EAST AFRICAN BREWERIES LIMITED BOARD CHARTER

Transcription

1 EAST AFRICAN BREWERIES LIMITED BOARD CHARTER 1 Introduction 1.1 East African Breweries Limited (the Company ) is a public limited company incorporated in the Republic of Kenya under the Companies Act (Chapter 486 now repealed and replaced by the New Companies Act 2015) and listed on the Nairobi Securities Exchange, the Uganda Securities Exchange and the Dar es Salaam Stock Exchange. 1.2 The Board of directors of East African Breweries Limited (the Board ) is committed to the highest standards of corporate governance. 1.3 The principal corporate governance guidelines and regulations applying to the Company are the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015 (the Corporate Governance Code ) and the Capital Markets (Licensing Requirements)(General)(Amendment) Regulations, 2016 (the Corporate Governance Regulations ) as issued by the Capital Markets Authority. 1.4 The Board has developed this board charter (the Board Charter ) in order to document its corporate governance practices and principles, in recognition of the role of good governance in corporate performance, maximisation of shareholder value and protection of investors rights, and also to promote the Company s standards of self-regulation. 1.5 Corporate governance, for the purpose of this Board Charter, is defined as the process and structure used to direct and manage business affairs of the Company towards enhancing prosperity and corporate accounting with the ultimate objective of realising shareholders long-term value while taking into account the interest of other stakeholders. 1.6 This Board Charter is supplementary to and, in the event of any inconsistency, shall not supersede the Corporate Governance Code and the rights and obligations of the Company, the Board and individual directors of the Company as established in law. 1.7 This Board Charter was initially approved on 17 th September, Any amendments to this Board Charter require approval of the Board. EABL Board Charter Page 1

2 2 Board Composition and Diversity 2.1 The Board shall comprise a balance of independent, executive and non-executive directors with diverse skills, experience, independence and knowledge sufficient to enable the Board to discharge effectively its responsibilities for governance of the Company, including setting the Company s strategic aims and its values, providing the leadership to put them into effect, supervising and constructively challenging the Company s management who are responsible for the day to day operational running of the business, and reporting to shareholders and investors. 2.2 The Board believes that this diverse mix of skills and business experience is a major contribution to the proper functioning of the Board and the Board Committees, ensuring that matters are adequately debated and that no individual or group dominates the Board s decision-making processes. 2.3 The process of the appointment of directors should be sensitive to gender representation, regional and national outlook and should not be perceived to represent single or narrow community interest. 2.4 The Board shall neither be too large so as to undermine interactive discussion during board meetings, nor too small such that the inclusion of a wider expertise and skills to improve the effectiveness of the board would be compromised. 2.5 There shall be a clear separation of the roles of the chairperson of the Board (the Chairperson ) and the group managing director of the Company (the Group Managing Director or GMD ). The Chairperson is responsible for the leadership of the Board and for ensuring all directors are fully informed of matters sufficient to make informed judgments. The Group Managing Director is responsible for implementing the strategy agreed by the Board and for managing the group. He is supported in this role by the executive committee. Further details on the separation of roles of the chairperson and the Group Managing Director are set out in Appendix 1 to this Board Charter. 2.6 The independent non-executive directors shall form at least one third of the membership of the Board. 2.7 The non-executive directors have a particular responsibility for ensuring that business strategies and operations are fully discussed and critically reviewed. This enables directors to promote the success of the Company for the benefit of its shareholders as a whole. In so doing, it is appropriate for the directors to have regard to such matters as the interests of the Company s employees, the fostering of business relationships with customers, suppliers and other stakeholders, and the impact of the Company on the environment and communities in which the business operates. EABL Board Charter Page 2

3 2.8 An important part of the role of a non-executive director is to ensure that high standards of integrity and probity are upheld, and to support the chairperson and executive directors in instilling the appropriate culture, values and behaviour in the boardroom and within the Company. 2.9 The Board shall have Executive Directors who understand every single risk and/or product associated with the Company and shall have knowledge of the manner in which the Group s longer term strategy is pursued in practice and have an ability to influence its policies; and effectively direct the business of the Company. 3 Activities of the Board 3.1 The Board has a primary responsibility of fostering the long-term business of the Company consistent with the directors fiduciary duties. Each director shall accord sufficient time to his role and act consistently on a fully informed basis in accordance with his fiduciary duties. 3.2 It is the Board s responsibility to make decisions and to review and approve decisions of the Company, including in relation to: the strategic direction for the Company; significant business development, financing and corporate transactions; appropriate controls and governance over the Company and its operations, including through operation of the Company s statement of authorities; appropriate risk management of the Company, including compliance with laws, regulations and the Company s code of business conduct; appointment or removal of directors and the company secretary; proper financial reporting and audit; and corporate social responsibility and sustainability, ethics and environmental stewardship. 3.3 The Board shall establish and review on a regular basis the adequacy and integrity of the company s internal control systems and the management of information systems, including compliance with applicable laws, regulations, rules and guidelines; 3.4 It is the responsibility of the Chairperson, the Group Managing Director and the Company Secretary to work closely together in planning the annual programme and agendas for meetings of the Board which are held at least quarterly. EABL Board Charter Page 3

4 3.5 The Board may establish relevant Board Committees and delegate specific mandates to such committees as appropriate. There are currently three standing Board Committees, whose terms of reference are set out in Appendices 2, 3, and 4 respectively, and which meet regularly in accordance with their respective terms of reference: Board Corporate Governance Committee Appendix 2; Board Audit and Risk Management Committee Appendix 3; Board Nominations and Remuneration Committee Appendix The Board Corporate Governance Committee is responsible for monitoring and reviewing the adherence and compliance by the Company to the principles and requirements of good corporate governance and business ethics. 3.7 The Board Audit and Risk Management Committee is responsible for monitoring and reviewing the integrity of the financial statements, the effectiveness of the Company s internal control and risk management processes, the transparency of the internal audit function, the efficiency of the Company s procedures for handling whistle blowing allegations and the effectiveness of the external auditor. 3.8 The Board Nominations and Remuneration Committee is responsible for: reviewing succession planning within the Board and identifying and nominating suitable candidates to fill vacancies on the Board and the Board Committees as and when they arise; evaluating the performance of the Board and it s members; and reviewing and recommending to the Board the remuneration of management and nonexecutive directors and staff incentive schemes, amongst other matters relating to employee terms and conditions of employment. 3.9 The Role of the Company Secretary: The Company Secretary shall be the de facto secretary of the Board or any Board Committee, responsible for taking minutes. The duties of the Company Secretary in relation to meetings of the Board or any Board Committee shall include: a) facilitating the smooth operation of the Group s formal decision-making and reporting machinery; b) arranging the venue and additional secretarial support for meetings; c) organising Board and Board Committee meetings; EABL Board Charter Page 4

5 d) formulating meeting agendas with the Chairperson and/or the Group Managing Director and advising management on content and organisation of memoranda or presentations for the meetings; e) collecting, organising and distributing information, documents or other papers required for the meeting; f) ensuring that all meetings are minuted, that the minutes of all meetings are circulated and that the minute books are properly maintained. The minutes of the meetings will be considered at the next meeting, approved and signed by the Chairperson of the meeting; g) advising on legal and regulatory matters during meetings; and h) ensuring that all Board Committees are properly constituted and provided with clear Terms of Reference. 4 Outside Interests, Disclosures and Conflicts 4.1 On appointment to the Board and on an annual basis thereafter, each non-executive director is required to disclose to the Chairperson and the Company Secretary (a) any significant commitment which he has and which may impede his ability to devote appropriate time to his role as director of the Company, (b) details of any other company of which he is a director, (c) details of any actual or potential conflict of interests which he is aware of, and (d) details of any interests in shares or securities in the Company or any of its subsidiaries which he may have. 4.2 Each director is required to disclose to the Chairperson and the Company Secretary, as appropriate, any matter which may give rise to a potential or actual conflict with the interests of the Company as soon as practicable after becoming aware of the matter. The Board authorises the Chairperson and the Company Secretary to receive such disclosures on behalf of the Board and to make recommendations to the Board as to how to address the relevant matter, including whether it should be authorised by the Board or whether the director making the disclosure should refrain from participating in discussions or voting on the relevant matter. 4.3 Each director is required to be familiar with the Company s code of business conduct and associated policies and standards, as they are relevant to his role. In particular, each director will comply with the provisions relating to anti-bribery and corruption (as set out in the Company s Anti-Money Laundering and Bribery and Anti-corruption Policies) and to insider dealing (as set out in the Company s Code of Conduct on Securities Dealings). EABL Board Charter Page 5

6 4.4 Directors shall maintain the highest standards of confidentiality of information obtained during the course of service to the Company. This includes ensuring that confidential information regarding customers, employees, suppliers, and security operations is communicated on a need to know basis only and is used solely for the Company s purposes and not as a basis for making a profit or furthering a private interest. 5 Rights of directors 5.1 The terms of appointment of a non-executive director shall be set out in an engagement letter or contract between the Company and the director. 5.2 Each director shall undergo an induction programme on appointment, including meeting with executive committee members and receiving orientation training in relation to the Company and its business, including a detailed briefing on relevant requirements of the Company s code of business conduct and associated policies and standards. 5.3 The Chairperson shall regularly review and agree with each director what specific training and development requirements he has. All directors are provided with the opportunity and are encouraged to attend periodic training to ensure that they are kept up to date on relevant legal developments or changes in best practice and changing commercial or other risks. 5.4 Each director is entitled to request and receive advice from the Company Secretary who is responsible for advising the Board, on all governance issues concerning the Board and its procedures. 5.5 In the event that any concern expressed by a director during a Board meeting cannot be resolved, he may require that his concern is recorded by the Company Secretary in the minutes of the meeting. 5.6 In the event that a director resigns from the Board, he may demand that the Chairperson or the Company Secretary circulates to all other directors a written statement of the resigning director detailing the reasons for his resignation. 6 Duties of Directors 6.1 Director s duties are as established by law and comprise the following; a) To act within their powers - to abide by the terms of the company's memorandum and articles of association and decisions made by the shareholders; b) To promote the success of the company - directors must continue to act in a way that benefits the shareholders as a whole while having regard to: EABL Board Charter Page 6

7 i. The long term consequences of decisions ii. iii. iv. The interests of employees The impact on the community and the environment The desire to maintain a reputation for high standards of business conduct v. The need to act fairly as between members; c) To exercise independent judgment - directors must not fetter their discretion to act, other than pursuant to an agreement entered into by the company or in a way authorised by the company's articles; d) To exercise reasonable care, skill and diligence - this must be exercised to the standard expected of i. Someone with the general knowledge, skill and experience reasonably expected of a person carrying out the functions of the director (the objective test) and also ii. The actual knowledge, skill and experience of that particular director (the subjective test); e) To avoid conflicts of interest; f) Not to accept benefits from third parties; and g) To declare an interest in a transaction with the company to the other directors. All directors are equally accountable for the proper stewardship of the Company s affairs. 6.2 A director who ceases to hold such office continues to be subject to the duty to avoid conflict of interest with regard to the exploitation of any property, information or opportunity that the person became aware of while a director, and not to accept benefits from third parties with regards to things done or omitted to be done by that person before ceasing to be a director. EABL Board Charter Page 7

8 7 Other 7.1 All directors except the Group Managing Director must submit themselves for re-election at regular intervals or at least every three (3) years. 7.2 Directors approaching their seventieth (70 th ) birthday are required to disclose such matter to the Board that respective year, for the purpose of disclosure of such matter to the shareholders at the annual general meeting and in the annual report. 7.3 To ensure effective participation in the Board, the Chairperson shall not hold such position in more than two (2) public listed companies at any one time while individual directors may not hold such position in more than [three (3)] public listed companies at any one time and, in the case where a corporate director has appointed an alternate director, the appointment of such alternate shall be restricted to two public listed companies.. 8. Miscellaneous 8.1 Reference to any legislative instruments or Company documents (Act, Codes, Guidelines etc) shall include reference to any subsequent amendments as may be made from time to time. 8.2 Reference to he shall include reference to the female gender and vice-verse. Approved and Adopted by the Board on 17 September 2013 Reviewed by the Board Corporate Governance Committee on: 17 July 2015 Review Approved by the Board on 30 July 2015 Reviewed by the Board Corporate Governance Committee on: 15 April 2016 Review Approved by the Board on 26 April 2016 EABL Board Charter Page 8

9 APPENDIX 1 CHAIRPERSON Main duties and responsibilities of the Chairman and Group Managing Director GROUP MANAGING DIRECTOR Main duties and responsibilities Leadership of the Board and ensuring its effectiveness on all aspects of its role. Ensure that the Board and its Committees operate effectively, including ensuring that the Board as a whole plays a full and constructive part in the review and approval of the Company s corporate vision and strategy and short and long term financial objectives and plans to achieve them, as developed by the GMD. Ensure that Board agendas take full account of the important issues facing the Company and the concerns of all Board members (with an emphasis on strategic, rather than routine, issues). Build an effective and complementary Board, by leading on issues of director development, including induction and regular reviews, as well as implementing a programme of regular board performance assessment. Leadership of the executive directors and senior executive team in the day to day running of the business of the Company. Develop for review and approval by the Board: a corporate vision and strategy with the explicit aim of maximising shareholder value; and short and long term financial objectives, and plans to achieve them. Implement the approved corporate vision and strategy and achieve the approved financial objectives. Monitor day-to-day business performance and take corrective action where needed. Ensuring appropriate objectives, policies and strategies are adopted for each division of the Company, that appropriate budgets are set for them individually, that their performance is effectively monitored, that guidance or direction is given where appropriate, and that guidance is given to the Company's subsidiaries as to the policy favoured by the Company as the principal shareholder. Ensure the quality of management and leadership within the Company and formalising the roles and responsibilities of the senior executive team, including clear delegation of authorities. Ensuring effective processes are established relating to succession EABL Board Charter Page 9

10 planning and the composition of the board, having regard to the benefits of diversity. Advising the Nomination Committee and the board, after appropriate consultation with all directors, on candidates for appointment as directors of the company, and advising the board on the retirement or removal of directors from office. Encouraging the active engagement of all Board members in Board and Committee meetings, drawing fully on their skills, experience, knowledge and, where appropriate, independence. Encouraging periodical performance evaluation of the Board and acting on the results of such evaluation. Monitoring progress towards the timely and effective achievement and implementation of the objectives, policies and strategies for the Company, including the business plan and financial objectives. Set the agenda for the Board and ensure that the Board receives accurate, timely and clear information on: the Company s performance; the issues, challenges and opportunities facing the Company; significant risks the Company is willing to embrace in its strategy; and matters reserved to it for decision. Making recommendations to the Nomination Committee on the role and capabilities required in respect of the appointment of directors. Encouraging directors to express their views frankly and challenge constructively in order to improve the standard of discussion in the boardroom. Motivating, reviewing and appraising the performance of the other executive directors and making appropriate recommendations to the Remuneration Committee on remuneration policy and specific remuneration packages and terms of employment of the senior executive team. Nurture and develop the Company s brand and product portfolio, and implement a business plan and programme in line with the approved strategy and financial objectives. Ensure that the Board and Board Committees are provided in a timely fashion with information in a form and of a quality appropriate to enable them to discharge their duties. Communicate the decisions of the Board and Board Committees as appropriate, and ensure proper implementation. Ensure compliance with the Board s approved procedures, including each Board Committee s Terms of Reference. Develop and maintain the policies and systems needed to ensure optimal business performance in line with the approved strategy EABL Board Charter Page 10

11 (where appropriate for review and approval by the Board). In particular, maintain an effective system of internal control and risk management. Ensure that there is effective communication by the Company with its shareholders, including by the GMD, Group Finance Director ( GFD ) and other executive management, and ensuring that members of the Board develop an understanding of the views of the major investors in the Company. Participating with the Group Managing Director, as appropriate, in public relations, including ensuring effective communications with other companies, organisations and bodies (including regulatory and policy makers), the media and the public generally. Promote the highest standards of integrity, probity and corporate governance and set clear expectations concerning around culture, values and behaviours throughout the Company and particularly at Board level. Together with the FD and other executive management, manage relationships with the Company s shareholders, the financial community and other external parties. Being responsible, with the participation of the Chairperson, as appropriate, for public relations, relations with other companies, organisations and bodies, the media and the public generally. Promote and conduct the affairs of the Company with the highest standards of integrity, probity and corporate governance. Set an example to the Company s employees and communicate to them the expectations of the Board in relation to the Company s culture, values and behaviours. Reporting lines The Chairperson reports to the Board. The Group Managing Director reports to the Chairperson (acting on behalf of the Board) and to the President, Diageo Africa. EABL Board Charter Page 11

12 APPENDIX 2 EAST AFRICAN BREWERIES LIMITED (the "Company") CORPORATE GOVERNANCE COMMITTEE TERMS OF REFERENCE Membership 1. Membership of the Corporate Governance Committee (the "Committee") shall be appointed by the Company's board of directors (the "Board"), on the recommendation of the Nominations and Remuneration Committee. The Committee shall consist of not less than three members. All of them shall be non-executive directors of the Company and a majority of them shall be independent non-executive directors. 2. Upon recommendation from the Nominations and Remuneration Committee, the Board shall appoint the Chairperson of the Committee who shall be a non-executive director but who shall not be Chairperson of the Board. 3. Appointments to the Committee shall be for a period of up to three years (subject to the election and re-election provisions in the company's constitution), which may be extended for further periods of up to three years each, provided the director concerned still satisfies the criteria (were he/she to be a new member) for appointment to the Committee. Quorum 4. The quorum necessary for the transaction of business shall be two (2) members attending in person or via agreed alternatives. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. Attendance at meetings 5. The Group Managing Director and other individuals (including representatives of external advisers) may be invited to attend for all or any part of a meeting as and when appropriate in the opinion of the Committee Chairperson or a majority of its members. 6. The Company Secretary, or any other person selected for the task by the Committee, shall act as the Secretary of the Committee. Frequency of meetings 7. The Committee shall meet at least three (3) times a year. Corporate Governance committee Terms of Reference Page 1

13 Notice of meetings 8. Meetings of the Committee shall be called by the Secretary of the Committee at the request of the Committee Chairperson. 9. Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed and copies of all committee papers shall be sent to all members of the Committee, and to all other non-executive directors and other attendees as appropriate, at least five working days before the meeting. The agenda and copies of all committee papers shall be copied to the Group Chairperson. Authority 10. The Committee is authorized by the Board to: (a) seek any information it requires from any employee of the Company, through the Group Managing Director, in order to perform its duties; and (b) obtain, through the Group Managing Director and at the Company s expense, outside legal or other professional advice in connection with its duties; and such advisors may attend meetings as necessary: and (c) incur any expenditure it considers appropriate in connection therewith (the Company to make available the necessary funds). Responsibilities 11. The responsibilities of the Committee shall include but not be limited to: (a) setting out the corporate governance principles that are appropriate for the company's business; establishing policies and strategies for achieving them; and annually assessing the extent to which the company has observed those policies and strategies; The corporate governance principles shall be presented annually to the Board Audit and Risk Committee for ratification. (b) reviewing and assessing the Board and the Company s practices in light of applicable good corporate governance guidelines and codes applicable within the region and make recommendations to the Board with regard to any changes; (c) approving on an annual basis the publication of a corporate governance statement to be included in the annual report and accounts; (d) ensuring the implementation of the Code of Conduct on Securities Transactions by Directors and Senior Executives of East African Breweries Limited and its subsidiaries; Corporate Governance committee Terms of Reference Page 2

14 (e) reviewing the Code of Conduct on Securities Transactions by Directors and Senior Executives of East African Breweries Limited and its subsidiaries on an annual basis; (f) ensuring the effectiveness of the Board by initiating various activities including but not limited to: i. creating awareness within the Board of current corporate governance issues taking into account the challenges and opportunities facing the Company; ii. evaluating the balance of knowledge and experience on the Board with respect to corporate governance issues and encourage further discourse; iii. arranging for all directors to have the opportunity to attend corporate governance training and attain recognized certification; iv. keeping abreast of developments in corporate governance and of new or revised codes/guidelines; (g) making recommendations to the Board concerning: i. any possible conflict of interest situations between corporate governance principles and the Company s commercial interests; ii. determining and implementing a suitable performance evaluation process for the Board as a whole, the Board Committees, the Chairperson, individual directors, CEO and Company Secretary; iii. any matters relating to the continuation in office of any director at any time due to a conflict of interest with corporate governance principles; and (h) ensuring that a governance audit is carried out at least annually to confirm that the company is operating on sound governance practices. Reporting Procedures 12. The Committee Chairperson shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. 13. The Secretary shall minute the proceedings and resolutions of the Committee meetings, including the names of those present and in attendance. 14. The Secretary shall circulate draft minutes of meetings of the Committee to all members of the Committee. Once approved, minutes should be circulated to all other members of the Corporate Governance committee Terms of Reference Page 3

15 Board except where the Committee determines it to be inappropriate to do so for reasons of confidentiality. 15. The Committee s activities shall be disclosed in the annual report and accounts. 16. The Committee Chairperson shall attend the Company s AGM prepared to respond to any questions which may be raised by shareholders on matters within the Committee s area of responsibility. Other 17. The Committee shall: a) be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members; b) give due consideration to all applicable laws and regulations, as appropriate; and c) periodically review its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval. Initially Approved and adopted by the Board on 17 September 2013 Reviewed by the Committee on 17 July 2015 Review Approved by the Board on 4 November 2015 Further reviewed by the Committee on 15 April 2016 Approved by the Board on 26 April 2016 Corporate Governance committee Terms of Reference Page 4

16 APPENDIX 3 EAST AFRICAN BREWERIES LIMITED (the "Company") BOARD AUDIT AND RISK MANAGEMENT COMMITTEE TERMS OF REFERENCE Membership 1) Membership of the Board Audit and Risk Management Committee (the "Committee") shall be appointed by the Company's board of directors (the "Board"), on the recommendation of the Nomination Committee in consultation with the Chairman of the Committee. The Committee shall comprise at least three members. All members of the Committee shall be Independent non-executive directors of the Company and at least one of whom shall have a professional qualifications in audit or accounting and be in good standing with the applicable professional body. 2) The Chairman of the Board shall not be a member of the Committee. 3) The Board shall appoint the Committee Chairman who shall be an independent nonexecutive director. In the absence of the Committee Chairman, the remaining members present shall choose one of their numbers to chair the meeting. 4) Appointments to the Committee shall be for a period of up to three (3) years (subject to the election and re-election provisions in the Company's Memorandum & Articles of Association), which may be extended for further periods of up to three (3) years each, provided the director concerned still satisfies the criteria (were he to be a new member) for appointment to the Committee. 5) The Committee shall also serve as the Audit and Risk Committee for Uganda Breweries Limited (UBL). The UBL Audit and Risk committee operating within this Committee shall comprise a maximum of four members one of whom shall be an independent non-executive director of UBL. The Non-Executive Director shall be the Chairman of the UBL Audit and Risk committee. The other members of this Committee shall be directors of UBL. 6) The Committee agenda, pre-read and minutes of meeting shall include specific reference to UBL where applicable. Audit and Risk committee Terms of Reference Page 1

17 Quorum 7) The quorum for purposes of conducting the business of the Committee shall be two (2). A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. Attendance at meetings 8) No one other than the members of the Committee shall be entitled to attend the Committee meetings and pass/vote on committee resolutions. 9) The following are permanent attendees in committee meetings: (a) Group Managing Director (b) Group Finance Director (c) Head of Group Audit and Risk (GAR) for EABL (d) Group Legal Director (e) Group Controls, Compliance & Ethics (CCE) Director (f) Management representative from Uganda Breweries Limited (UBL) (g) Head of the Controls Assurance Team (CAT) (h) A representative of EABL s appointed external auditor who shall be the senior engagement partner The committee may invite any other non-executive directors, representatives of the external advisers, or other persons to attend all or part of any meeting as and when appropriate in the opinion of the Committee Chairman or the majority of its members. 10) The Company Secretary, or any other person selected for the task by the Committee, shall act as the secretary of the Committee. Frequency of meetings 11) Meetings shall be held not less than three (3) times a year (to coincide with key dates in the Company s financial reporting cycle) and otherwise as required. 12) External auditors, the Group Managing Director, the Group Finance Director, Group Legal Director, Group CCE Director, Finance Director UBL (Management representative for UBL), Head of the Controls Assurance Team or the Head of GAR may request of the Chairman a Committee meeting, if they consider that one is necessary. 13) There should be at least one (1) meeting in a year, where the Committee meets the external and internal auditors without executive Board members present. This need not be the same meeting as the Committee meeting. Notice and Agenda of meetings 14) Meetings of the Committee shall be called by the secretary of the Committee at the request of the Committee Chairman. Audit and Risk committee Terms of Reference Page 2

18 15) The Committee Chairman will review the agenda before it s published. The agenda shall cover the Committee work plan (appendix I) and other areas of interest identified by the Committee members or the EABL Management team that are within the scope. 16) The EABL Finance Director will support the Chairman, Secretary in facilitating the Committee agenda and actions. This role was previously performed by GAR. 17) Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed and copies of all Committee papers shall be sent to all members of the Committee, and to all other non-executive directors and other attendees as appropriate, at least five working days before the meeting. Authority 18) The Committee is authorized to: Duties (a) Seek any information that it requires from any employee of the Company in order to perform its duties and all employees are directed to cooperate with any request made by the Committee; (b) investigate any activity within these terms of reference; (c) obtain external legal or other professional advice and to secure the attendance of anyone it considers has relevant experience, expertise or knowledge; and (d) have the right to publish in the Company's annual report and accounts details of any issues that cannot be resolved between it and the Board. 19) The Committee should carry out the duties below for the Company, major subsidiary undertakings and the Group as a whole, as appropriate. Financial reporting 20) The Committee shall monitor the integrity of the Company s financial statements, operating and financial review, interim reports, preliminary announcements and any other formal announcements relating to its financial performance, reviewing significant financial reporting issues and judgments which they contain. 21) The Committee shall review and challenge where necessary: (a) critical accounting policies and practices, and any changes in them; (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management and the ramifications of the use of such; Audit and Risk committee Terms of Reference Page 3

19 (c) alternative disclosures and treatments, and the treatment preferred by the external auditor; and decisions requiring a significant element of judgment; (d) the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed; (e) the clarity of disclosures in the Company's financial reports and the context in which statements are made; (f) significant adjustments resulting from the audit; (g) the going concern assumption; (h) compliance with accounting standards; (i) compliance with stock exchange and other legal requirements; (j) all material information presented with the financial statements; (k) other material written communications between the auditor and management or the Committee; and (l) other topics for consideration, as defined by the Board such as periodic legal reports. Internal control and risk management 22) On internal controls and risk management, it is the duty of the Committee to: (a) determine and review the Company's risk profile, including the nature and extent of significant risks that the Company is willing to take in achieving its strategic objective; (b) assess the scope, adequacy and effectiveness of the systems established by management to identify, assess, manage and monitor financial and non-financial risks. (c) review management s and GARs reports on the effectiveness of the systems for internal financial control, financial reporting and risk management; (d) monitor the integrity of the Company s internal financial controls; (e) review the timeliness of, and report on, the effectiveness of corrective action taken by the Company's management; Audit and Risk committee Terms of Reference Page 4

20 (f) review the Company s procedures for managing breaches of the Code of Business Conduct (COBC) including the risk of fraud (prevention, detecting and dealing with fraud); (g) review the COBC, anti-bribery & corruption policy and related corporate responsibility policies and how these are communicated to staff and monitored; and (h) review the statement in the annual report and accounts on the Company s internal controls and risk management framework, prior to consideration by the Board; Whistle blowing 23) The Committee shall: (a) review the Company s procedures for handling allegations from whistleblowers by which staff or other person can report in confidence possible wrongdoing in financial reporting or other matters; and (b) ensure that these arrangements allow timely and independent investigation of such matters and appropriate follow up action. Global Audit & Risk (GAR) 24) The Committee shall: (a) review and assess the GAR audit programme; (b) review the adequacy, scope and functions of the GAR internal audit function and ensure that it is adequately resourced and has appropriate authority to carry out its work; (c) ensure the GAR internal audit function is independent of the activities of the Company and is performed with impartiality, proficiency and due professional care; (d) ensure that the Head of Group Audit & Risk has direct access to the Board Chairman and the Committee and is accountable to the Committee; (e) receive a report on the results of the GAR internal auditors work on a periodic basis; (f) review and monitor management s responsiveness to the internal audit findings and recommendations; (g) monitor and assess the role and effectiveness of the GAR internal audit function in the overall context of the Company s risk management system; (h) review any appraisal or assessment of the performance of the members of the GAR internal audit functions; Audit and Risk committee Terms of Reference Page 5

21 (i) be informed of resignations of GAR internal audit staff members and ensure that resigning staff members are provided an opportunity to submit reasons for resigning. Controls Assurance Team (CAT) 25) The Committee shall: a) review and assess the Control Assurance Team s internal audit schedule and audit programme; b) review the adequacy, scope and functions of the Control Assurance Team and ensure they are adequately resourced and have appropriate authority to conduct agreed audit plans; c) ensure that the Head of CAT has direct access to the Committee Chairman, the Committee and are accountable to the Committee; d) receive a report on the results of the CAT team on a periodic basis; e) review and monitor management s responsiveness to the CAT team findings and recommendations; f) monitor and assess the role and effectiveness of the CAT team in the overall context of the Company s risk management system; g) review any appraisal or assessment of the performance of the CAT team functions; External audit h) be informed of resignations of the CAT team staff members and ensure that resigning staff members are provided an opportunity to submit reasons for resigning. 26) The Committee shall be directly responsible for recommendation of appointment, compensation, and oversight of the work of any registered public accounting firm employed by the Company (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The registered public accounting firm shall report directly to the Committee. 27) Specifically, the Committee shall: (a) consider, and make recommendations on the appointment, reappointment and removal of the external auditor; Audit and Risk committee Terms of Reference Page 6

22 (b) approve the terms of engagement and the remuneration to be paid to the external auditor in respect of audit and non-audit services provided; (c) assess the qualifications, expertise and resources, effectiveness and independence of the external auditors annually; (d) discuss with the external auditor, before the audit commences, the nature and scope of the audit; (e) satisfy itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company other than in the ordinary course); (f) agree with the Board a policy on the employment of former employees of the Company's auditor, then monitoring the implementation of such policy; (g) seek to ensure co-ordination with the activities of the internal audit function; (h) consider the risk of the withdrawal of the Company's present auditor from the market; (i) review with the external auditors, the findings of their work, including, any major issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved; key accounting and audit judgments; levels of errors identified during the audit, obtaining explanations from management and, where necessary the external auditors, as to why certain errors might remain unadjusted; (j) review the audit representation letters before consideration by the Board, giving particular consideration to matters that relate to non-standard issues; (k) assess, at the end of the audit cycle, the effectiveness of the audit process by; i. reviewing whether the auditor has met the agreed audit plan and understanding the reasons for any changes, including changes in perceived audit risks and the work undertaken by the external auditors to address those risks; ii. considering the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgments identified and in responding to questions from the audit committees, and in their commentary, where appropriate, on the systems of internal control; and iii. obtaining feedback about the conduct of the audit from key people involved; (l) review and monitor the content of the external auditor s management letter, in order to; Audit and Risk committee Terms of Reference Page 7

23 i. assess whether it is based on a good understanding of the Company s business; and ii. establish whether recommendations have been acted upon and, if not, the reasons why they have not been acted upon; (m) develop and recommend to the Board the Company s policy in relation to the provision of non-audit services by the auditor and ensure that the provision of such services does not impair the external auditor s independence or objectivity. In doing so, the audit committee should; i. consider whether the skills and experience of the audit firm make it a suitable supplier of the non-audit services; ii. consider whether there are safeguards in place to ensure that there is no threat to objectivity and independence in the conduct of the audit resulting from the provision of such services by the external auditor; iii. consider the nature of the non-audit services, the related fee levels and the fee levels individually and in aggregate relative to the audit fee; and iv. consider the criteria which govern the compensation of the individuals performing the audit; (n) Set and apply a formal policy specifying the types of non-audit work: from which the external auditors are excluded; for which the external auditors can be engaged without referral to the audit committee; and for which a case-by-case decision is necessary. Corporate Governance 28) Pursuant to the New Companies Act 2015, the Committee shall set out the corporate governance principles that are appropriate for the nature and scope of the company's business; establish policies and strategies for achieving them; and annually assess the extent to which the company has observed those policies and strategies. The committee may delegate this duty to the Corporate Governance Committee and shall annually review the principles set out by the Corporate Governance Committee. Reporting Procedures 29) The Committee Chairman shall report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. Audit and Risk committee Terms of Reference Page 8

24 30) The Secretary shall minute the proceedings and resolutions of the Committee meetings, including the names of those present and in attendance. 31) The Secretary shall circulate draft minutes of meetings of the Committee to all members of the Committee. Once approved, minutes should be circulated to all other members of the Board except where the Committee determines it to be inappropriate to do so for reasons of confidentiality. 32) The Committee shall prepare a report on its role and responsibilities and the actions it has taken to discharge those responsibilities for inclusion in the annual report and accounts. Such a report should specifically include: (a) a summary of the role of the Committee; (b) the number of Committee meetings and attendance by each member; (c) the way the Committee has discharged its responsibilities; (d) how it has assessed the effectiveness of the external audit process; (e) where the external auditor has provided non-audit services, how auditor objectivity and independence has been safeguarded; (f) where disagreements between the Committee and the Board cannot be resolved, the Committee shall report the issue to the shareholders as part of the report on its activities in the Company s annual report; and (g) if the board does not accept the Committee s recommendation regarding the appointment, reappointment and removal of the external auditors, the Committee shall include a statement explaining its recommendation and reasons why the Board has taken a different stance in the annual report. 33) The Committee Chairman shall attend the Company's AGM prepared to respond to any questions which may be raised by shareholders on matters within the Committee s area of responsibility. Other 34) The Committee shall: (a) be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members; (b) give due consideration to all applicable laws and regulations, as appropriate; and (c) periodically review its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum Audit and Risk committee Terms of Reference Page 9

25 effectiveness and recommend any changes it considers necessary to the Board for approval. Initially Approved and adopted by the Board on 17 September Reviewed by the Committee on 18 April 2016 Review Approved by the Board on 26 April 2016 Audit and Risk committee Terms of Reference Page 10

26 APPENDIX 4 EAST AFRICAN BREWERIES LIMITED (the "Company") NOMINATIONS AND REMUNERATION COMMITTEE Constitution TERMS OF REFERENCE The Nominations and Remunerations Committee (the "Committee") was formally constituted by Ordinary Resolution passed by the Board of Directors of East African Breweries Limited (the Board ) on 30 th July The Committee is responsible for: reviewing succession planning within the Board and identifying and nominating suitable candidates to fill vacancies on the Board and the Board Committees as and when they arise; evaluating the performance of Board members; and reviewing and recommending to the Board the remuneration of management and nonexecutive directors and staff incentive schemes, amongst other matters relating to employee terms and conditions of employment. Membership Membership of the Committee shall be approved by the Board upon recommendation of the Committee through the Chair of the Committee. The Committee shall consist of at least three members. All of them shall be non-executive directors of the Company. 1. The Board shall appoint the Chair of the Committee who shall be a non-executive director of the Company. When dealing with the matter of succession to the Chair of the Board, the Committee shall be chaired by a non-executive director who is not also Chair of the Board. 2. Appointments to the Committee shall be for a period of up to three (3) years (subject to the election and re-election provisions in the Company's Memorandum & Articles of Association), which may be extended for further periods of up to three (3) years each, provided the director concerned still satisfies the criteria (were he to be a new member) for appointment to the Committee. Nominations and Remuneration committee Terms of Reference Page 1