MAZOR GROUP LIMITED CORPORATE GOVERNANCE COMPLIANCE KING III REGISTER Mazor Group Limited has in its Integrated Report for 2015 disclosed its level of compliance with the King Code of Corporate Governance as required by the JSE Listings Requirements. The following table discloses the status of the Group s compliance with King III and reasons for non-compliance, if applicable. KING PRINCIPLE No 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 managed effectively Board 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 managed effectively Applied or explained Notes The Board operates within the powers conferred on it in the Memorandum of Incorporation and Board Charter. The Board reviews the Board Charter on an annual basis. The Board acknowledges that it has a responsibility for determining policy and strategic direction on corporate responsibility issues. The Integrated annual report outlines the Group s performance in this regard. The Social and Ethics Committee is furthermore mandated to deal with the detail of matters of sustainability at its meetings The composition of the Board ensures the necessary skills and experience to objectively judge matters of a strategic nature and to guide and lead the company in its business effectively, and ethically. Ethical matters are considered by the Social and Ethics Committee and at Board level. The Board is responsible for ensuring that the Company adheres to sound corporate governance principles and operates in accordance with a detailed charter. The Board reviews the strategy, risk, performance and sustainability on an annual basis. Refer to point 1.1 above. Refer to point 1.2 above. Refer to point 1.3 above.
2.6 The board should ensure that it 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 (IT) governance 2.9 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards 2.10 The board should ensure that there is an effective risk-based 2.11 The board should appreciate that stakeholders perceptions affect a company s reputation 2.12 The board and its directors should act in the best interests of the company 2.13 The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act 2.14 The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board 2.15 The board should appoint the chief executive officer and establish a framework for the delegation of authority X The Audit and Risk Committee comprises three independent nonexecutive directors, one of them being the Chairman of the Board. This fact is disclosed as a non-compliance with the principles of King 3 in its Integrated Annual Report. The Board is responsible for the governance of risk which is delegated to the Audit and Risk Committee without abdicating the Board s responsibility. The Board is responsible for the governance of IT which is delegated to the Audit and Risk Committee without abdicating responsibility. The Board is responsible for ensuring that the Company adheres to sound corporate governance principles, laws and regulations, codes and standards. The Audit and Risk Committee and The Social and Ethics Committee assist the Board to monitor such compliance. The Internal Audit Function of the Group has been outsourced to Grant Thornton who report to the Audit and Risk Committee and the Group CFO. Stakeholder relationships are an important aspect of the Company s responsibilities and the Board ensures disputes are resolved timeously and effectively, should disputes with stakeholders arise. See 1.1 above. The Audit and Risk Committee reviews the financial information in detail and recommends any special action to the Board if deemed necessary. In this regard, the Group s solvency and liquidity and going concern status are reviewed on a regular basis. The position of the chairman is held by an independent non-executive director. The CEO of the company is not the chairman. The CEO is appointed by the Board and his roles and responsibilities are set out in the Board Charter.
2.16 The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent 2.17 Directors should be appointed through a formal process 2.18 The induction and on-going training and development of directors should be conducted through formal processes 2.19 The board should be assisted by a competent, suitably qualified and experienced company secretary 2.20 The board should report on the effectiveness of the company s system of internal controls 2.21 The board should ensure the integrity of the company s integrated report X The Board comprises a majority of nonexecutive directors. The majority of non-executive directors are independent. The directors are appointed through a formal process defined by the Board Charter, with the assistance of the Remuneration and Nominations committee. The Company does not have a formal induction and training and development programme for directors, but the directors are provided with regular updates on governance and regulations by the Company Secretary and external advisors. All directors have access to key management members for information on the Group s operations. The Board selects and appoints the Company Secretary and is satisfied that the Company Secretary possesses the requisite knowledge and experience to carry out the duties of a company secretary of a public company and in the performance of his duties as company secretary, is able to maintain an arms-length relationship with other members of the Board to effectively perform the role as gatekeeper of good governance. The Board fulfils its responsibilities relating to the safeguarding of assets, operation of adequate systems and control processes and the preparation of accurate financial reporting and statements in compliance with all statutory requirements, accounting standards and the requirements of the King Code with the assistance of the Audit and Risk Committee. The Board is responsible for integrated financial reporting including the integrity of the report.
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 2.26 Companies should disclose the remuneration of each individual director and prescribed officer 2.27 Shareholders should approve the company s remuneration policy X A self-evaluation of the performance of the Board and its committees are performed, but not necessarily performed on annual basis. The Board is responsible for the proper management and ultimate control of the Company and for monitoring performance, risk areas and performance indicators of the business. The Board has delegated certain functions to sub-committees. Each subsidiary company operates with a separate board of directors but the main board and its committees oversee all significant aspects and transactions of subsidiaries. The Remuneration and Nominations Committee advises the Board on the structure and development of the Company s policy on executive directors remuneration including advising on policy regarding and recommending non-executive directors remuneration. The Company s remuneration of each individual director and prescribed officer is disclosed in the Integrated Annual Report. The remuneration policy is endorsed by shareholders annually. Audit committees 3.1 The board should ensure that the company has an effective and independent audit committee 3.2 The audit committee members should be suitably skilled and experienced independent nonexecutive directors 3.3 The audit committee should be chaired by an independent nonexecutive 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 co-ordinated approach to all assurance activities 3.6 The audit committee should satisfy itself of the expertise, resources and experience of the company s finance function 3.7 The audit committee should be responsible for overseeing of Refer to point 2.6 above. The members of the committee are financially literate and possess the required level of skill and experience. The Committee is chaired by an independent non-executive director. The preparation of the Integrated Annual Report is overseen by the committee. The external auditor reports to the committee which reviews the external audit findings. The Committee monitors the independence of the external auditor and is of the view that the external auditor is independent of the Company. The Committee has reviewed, assessed, evaluated and satisfied itself of the appropriateness of the expertise and experience of the Financial Director.
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 The governance of risk 4.1 The board should be responsible for the governance of risk 4.2 The board should determine the levels of risk tolerance 4.3 The Audit and Risk Committee should assist the board in carrying out its risk 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 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 The committee monitors and reports to the Board on the risks faced by the Company. The Committee recommends the appointment of the external auditor to the Board and shareholders of the Company annually. The Committee meets quarterly prior to the quarterly Board meetings and to shareholders at the AGM on the discharge of its duties. Refer to point 2.7 above. Risks are reviewed and considered by the Board on a regular basis as part of the normal management processes of the business. The Audit and Risk Committee assists the Board in carrying out certain responsibilities, including review of ongoing effectiveness of the internal financial and operating controls and frameworks on behalf of the Board. Design, implementation and monitoring of the risk management plan are performed by the executive members of the Board, with the assistance of the Audit and Risk Committee. The risk assessment process identifies risks and this process is performed on a regular basis. Refer to point 4.5 above. Refer to point 4.5 and 4.6 above. Refer to point 4.5 and 4.6 above.
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 governance of information technology 5.1 The board should be responsible for information technology (IT) 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 managed effectively 5.7 The Audit and Risk committee should assist the board in carrying out its IT responsibilities Compliance with laws, rules, codes and standards 6.1 The board should ensure that the company complies with applicable laws and considers adherence to non-binding 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 Refer to point 4.5 and 4.6 above. The Board is committed to timeously and effectively communicating to shareholders. Communication with shareholders is based on the principles of timely, balanced, complete, clear and transparent information. All matters are communicated in a transparent fashion. The Board is responsible for ensuring disputes are resolved timeously and effectively, should disputes with shareholders arise. Refer to point 2.8 above. The Board has aligned IT with the performance and sustainability objectives of the Company. X There is currently no formal IT governance framework in place, notwithstanding that management do inform the Audit and Risk Committee and the Board of significant IT related issues. The Board monitors and evaluates significant IT investments and expenditures. IT does form an integral part of the company s risk management. The management of IT assets is managed through the Company s risk management process. The Audit and Risk Committee monitors IT risks and reports to the Board on the risks faced by the Company. Refer to point 2.9 above. Refer to point 2.18 above. Compliance risk forms part of the Company s risk management process. Refer to point 4.4 above. Performed by the executive directors.
Internal audit 7.1 The board should ensure that there is an effective risk-based 7.2 Internal audit should follow a riskbased approach to its plan 7.3 Internal audit should provide a written assessment of the effectiveness of the company s system of internal controls and risk management 7.4 The audit committees should be responsible for overseeing 7.5 Internal audit should be strategically positioned to achieve its objectives Governing stakeholder relationships 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 that disputes are resolved as effectively, efficiently and expeditiously as possible Integrated reporting and disclosure 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 disclosures should be independently assured Refer to point 2.11 above. Refer to point 4.4 above. Performed by the executive directors. The Company recognises material stakeholders which whom it engages on relevant issues. All holders of the same class of shares are treated equitably. Refer to point 4.10 above. Refer to point 4.10 above. Refer to point 2.21 above. Sustainability reporting and disclosure form part of the 2015 Integrated Annual Report. X The Board and Audit and Risk Committee reviews the Integrated Report and complimentary reports. External assurance will be considered if the sustainable report is more developed. This is not considered necessary at this stage due to the nature of the business.