The Handbook of Board Governance

4Governance as a Corporate Discipline

Drew Stein

Professional Chairman and Director

From the beginning of time, ever since humans began living together as groups, there have been rules that have governed their behavior. While they didn't recognize their hierarchical instincts as rules, nevertheless they had leaders who set the standards, seniors who implemented and controlled the allotted processes, and those who carried out the general work functions. Over the millennia, as societies evolved from hunter gathers, to village groups, and then to larger communities so these behavioral rules evolved and adapted to the societal conditions in which the populations existed. The most important driver for change in these hierarchical structures arrived with the growth of interpopulation trading and the financial platforms that supported such arrangements. These activities required a different, more refined and defined, set of rules, and thus we begin to see the development of primitive business functions and structures that become generally accepted as the basis for most trading arrangements.

In the twelfth century the Knights Templar (a Holy Crusade Order founded in 1119 by Hugues de Payens) are credited with refining the banking system and establishing the basic rules for commercial trading. They introduced the first international letter of credit and also established the foundation rules governing the financial behavior and accountabilities, including trading obligations covering ...