In the context of the Revised Corporation Code, how is "corporate governance" best defined?

Corporate governance is best defined as the system by which corporations are directed and controlled. This definition encompasses the structures, processes, and practices through which companies are managed and operated, including the framework that outlines the roles, rights, and responsibilities of different stakeholders such as the board of directors, management, shareholders, and other parties involved in the corporation.

This concept plays a critical role in ensuring transparency, accountability, and ethical behavior within corporate structures. It involves not only compliance with legal requirements but also adherence to standards of best practices in management and decision-making processes. The focus here is on aligning the interests of various stakeholders while ensuring that the corporation operates effectively and responsibly, which is fundamental to maintaining investor confidence and fostering sustainable growth.

The other choices reflect aspects that are narrower in scope or not directly aligned with the comprehensive concept of corporate governance. For example, policies regulating financial audits relate specifically to financial oversight rather than the overall management structure. The legal framework surrounding dissolution pertains to the end of a corporation's existence, which is not relevant to its ongoing governance. Lastly, the relationship between employees and management is a facet of organizational behavior, but it does not capture the full breadth of governance as it relates to all levels of corporate control and direction.