The health system’s governance committee may benefit from a general-counsel-led briefing on the relevance of the newly released revisions to the “Commonsense Principles” of corporate governance.

Released on October 18, 2018, this document builds upon the initial 2016 series of recommendations and guidelines concerning the governance-related roles and responsibilities of boards, companies and shareholders, and contains revisions and updates to the initial release of the Principles, as proposed by a group of financial sector leaders. In addition to multiple refinements to the original recommendations, this updated version reflects an expanded consensus, with the additional endorsement of a large number of business leaders.

Many health system boards are committed to following best practices in the course of their responsibilities. However, the concept of what constitutes corporate governance “best practices” is more nuanced than many directors and executives may think, and thus they may benefit from the advice of general counsel with respect to the Commonsense Principles’ application. Indeed, the board should look to the general counsel for advice on specific conduct that is recognized as rising to the level of best practice, because it is, in many respects, a matter of law.

The revised Commonsense Principles reflect an important step toward a more accepted set of governance guidelines for large corporations. They also contain several revisions to the prior governance principles that are noteworthy for health systems, particularly with respect to matters of fiduciary duties, board composition, internal governance and board responsibilities.