OVERVIEW OF KING III PRINCIPLES

Transcription

1 OVERVIEW OF KING III PRINCIPLES This checklist has been prepared in terms of the JSE Listings Requirements and sets out Brimstone s approach to corporate governance in relation to the King Report on Governance for South Africa (King III). Reference to the index is made in the Corporate Governance Report in the Integrated Report of Brimstone. Principle Status Additional comments Chapter 1: Ethical leadership and corporate citizenship 1.1 The board should provide effective leadership based on an ethical foundation 1.2 The board should ensure that the company is and is seen to be a responsible corporate citizen 1.3 The board should ensure that the company s ethics are The Board recognises and remains committed to the principles of good governance which emanates from effective, responsible leadership and is characterised by the ethical values of responsibility, accountability, fairness and transparency. Brimstone s commitment to doing business ethically is entrenched in the Company s Code of Business Conduct. Brimstone seeks to be Profitable, Empowering and to have a Positive Social Impact on the businesses and the individuals with whom it is involved, including shareholders, stakeholders, employees, clients and the greater community. The Company s Code of Business Conduct sets out the standards of behaviour required from all. A Group Social and Ethics Committee was established in 2012 to assist in monitoring the Group s performance as a good and responsible corporate citizen and to perform the statutory functions required of a social and ethics committee in terms of the Companies Act, 71 of 2008, as amended. Chapter 2: Boards and directors 2.1 The board should act as the focal point for and custodian of corporate governance 2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable 2.3 The board should provide effective leadership based on an ethical foundation 2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen. 2.5 The board should ensure that the company s ethics are 2.6 The board should ensure that the company has an effective and independent audit committee 2.7 The board should be responsible for the governance of risk 2.8 The board should be responsible for information technology governance 2.9 The board should ensure that the company complies with applicable laws and considers adherence to nonbinding rules, codes and standards An approved Board Charter exists clearly setting out the Board s responsibilities. The Board meets at least four times per year. The Board approves the Company s strategy and ensures that its strategy will be that of creating value for its shareholders in an environmentally responsible way. As per 1.1 above. As per 1.2 above. As per 1.3 above. The Board ensures that the Company has an effective and independent Audit and Risk Committee as set in the comments to Chapter 3. The Board is responsible for the governance of risk as set out in the comments to Chapter 4. The Board is responsible for information technology as set in the comments to Chapter 5. The Board ensures that the Company complies with applicable laws and considers adherence to non-binding rules, codes and standards as set out in the comments to chapter 6.

2 2.10 The board should ensure that there is an effective riskbased internal audit 2.11 The board should appreciate that stakeholders perceptions affect the company s reputation 2.12 The board should ensure the integrity of the company s integrated report 2.13 The board should report on the effectiveness of the company s system of internal controls 2.14 The board and its directors should act in the best interest of the company 2.15 The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Companies Act 2.16 The board should elect a chairman of the board who is an independent non-executive director. The chief executive officer of the company should not also fill the role of chairman of the board 2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent applied The Board ensures that there is an effective risk-based internal audit as set out in the comments to chapter 7. The Board appreciates that stakeholders perceptions affect the Company s reputation. Effective communication with our shareholders and other stakeholders is important in maintaining our corporate reputation and dignity. The Company consistently strives to maintain direct dialogue with all who have a relationship with Brimstone on any level. See also chapter 8 below. Controls are in place to ensure relevant, reliable and accurate reporting. The Board reviews and approves the Integrated Report. The Audit and Risk Committee confirms to the Board that the Company s system of internal controls is effective. Directors adhere to legal standards of conduct. Board members are required to disclose any potential conflict of interest as and when required. The Board through the Audit Committee assesses the Group s going concern status annually. The Chairman of the Board, Mr F Robertson is not an independent non-executive director. Mr PL Campher has been appointed as lead independent non-executive directors as recommended in King III and as required in terms of the JSE Listings Requirements. The roles of the CEO and Chairman are separated. The CEO is appointed in terms of the Board Charter. There is a clear delegation of authority in place. The composition of the Board reflects a balance between executive and non-executive directors, of whom the majority are independent Directors should be appointed through a formal process The Nominations committee assists with the process of identifying suitable members of the Board, which is aligned to the Appointment of Directors Policy The induction of and ongoing training and development of directors should be conducted through formal processes The board should be assisted by a competent, suitably qualified and experienced company secretary 2.22 The evaluation of the board, its committees and the individual directors should be performed every year 2.23 The board should delegate certain functions to wellstructured committees but without abdicating its own responsibilities 2.24 A governance framework should be agreed between the group and its subsidiary boards 2.25 Companies should remunerate directors and executives fairly and responsibly Induction takes place on appointment. Directors are briefed on changes in risk, laws and the environment. The Board is assisted by a competent, suitably qualified and experienced Company Secretary. The Company Secretary is subjected to an annual evaluation of the Board. Evaluations of the Board, subcommittee and the independence of the independent non-executive directors are conducted with feedback to the Board. The results of these evaluations are not disclosed in the Company Integrated Report, but the nomination for re-appointment of directors only occurs after the evaluation of the performance of the Board. Appropriate committees are constituted and each committee has atermsa terms of reference that areis reviewed annually. A governance framework is established between the group and its subsidiary boards. This is fulfilled by the Company s executives serving as non-executive directors on subsidiary companies boards thereby promoting good governance. The Remuneration committee assists the Board in setting and administering remuneration policies.

3 2.26 Companies should disclose the remuneration of each director and certain senior executives 2.27 Shareholders should approve the company s remuneration policy Chapter 3: Audit committees This is disclosed in the Remuneration Report and annual financial statements. The Company s remuneration policy is tabled at the annual general meeting for shareholder approval. 3.1 The board should ensure that the company has an effective and independent audit committee 3.2 Audit committee members should be suitably skilled and experienced independent non-executive directors 3.3 The audit committee should be chaired by an independent non-executive director 3.4 The audit committee should oversee integrated reporting 3.5 The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities 3.6 The audit committee should satisfy itself of the expertise and experience of the company s finance function 3.7 The audit committee should be responsible for overseeing of internal audit 3.8 The audit committee should be an integral component of the risk management process 3.9 The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process 3.10 The audit committee should report to the board and shareholders on how it has discharged its duties Chapter 4: The governance of risk The members of the audit and risk committee are all independent non-executive directors. The members of the audit and risk committee are suitably skilled and experienced independent non-executive directors. The committee is chaired by Mr N Khan, an independent nonexecutive director. The Audit and Risk committee is responsible for considering and making recommendations to the Board relating to the Company s integrated report. The audit and risk committee monitors the relationship between the external assurance providers and the entity. The committee performs a yearly review of the finance function and confirms the competency of the Financial Director and Chief Financial Officer The audit committee is responsible for overseeing the internal audit. This forms part of the committee s terms of reference. The audit and risk committee charter sets out the responsibilities towards risk management. This forms part of the committee s terms of reference. The committee recommends the external audits appointment for approval by the shareholders. The committee defines a policy for non-audit services provided by the external auditors. The committee is informed of all and any reportable irregularities identified and reported by the external auditor. The audit and risk committee provides feedback to the Board at each Board meeting. Reporting to shareholders is provided though the audit and risk committee report contained in the Integrated Report. 4.1 The board should be responsible for the governance of risk The audit and risk committee is a board committee and the terms of reference are approved by the Board. 4.2 The board should determine the levels of risk tolerance The Board formalises and approves the risk appetite and risk tolerances on at least an annual basis. 4.3 The risk committee or audit committee should assist the board in carrying out its responsibilities 4.4 The board should delegate to management the responsibility to design, implement and monitor the risk management plan 4.5 The board should ensure that risk assessments are performed on a continual basis. The audit and risk committee assists the Board in its responsibility for the governance of risk. The Board has delegated to management the responsibility to design, implement and monitor the risk management plan. Risk assessments are conducted at least annually.

4 4.6 The board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks. 4.7 The board should ensure that management considers and implements appropriate risk responses 4.8 The board should ensure continual risk monitoring by management 4.9 The board should receive assurance regarding the effectiveness of the risk management process 4.10 The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders The key issues control log are presented to both the audit and risk committee and the Board. Priority risk items are identified and reported to the Board through the audit and risk committee. The audit and risk committee reports to the Board and includes a review, where required, of the risk monitored by management. The audit and risk committee provides the required assurance with regard to the risk management process to the Board. An audit and risk committee report is included in the Integrated Report. Chapter 5: The Governance of information technology (IT) 5.1 The board should be responsible for information technology governance 5.2 IT should be aligned with the performance and sustainability objectives of the company 5.3 The board should delegate to management the responsibility for the implementation of an IT governance framework 5.4 The board should monitor and evaluate significant IT investments and expenditure 5.5 IT should form an integral part of the company s risk management. 5.6 The board should ensure that information assets are 5.7 A risk committee should assist the board in carrying out its IT responsibilities Chapter 6: compliance with laws, rules, codes and standards The Board and executive management are well informed about the role of IT and its impact on the company, taking into account the limited technology needs of an investment holding company. Any IT related issues are addressed at the audit and risk committee and if required is escalated to the Board. The Board is satisfied that IT is properly managed and that it is aligned with the objectives of the company. Responsibility for managing the IT governance framework is delegated to management. The audit and risk committee considers and monitors the progress on any IT related projects. The Board ensures that the company complies with IT laws and related rules. Systems are in place to manage information security. The audit and risk committee ensures that IT risks are adequately addressed. 6.1 The board should ensure that the company complies with applicable laws and considers adherence to nonbinding rules, codes and standards 6.2 The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business 6.3 Compliance risk should form an integral part of the company s risk management process 6.4 The board should delegate to management the implementation of an effective compliance framework and processes The company complies with all applicable laws to the best of its knowledge. A compliance and governance report is included for review in each board meeting pack. Directors familiarise themselves with the general content of changes to applicable laws, codes, rules and standards to discharge their duties. Directors are also kept up to date through regular briefings included in board packs. A compliance function exists within the company. A compliance policy exists within the company. The board does receive some measure of assurance on the effectiveness of the controls around compliance.

5 Chapter 7: Internal audit 7.1 The board should ensure that there is an effective risk based internal audit 7.2 Internal audit should follow a risk based approach to its plan 7.3 Internal audit should provide a written assessment of the effectiveness of the company s systems of internal control and risk management 7.4 The audit committee should be responsible for overseeing internal audit 7.5 Internal audit should be strategically positioned to achieve its objectives Chapter 8: Governing stakeholder relationships An independent and effective risk based internal audit function exits. Internal audit follows a risk based approach. Internal audit provides a written assessment of the effectiveness of the company s system of internal control and risk management. This forms part of the audit and risk committee s mandate. The internal audit function is independent and objective. 8.1 The board should appreciate that stakeholders perceptions affect a company s reputation 8.2 The board should delegate to management to proactively deal with stakeholder relationships 8.3 The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company 8.4 Companies should ensure the equitable treatment of shareholders 8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence 8.6 The board should ensure disputes are resolved as effectively, efficiently and expeditiously as possible Chapter 9: Integrated reporting and disclosure In terms of the Board charter, the Board is inter alia, responsible for the handling of all aspects that may impact on the Company s reputation. The Board is aware that effective communication with shareholders is critical in maintaining the Company s corporate reputation. This is achieved through various instances, like the Company s Annual General Meeting and analyst presentations, inter alia. The Company does consider the legitimate interests and expectations of stakeholders in its decision making. Shareholders are treated equally through the distribution of information and the accessibility of this information on SENS, the Company s website and print media where required. The Company provides complete, timely and accessible information to its stakeholders. Communication with stakeholders is clear and understandable. The Board has not instituted a formal dispute resolution process as it believes that the existing processes within the Group operate satisfactorily and do not require a more formal and separate mechanism. In addition shareholders do have remedies in terms of the Companies Act. 9.1 The board should ensure the integrity of the company s integrated report 9.2 Sustainability reporting and disclosure should be integrated with the company s financial reporting 9.3 Sustainability reporting and disclosure should be independently assured Controls are in place to ensure relevant, reliable and accurate reporting. The Social and Ethics committee is responsible to review and recommend for approval the annual sustainability content included in the Integrated Report. The audit and risk committee and reviews the entire Integrated Report and makes recommendation to the Board. The integrated report covers both financial and non-financial performance indicators. The Board accepts its responsibility to stakeholders to present information that is relevant, accurate and reliable. The sustainability report is not audited but verification of certain key sustainability metrics are obtained through agreed upon procedures performed by Deloitte & Touche.