SAEOPA’s Board of Directors is ultimately accountable and responsible for the performance of the company. The Board endorses and is committed to the fundamental principles of good corporate governance.
These include discipline, transparency, independence, accountability, responsibility, fairness and social responsibility.
In accordance with this commitment, the Board of Directors embraces the principles of good governance as set out in the King Report on Corporate Governance for South Africa (“King Code IV”).”
- PRIME DUTY
The Board accepts its responsibility to act as a board and to do so in the interests of the company only and not in a director’s personal interests or in the interests of any member a director may represent.
- MAIN DUTIES
The Board accepts the following as its main duties:
2.1 A duty of care, diligence and skill which can be reasonably expected from persons with their level of knowledge and experience.
2.2 A duty to exercise an independent discretion.
2.3 A duty of always acting in a bona fide manner, i.e. in good faith.
2.4 A duty to act intra vires, i.e. within the powers and authority bestowed upon them by the company’s Memorandum of Incorporation.
- DUTY OF CARE, DILIGENCE AND SKILL
Directors undertake to show the standard of care, diligence and skill referred to in 2.1 above by:
3.1 Understanding the business of the company in all operational, financial, human resources, risk management, and environmental respects.
3.2 Making informed decisions based on a complete understanding of the company’s business and the issues that may materially affect it.
3.3 Seeking out additional information where a director feels that insufficient information has been furnished for the purposes of decision-making.
3.4 Obtaining independent professional advice in circumstances where the director believes that, despite a good understanding of the company and efforts to obtain further information, he/she is still not in a position to make informed decisions.
3.5 Diligently preparing for board meetings by reviewing and understanding board pack material well in advance of board meetings, actively participating in board meetings, and bringing to bear the full measure of one’s experience and expertise to which the company is entitled.
- DUTY TO EXERCISE AN INDEPENDENT DISCRETION
Directors accept that they are not answerable to certain groups of members or other stakeholders, but to the company only. Independent mind and judgement are exercised in assessing what is in the best interest of the company even if detrimental to the interests of the appointing member.
- DUTY OF GOOD FAITH
Directors are required at all times to act in good faith towards and in the interests of the company. This is achieved by:
5.1 Always setting the company’s interests before personal or the appointing member’s interests or gain.
5.2 Always acting impartially and independently in the interests of the company, unhampered and unfettered by any other interest (whether it be personal, another member’s, or stakeholders’).
5.3 Always conducting the affairs of the company with the utmost honesty and integrity.
5.4 Avoiding any conflict between the interests of the company and any personal interest. In the event of there being the slightest hint of any possible interest, it is openly and formally declared.
- DUTY TO ACT WITHIN POWERS AND AUTHORITY
Directors do not exercise powers that are beyond the normal capacity of the company or request that powers be given to them unless bestowed by the company’s Memorandum of Incorporation (MOI).
Compliance with this duty is achieved by strict adherence to the MOI, any codes developed by the company, specific mandates from the board of directors, and the law.
- BOARD CHARACTERISTICS
7.1 Board size and membership
The board’s size is such to be effective and meet in the company’s requirements. It comprises a majority of non-executive directors.
7.2 Suitably-qualified directors
The following attributes are brought into consideration when directors are nominated:
7.2.1 Calibre and credibility.
7.2.2 Skills and experience.
7.2.3 Demographic diversity.
7.2.4 Time and attention to devote to role.
7.3 Separation of chairperson of the board and CEO/National Co-ordinator roles
The positions of chairperson and chief executive officer are vested in two separate persons.
7.4 Chairperson of the board to be an independent non-executive director
The chairperson is an independent non-executive director.
7.5 Balance of non-executive directors
With the exception of the CEO and the Secretary, all members of the board, whether elected or co-opted, are non-executive directors.
Directors and executive management are encouraged to hold other non-executive directorships, but those should not interfere with their responsibilities towards SAEOPA. The number of such directorships they accept should be carefully considered to ensure that the company enjoys the full benefit of their expertise, experience and knowledge.
7.6 Code of Conduct for directors
A Code of Ethics for Directors has been adopted by the board to address conflicts of interest.
7.7 Formal delegation of power and authority to management
An approval framework which defines the authority of management and matters for board approval, has been introduced.
7.8 Regular meetings
The board meets regularly (at least four times per year) to review and discuss the operational performance of the company, strategic issues, the business plan, acquisitions, disposals, longer-term contracts and commitments, company policies and stakeholder reporting.
7.9 Rotation of directors
Provision is made for the rotation of directors in the company’s MOI whereby directors are elected for a two-year period, following which they must stand down but may be re-elected by the members in general meeting.
7.10 Formal and transparent director appointment process
Such process is ensconced in the MOI.
7.11 Investigation of new directors’ background
New directors’ suitability for serving on the board is ascertained beforehand by the board in order to formulate recommendations thereon.
7.12 Formal orientation/induction for new directors
The board’s formal orientation programme familiarises incoming directors with the company’s operations, management and its business environment, and inducts them in their fiduciary duties, responsibilities, powers and potential liabilities.
The CEO, in consultation with the chairperson, plays a substantial role in the orientation process for directors.
7.13 Ongoing briefing for directors on material issues
Directors are apprised of material company issues on an ongoing basis.
7.14 Access to organisational information and records
Directors have access to all organisational information and records.
7.15 Access to independent professional advice
The board is at liberty to retain external professionals’ services when required.
7.16 Balance between entrepreneurial performance and conformance with governance standards
The company’s performance is measured according to the “triple bottom line”, viz. on financial, social and environmental levels.
7.17 Importance of meaningful corporate disclosure
The board lays great emphasis on the importance of corporate disclosure, notably as a means of transparency, accountability and responsibility, on matters of significance, interest and relevance to members and a wide range of stakeholders.
8 THE BOARD AND DIRECTORS
8.1 Role and function of the board
The board’s key functions include:
- Establishing the company’s
- Vision.
- Mission.
- Values.
- Corporate strategy.
- Codes.
- Policies, including delegated authority levels.
- Major plans of action.
- Annual budgets and business plans.
8.1.2 Ensuring organisational integrity.
8.1.3 Monitoring implementation and corporate performance.
8.1.4 Overseeing major capital expenditures, acquisitions and divestitures.
8.1.5 Appointing, compensating, monitoring and, when necessary, replacing key executives and overseeing succession planning.
8.1.6 Reviewing key executive and board remuneration, and ensuring a formal and transparent board nomination process.
8.1.7 Setting performance objectives for the board and executive management.
8.1.8 Ensuring independence from any vested interest.
8.1.9 Monitoring and managing potential conflicts of interest of directors, management and members, including any possible misuse of corporate assets and abuse in related party transactions.
8.1.10 Overseeing the process of disclosure and communications.
8.1.11 Ensuring the integrity of the company’s accounting and financial reporting systems, including the annual independent review, and that appropriate systems of control are in place, particularly systems for monitoring risk, financial control and compliance with the law.
8.1.12 Monitoring the effectiveness of the governance practices under which it operates, and making changes as needed.
8.1.13 Reviewing and guiding the above functions.
8.2 Role and function of the chairperson
8.2.1 The chairperson’s primary function is to preside over directors’ and members’ meetings and ensure their smooth functioning in the interests of good governance.
8.2.2 There is a clearly accepted division of responsibilities at the head of the company to ensure balance of power and authority, so that no individual has unfettered powers of decision-making.
8.2.3 The chairperson is an independent non-executive director.
8.2.4 The board appraises the performance of the chairperson on an annual basis.
8.2.5 The chairperson of the board accepts responsibility for the following essential tasks:
- Providing leadership to the board.
- Taking responsibility for the board’s composition and development.
- Ensuring proper information to the board.
- Planning and conducting board meetings effectively.
- Getting all directors involved in the board’s work.
- Ensuring that the board focuses on its key tasks.
- Engaging the board in assessing and improving its performance.
- Overseeing the induction and development of directors.
- Supporting the chief executive officer.
8.3 Role and function of the Chief Executive Officer/National Co-rdinator
8.3.1 Given the strategic and operational role of the CEO, this function is separate from that of the chairperson.
8.3.2 The CEO is responsible for the performance of the company, as dictated by the board’s overall strategy.
8.3.3 The incumbent reports to the board of directors.
8.3.4 The chairperson is responsible for appraising the performance of the CEO. The board considers the results of such appraisal in order to evaluate the performance of the CEO and to determine his/her remuneration.
8.3.5 The incumbent’s responsibilities include:
- Implementing company strategies, plans and policies.
- Directing strategy towards the profitable growth and operation of the company.
- Developing operational plans that reflect the longer-term strategy, objectives and priorities established by the board.
- Maintaining an ongoing dialogue with the board and its chairperson.
- Putting in place adequate operational planning and financial control systems.
- Ensuring that the operating objectives and standards of performance are not only understood but owned by executive management and other employees.
- Closely monitoring the operating and financial results against plans and budgets.
- Taking remedial action where necessary and informing the board of significant deviations and changes.
- Maintaining the operational performance of the company.
- Assuming full accountability to the board for all company operations.
- Representing the company externally and acting as chief spokesperson of the company.
- Building and maintaining an effective executive team.
8.4 Relationship between the board and CEO/National Co-ordinator
The board as a body controls corporate objectives in an affirmative, prescriptive way and controls corporate means in a limiting, proscriptive way.
8.5 Remuneration
8.5.1 The board will decide on and annually review the remuneration package of the CEO, and develop performance-based incentive schemes.
8.5.2 Performance-related elements constitute a substantial portion of the total remuneration packages of executives to align their interests with those of members and stakeholders, and are designed to provide incentives to perform at the highest operational standards.
8.5.3 The board is responsible for succession planning in respect of the CEO and executive management.
8.6 Board meetings
8.6.1 Board meetings are held at least four times per year.
8.6.2 The number of board meetings and directors’ attendance thereat are disclosed in the annual report.
8.7 Standing committees of the board
8.7.1 The board may establish standing committees which will be delegated to assist and enable the board to properly discharge its duties and responsibilities and to effectively fulfil its decision-taking process.
8.7.2 Standing committees will have formally determined terms of reference in respect of:
- Composition.
- Objectives, purpose and activities.
- Life span.
- Delegated authorities.
- Reporting mechanism to the board.
8.7.3 The following principles will be applied:
- Feedback from committees are provided at board meetings.
- Board committees are free to take independent external professional advice if deemed necessary, subject to budget constraints.
- Membership of all board committees is disclosed in the annual report and the chairpersons of board committees attend the company’s annual general meeting to answer questions from members.
- Chairpersons of standing committees are appointed by the board from the ranks of serving directors.
- Full disclosure of directors’ remuneration is provided in the annual report.
- Chairpersons of standing committees determine the composition of their respective committees.
8.7.3 The following standing committees of the board have been established:
- Audit Committee.
- Risk Committee.
8.8 Director selection, development and evaluation
The board annually evaluates, with emphasis on performance:
8.8.1 The board as a whole.
8.8.2 Chairperson of the board.
8.8.3 Individual directors.
8.8.4 Standing committees.
8.9 The Business Judgement rule
This measure has been introduced to protect directors and executive management against accountability where a business decision was taken based upon all available information, in good faith and without any conflicting interests, but which later proved to be a major mistake. This rule encourages innovation and risk taking while limiting judicial intrusiveness in private sector decision making.
8.10 Company secretary
A company secretary has been appointed. The board is cognisant of the duties imposed upon the company secretary and the secretary is empowered accordingly to enable him to properly fulfil those duties.
9 RISK MANAGEMENT AND CONTROL
9.1 The board’s responsibility
The board is responsible for:
- The total process of risk management.
- Introducing and maintaining an effective system of risk management and internal control.
- Determining the company’s risk management philosophy, strategy and policy.
- Disclosure of salient facts.
9.2 Management’s responsibility
Management is accountable to the board for:
- Designing, implementing and monitoring the process of risk management
- Integrating it into the day-to-day activities of the company.
9.3 Application
The Risk Committee’s regular risk assessment addresses the company’s exposure to the following:
- Physical and operational risks.
- Human resource risks.
- Technology risks.
- Business community and disaster recovery.
- Credit and market risks.
9.3.6 Compliance risks.
- AUDIT COMMITTEE
The Audit Committee has been established and is maintained by the board as one of its standing committees as recommended by King Code IV.
- RELATIONS WITH MEMBERS
11.1 Relations with members
The following modus operandi is applied:
11.1.1 Members’ attendance at annual general meetings is encouraged.
11.1.2 A reasonable time for discussion at general meetings is allowed.
11.1.3 Committee chairpersons are encouraged to attend general meetings.
11.1.4 The ballot process is used where contentious issues are under consideration.
11.1.5 Members are informed of decisions taken at general meetings.
11.2 General disclosure
11.2.1 Openness and substance are considered more important and of higher relevance than form. Both positive and negative aspects of performance are reported.
11.2.2 Characteristics pertaining to disclosure which have been adopted, are:
- Relevance
- Reliability
- Clarity
- Comparability
- Timeliness
- Verifiability.
11.3 General meetings
Annual general meetings and other general meetings of the company are dealt with in accordance with the company’s MOI.
11.4 Communication
Communication with members on the state of the company’s assets, business conduct and business practices is done at least once per annum by means of the board’s annual report.
