Correspondence: Frederick D. Lipman, Blank Rome LLP, One Logan Sq, 130 N 18th St, Philadelphia, PA 19103-6998, USA. Tel: +1 215 569 5518; Fax: +1 215 832 5518; E-mail: Lipman@BlankRome.com

¹is a partner at Blank Rome LLP, an international law firm with offices in the United States and Hong Kong. He is also President of the Association of Audit Committee Members, Inc., a not-for-profit organisation of public companies whose website is at www.aacmi.org. He taught in the MBA programme at the Wharton School of Business for five years and at the University of Pennsylvania Law School for ten years. A graduate of Harvard Law School, he appears periodically on CNBC, CNN and Bloomberg television. This paper is excerpted from Chapter 2 of the book by Frederick D. Lipman and L. Keith Lipman entitled 'Corporate Governance Best Practices' (John Wiley & Sons, Inc., 2006) and is reprinted with permission of the John Wiley & Sons, Inc. Mr Lipman is the author of nine other books, including Audit Committees, published by The Bureau of National Affairs, Inc.

Received 13 July 2007; Revised 13 July 2007.

Abstract

This paper summarises overall minimum corporate governance principles and best practices applicable to all organisations (whether public, private or nonprofit). These best practices are divided as follows:

• structure of the board of directors;
• operation of the board of directors and
• other corporate governance practices.

This paper discusses certain current best practices as advocated by corporate governance groups and practiced by some Fortune 100 public companies, with the understanding that best practices tend to evolve over time. We proceed on the assumption that a 'best practice' is one in which the benefits to the organisation substantially exceed the cost of implementation. What is a best practice today may not be a best practice in the future. Although the paper is addressed primarily to US-based organisations, the general principles are applicable to foreign entities as well, although modifications must be made to account for legal and cultural differences.