daily operations of a small business,” says Moore.

“The needs of a company will change as it moves into new stages of development. A start up company’s needs are quite different to mature company needs. As a company grows, a stricter governance framework will be needed.”

Moore says a common oversight for many SMEs during the growth of the business is the benefit to be gained by establishing an advisory board of directors to assist and drive the business forward.

“The importance of having an advisory board may also be ‘overlooked’ due to the fear by entrepreneurs, family business owners, owner-operators etc of having the presence of independent directors at the company,” he says.

“The concern that with an advisory board will come as a loss of control over the business is a misconception. Independence can and should be maintained as the role of the directors is the oversight of management of the company. They must ensure that the company does everything that it is obliged to do by law and that the decisions they make are in the best interests of the company and shareholders.”

Moore says advisory boards help to access capital, especially in these times, for many investors are reluctant to put funds into companies with poor governance structures.

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

Telix Pharmaceuticals (ASX: TLX), one of the nation’s largest...

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

In an effort to reduce the number of SMS phishing scam victims...

‘Gone the long yards’: Luxury boatbuilder Maritimo a stayer in local manufacturing

‘Gone the long yards’: Luxury boatbuilder Maritimo a stayer in local manufacturing

In an era when Australia’s mass-production car industry is a ...

A year after the PwC scandal, the furore is gone – as well as the appetite for structural change

A year after the PwC scandal, the furore is gone – as well as the appetite for structural change

It was a scandal that rocked the shaky foundations of Australia&rsq...