Boards and Directors by gyvwpsjkko


									Boards and Directors

                                    The Boards and Directors form the focal point of corporate
                                    governance with responsibilities extending to shareholders
                                    and other stakeholders. As a result, boards must have the
                                    appropriate balance of skills and experience within its ranks
                                    to fulfil its mandate., as the composition and performance of
                                    the board and its committees will be the key factors that will
                                    determine the success of the organisation.

                                    All companies should be headed by a unitary board comprised
                                    of majority of non-executive directors, and should be lead by a
                                    Chairman who is an Independent Non-Executive Director.

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Some of the New Requirements                                       3. Has not been employed by the group or appointed as
                                                                      designated auditor or partner in the group’s external audit
• The majority of non-executive directors should be                   firm, or senior legal adviser in the previous 3 financial years
• Non-executive directors should not receive share options         4. Is not related (immediate family) to someone who has been
• The chairman and non-executive directors should not receive         employed by the group in an executive capacity in the
  incentive awards geared to the share price or corporate             previous 3 financial years
• The remuneration policy should be approved by shareholders       5. Is not a professional advisor to the group
  at the annual general meeting
• The chairman of the board should be independent and free         6 Is free from any other business or relationship that could be in
  of conflicts of interest on appointment, failing which a Lead       conflict , such as being a director of a material customer of or
  independent non-executive director should be appointed              supplier to the company
• Improvements have been made to the definitions of
  non-executive directors and independent directors as follows:    7. Does not receive remuneration contingent upon the
                                                                      company’s performance

Non-Executive Directors                                            The independent Non-Executive Directors should be
                                                                   independent in fact and perception of a reasonable informed
These are defined as individuals not involved in the               outsider.
management of the company.
                                                                   If an independent Non-executive Director has served on the
An individual in the full time employment of the holding           board for more than nine years, the board should assess if
company is also considered to be a Non-executive Director of       his/her independence has been impaired. If not, a statement
a subsidiary company unless the individual, by his conduct or      that the independent director’s independence of character
executive authority, is involved in the day to day management      and judgement has not been affected or impaired should be
of the subsidiary.                                                 included in the integrated report.

Independent Non-Executive                                          Executive Directors
                                                                   Directors involved in the day-to-day management of the
These are Non-Executive Directors who:                             company or being in full time salaried employment of the
                                                                   company (or its subsidiary) or both defines the director as
1. Are not representative of a major shareholder who can           executive.
   control or significantly influence management or the board
                                                                   Executive Directors should carefully manage the conflict
2. Does not have a material direct or indirect interest in the     between their management responsibilities and their fiduciary
   company or group which:-                                        duties as directors in the best interest of the company.
   a. Is greater than 5% of the group’s total number of
      shares in issue                                              There should be a minimum of 2 executive directors on board,
   b. Is less that 5% of the group’s total number of shares in     the CEO and the director responsible for the finance function.
      issue, but is material to his /her personal wealth

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The Board                                                             The Chairman
The board should appoint a CEO who is separate from the               The Chairman of the board should be an Independent Non-
Chairman.                                                             Executive Director, failing which, a lead independent director
                                                                      can be appointed to handle matters of conflict for the
The board should meet as often as required to fulfil their duties,    Chairman.
preferable at least 4 times per annum.
                                                                      The retired CEO should not become Chairman of the Board
The board should ensure an effective risk based internal audit        until 3 years have passed since the end of his/her tenure as an
and the integrity of the integrated report.                           Executive Director.

The board should ensure that there is transparent and effective       Principle 2.16 lists 17 minimum core functions of the Chairman
communication with stakeholders on both positive and                  of the Board
negative aspects of the business.
                                                                      Chairmen of boards should apply their minds in an intellectually
The board should report on the effectiveness of the company’s         honest manner, and be satisfied that they have the ability and
system of internal controls in the integrated report.                 capacity to discharge their duties.

The board should appreciate that sustainability is not separate       The chairman should meet with the CEO or CFO or the
from strategy, risk and performance and should link long term         company secretary or all three before a board meeting to
sustainability to strategy to create business opportunities.          discuss important issues and agree on the agenda.

The remuneration of each individual director and the three            The chairman can only chair the Nominations committee and
most highly paid employees who are not directors of the               should not be:
company should be disclosed.
                                                                          1. The Chairman of the Audit Committee.
                                                                          2. The Chairman of the Remuneration committee.
Board Committees                                                          3.The Chairman of the Risk Committee.
                                                                          4. A member of the Audit Committee.
The board should appoint an audit, risk and remuneration and
nominations committee.                                                There should be a Succession Plan for the position of the
All board committees, other than risk committee, should
comprise only board members and should have a majority of             Overall, Chapter 2 of the King III report discusses the key
non executive directors who are independent.                          governance responsibilities that directors are expected to apply
                                                                      which include the following:
All board committees should be chaired by Non-Executive
Directors, other than EXCO which is chaired by the CEO.                   • The role and function of the board and its committees
                                                                             (Principles 2.1 to 2.15).
The performance of the board and its committees and                       • The composition of the board, the board appointment
individual directors should be assessed annually and results                 process and director development (Principles 2.16 to 2.20).
thereof disclosed in the integrated report, along with action             • The company secretary, the performance assessments of
plans to be implemented, if any.                                             the board and its directors and the board committees
                                                                             (Principles 2.21 to 2.23).

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   • Group Boards and Remunerations of directors, senior          Principle 2.10:
     executives, group boards and company secretaries             The board should ensure that there is a risk based internal audit;
     (Principles 2.24 to 2.27).
                                                                  Principle 2.11:
These are covered over 27 Principles which are stated below:      The board should appreciate that stakeholders’ perceptions
                                                                  affect the company’s reputations;
Role and Functions of the Board
                                                                  Principle 2.12:
Principle 2.1:                                                    The board should ensure the integrity for the company’s
The Board should act as the focal point for Corporate             integrated report;
                                                                  Principle 2.13:
Principle 2.2:                                                    The board should report on the effectiveness of the company’s
The board should appreciate that strategy, risk, performance      system of internal controls;
and sustainability are Inseparable;
                                                                  Principle 2.14:
Principle 2.3:                                                    The board and its directors should act in the best interest of the
The board should provide effective leadership based on ethical    company;
                                                                  Principle 2.15:
Principle 2.4:                                                    The board should consider business rescue proceedings or
The board should ensure that the company is and is seen to be     other turnaround mechanisms as soon as the company is
a responsible corporate citizen;                                  financially distressed as defined in the Companies Act no. 71 of
Principle 2.5:
The board should ensure that the company’s ethics are             Composition of the Board
managed effectively;
                                                                  Principle 2.16:
Principle 2.6:                                                    The board should elect a Chairman of the board who is an
The board should ensure that the company has an effective and     independent non-executive director. The Chief Executive
independent audit committee;                                      Officer (CEO) of the Company should not also fulfil the role of
                                                                  the Chairman of the Board;
Principle 2.7:
The board should be responsible for the governance of risk        Principle 2.17:
                                                                  The Board should appoint a CEO and establish a framework for
Principle 2.8:                                                    the delegation of authority;
The board should be responsible for information technology
governance;                                                       Principle 2.18:
                                                                  The board should comprise a balance of power, with a majority
Principle 2.9:                                                    of non-executive directors. The majority of non-executive
The board should ensure that the company complies with            directors should be independent.
applicable laws and considers adherence to non-binding rules,
codes and standards;

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Board Appointment Process                                          Principle 2.26:
                                                                   Companies should disclose the remuneration of each individual
Principle 2.19:                                                    director and certain senior executives;
Directors should be appointed through a formal process;
                                                                   Principle 2.27:
Director Development                                               Shareholders should approve the company’s remuneration
Principle 2.20:
The Induction of and ongoing training and development of           The board and its committees must have clear terms of reference in
directors should be conducted through a formal process;            place which have to be reviewed annually to ensure that there are
                                                                   no gaps or overlaps.
Company Secretary
                                                                   Regular performance evaluations of the board and its committees
Principle 2.21:                                                    is essential not only to improve efficiency and effectiveness of the
The board should be assisted by a competent, suitably qualified    board, but also to develop individual directors and enable them to
and experienced company secretary;                                 add better value.

Performance Assessment
Principle 2.22:
The evaluation of the board, its committees and the individual
directors should be performed every year;

Board Committees
Principle 2.23:
The board should delegate certain functions to well-structured
committees but without abdicating its own responsibilities;

Group Boards
Principle 2.24:
A governance framework should be agreed between the group
and its subsidiary boards;

Remuneration of Directors and
Senior Executives
Principle 2.25:
Companies should remunerate directors and executives fairly

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