BOARD COMMITTEES AND ATTENDANCE

The Board established and delegated specific roles and responsibilities to Sub-committees. Each Committee’s roles, responsibilities and membership are according to their Board-approved charter. The Directors have delegated specific responsibilities to Committees to assist the Boards of AfroCentric Investment Corporation Limited and the major subsidiary, AfroCentric Health Proprietary Limited (“AHL”), in meeting their oversight responsibilities. The delegation of authority does not absolve the Board and its Directors of their fiduciary duties and responsibilities. The Directors confirm that the Committees have functioned within their charters during the financial year.

The AHL Executive Enterprise Risk Committee and Transformation Committee do not operate at Group level. The Board relies on the Sub-committees of AHL and entrusts them to function and operate as intended while updating the Board as to any material matters.

  AFROCENTRIC INVESTMENT CORPORATION LIMITED    
Role/
classification		 Board
(4 Scheduled)		 Audit and
Risk
Committee
(5)		 Remuneration
Committee
(4)		 Nomination
Committee
(3)
Special (1)		 Social and
Ethics
Committee
(3)		 Investment
Committee
(4)		 ICT
Steering
Committee
(5)		  
Director                
Non-executive Directors                
Dr ATM Mokgokong
Chairperson 		4/4     3/3
1/1		        
MJ Madungandaba
Deputy Chairperson 		4/4   4/4 3/3
1/1		   4/4    
ND Munisi 4/4       2/3      
A Banderker 4/4   3/4 3/3   4/4    
IM Kirk 2/4              
JG Appelgryn** 1/1              
Executive Directors                
A van Buuren
Group Chief Executive Officer 		4/4         4/4    
H Boonzaaier
Group Chief Financial Officer 		4/4              
WH Britz 3/4              
Independent                
Non-executive Directors                
JM Kahn 4/4   4/4 2/3   3/4    
MI Sacks 1/4   2/4     2/4    
LL Dhlamini 4/4 5/5            
NB Bam** 1/1       1/1      
HG Motau* 1/1 1/1            
Y Masithela** 1/1       1/1      
GL Napier** 1/1 1/1     1/1      
SE Mmakau* 2/2 3/5         1/1  
NV Qangule***   3/3            
* Appointments were as follows:
  SE Mmakau was appointed 30 November 2016, HG Motau was appointed 15 May 2017.
** Resignations were as follows:
  NB Bam (1 November 2016), Y Masithela (15 September 2016), GL Napier (1 November 2016) and JG Appelgryn (1 November 2016).
*** NV Qangule was appointed 30 November 2016 and resigned 14 March 2017.

AUDIT AND RISK COMMITTEE

The Audit and Risk Committee is appointed by the Board, and is responsible for directing and overseeing enterprise risk management as well as the statutory obligation.

The main purpose of the Audit and Risk Committee is to assist the Board in ensuring that management has an effective risk management process that identifies and monitors the key risks facing the Group in an integrated and timely manner.

As at the financial year-end, the Audit and Risk Committee comprised three Independent Non-executive Directors, with Executive Directors as standing invitees to the Committee meetings. The Chairperson of the Board is not the Chairperson of the Audit and Risk Committee. The internal and external auditors have unrestricted access to the Chairperson of the Audit and Risk Committee.

Ms Nomfundo Qangule resigned on 14 March 2017, and the Board appointed Ms Grathel Motau to replace her within the period allowed by the Companies Act and JSE Listings Requirements.

The full report of the Audit and Risk Committee is outlined in the 2017 Group Annual Financial Statements.

Five meetings were held in the year under review. Apart from the statutory duties of the Audit and Risk Committee as set out in the Companies Act, provisions of the JSE Listings Requirements and King IV principles, the duties of the Committee incorporated in the charter also include the following:

  • Examine and review the Group Annual Financial Statements and report on interim and final results, the accompanying message to stakeholders and any other announcements on the Group’s results or other financial information to be made public.
  • Oversee cooperation between Internal and External Auditors and serve as a link between the Board and these functions.
  • Oversee the External Audit function.
  • Review and confirm the adequacy of insurance cover.
  • Monitor processes and procedures to deal with and review the disclosure of information to clients.
  • Formulate criteria for the appointment of a Risk Manager and charter for the Risk Management functions.
  • Review the risk management reports regarding the adequacy and overall effectiveness of the Company’s Risk Management function and its implementation by management. Review risk in the widest sense including, but not limited to: technology risk, disaster recovery plan, operational risk, prudential risk, reputational risk, competitive risk, legal risk, compliance and control risk, concentration of risk across a portfolio dimensions as well as asset valuation risk.
  • Approve the internal audit plan and qualifications of the internal auditors.
  • Evaluate the qualifications and independence of the external auditors.
  • Approve external audit fees.
  • Ensure effective internal financial controls are in place.
  • Review the integrity of financial risk control systems and policies.
  • During the year under review, the Committee satisfied itself that the Finance Director possesses the appropriate level of expertise and experience to fulfil his responsibilities as Group Chief Financial Officer to the Board and the Company.
  • The Committee and the Board are satisfied that there is adequate segregation between the External and Internal Audit functions, and that the independence of the internal and external auditors is not in any way impaired or compromised.

REMUNERATION COMMITTEE

The Committee’s mandate is to ensure that remuneration arrangements support the strategic aims of the business and enable the recruitment, motivation and retention of senior executives while complying with regulatory and governance principles. It has oversight regarding new Board appointments. There are five members in the Committee, three of whom are Independent and two Non-executive Directors.

Four meetings were held in the year under review.

The Committee has access to independent surveys and consultants. The Chairperson reports to the main Board on the activities and recommendations made by the Committee. The duties and responsibilities as contained in the charter include the following:

  • Agree and develop the Group’s general policy on executive and senior management and employee remuneration. This general policy will be referred to shareholders in order for such shareholders to pass a non-binding advisory vote on AfroCentric’s annual remuneration policy.
  • Determine the specific remuneration packages for Executive Directors of the Company.
  • Identify the criteria necessary to measure the performance of Executive Directors in discharging their functions and responsibilities.
  • Review at least annually the terms and conditions of Executive Directors’ service agreements, taking into consideration information from comparable companies, where relevant.

NOMINATION COMMITTEE

The Committee is responsible for providing recommendations to the Board on all new Board and Committee appointments. A formal process of reviewing the balance and effectiveness of the Board and its Committees, identifying the skills needed and the individuals to provide such skills in a fair and efficient manner, is required of the Committee to ensure the Board and its Committees remain effective and focused. This includes a regular review of the composition of the Board Committees and includes assisting the Chairperson with the annual evaluation of Board performance.

The Committee is responsible for identifying appropriate Board candidates and evaluating them against the specific disciplines and areas of expertise required.

Three meetings were held in the year under review.

The Chairperson of the Committee is the Chairperson of the Board and reports to the AfroCentric Board on the and recommendations made by the Committee. The duties and responsibilities as contained in the terms of reference include the following:

  • Formulate and adopt a clear, transparent process for the selection, nomination and appointment of Directors to the Board.
  • Provide recommendations to the Board on the appointment of new Executive and Non-executive Directors, including providing recommendations on the composition of the Board and the balance between Executive and Non-executive Directors appointed to the Board.
  • Ensure that succession plans are in place, particularly for the Chairperson and Group CEO positions.
  • Liaise with the Board in relation to the preparation of the Committee’s report to shareholders, as required.

SOCIAL AND ETHICS COMMITTEE

The Social and Ethics Committee is constituted as a statutory committee for purposes as contained in section 72 of the Companies Act. The Committee is governed by the charter and monitors Group performance in terms of defined social and ethics performance indicators that were formulated with reference to Regulation 43(5) of the Companies Act. This is further supported by a detailed work plan that guides the Committee on its mandate and responsibilities.

The Committee comprises one Independent Non-executive Director, two prescribed officers who are Executive Directors at the major subsidiary level. The Chairperson of the Committee submits a report to the Board on its initiatives and mandate.

Three meetings were held in the year under review.

The Committee plays an oversight role on the implementation of Group policies that relate to ethics, whistle-blowing, anticorruption and procurement. Further, it monitors assurance provided by management on implementation of ethical standards and conduct within the Group.

INVESTMENT COMMITTEE

During the year under review, the Investment Committee comprised five members, two Independent Non-executive Directors, two Non-executive Directors and one Executive Director. The constitution of this Committee is under review to align to best practice. The Investment Committee meets at least twice a year, and additional meetings are held when required. During the year under review, the Committee held four meetings. The Committee oversees the approval processes for investments. These are designed to ensure alignment with the Group’s agreed strategies and values. Risks are identified and evaluated, investments are fully optimised to produce the maximum shareholder value within an acceptable risk framework and appropriate risk management strategies are pursued. The duties of the Investment Committee include:

  • considering commitments, acquisitions or disposals by the Group;
  • considering initial investments in the Group;
  • performing such investment-related functions as may be delegated by the Board from time to time;
  • considering the viability of the capital project and/or acquisition and/or disposal and the effect it may have on the Group’s cash flow and balance sheet, and whether it will align with the Group’s overall strategy; and
  • ensuring due diligence procedures are adhered to when acquiring or disposing of assets.

ICT STEERING COMMITTEE

The role of the ICT Steering Committee is as follows:

  • Direct corporate level ICT strategies (Group and Helios IT Solutions) and plans that ensure the cost-effective application and management of ICT systems and resources throughout the organisation.
  • Review current and future technologies including tools, to identify opportunities that may increase the efficiency of ICT and business resources.
  • Monitor and evaluate ICT projects and achievements against the ICT Master Systems Plan (“MSP”) and in accordance with the ICT Strategic Plan.
CONFLICTS OF INTEREST

Directors are required to declare their personal financial interests, and those of related persons, annually, in terms of the Companies Act and the MOI. Declaration of interests is a standing agenda item on all Board and Committees (including those of subsidiary Boards). During the year under review, a policy was developed to address any potential conflicts of interest. Based on these declarations, Directors with material interests in any transactions with the Group during the financial period are disclosed in note 32 of the Group Annual Financial Statements and shareholding as per the Shareholder Analysis of the Group Annual Financial Statements.

DEALINGS IN SECURITIES

Directors and officers are prohibited from dealing directly or indirectly in AfroCentric’s ordinary shares on the basis of unpublished price-sensitive information regarding its business or affairs. Similarly, no Director or officer may trade in shares of the Company during a closed period, as determined by the Board according to JSE Listings Requirements. The Group’s closed periods are between the last day of the reporting period and the publication of the results, and during those periods when the Group trades under a cautionary. The Group Company Secretary regularly disseminates written notice to all Directors and executive management throughout the Group, highlighting the provisions of the Financial Markets Act and JSE Listings Requirements and informing them that dealing in AfroCentric shares during certain restricted periods may not be undertaken. The Board reviews its current share dealing policy and updates the policy to improve processes. This was carried out during the year under review.

During the year under review, there were no compliance concerns in respect of Directors’ dealings. This follows the commitment made to the JSE to strengthen its internal controls and processes relating to trading in AfroCentric’s securities. An information and share dealings policy is in place. Controls are in place and the Board was inducted on the JSE rules in respect of share dealings. Constant updates are provided to the Board via the Company Secretary.

INTERNAL CONTROLS

Organisational policies, procedures, structures and approval frameworks provide direction, accountability and segregation of responsibilities and contain self-monitoring mechanisms. Operational and executive management closely monitor the controls and actions taken to correct weaknesses as they are identified. The Head of Group Finance reports directly to the Group Chief Financial Officer, who is responsible for the overall financial control and reporting.

Standards of disclosure increased significantly and internal governance structures and roles were reviewed and improved, where necessary, to reflect best practices. This occurred at Board and management levels.

INTERNAL AUDIT

AfroCentric Internal Audit is an independent function governed by an internal audit charter which is approved by the Audit and Risk Committee and is reviewed annually. The Internal Audit Charter defines the role, organisational status authority, responsibilities and scope of the Internal Audit Activity (“IAA”). It also includes the principles underlying the realisation of the objectives of the IAA and the translation thereof into operational activities. The General Manager: Internal Audit reports at each Audit and Risk Committee meeting and has a direct reporting line to the Chairperson of the Audit and Risk Committee. The Internal Audit function operates independently of executive management and is not authorised to perform any operational duties in the Group. For administrative purposes, the General Manager: Internal Audit reports to the Group Chief Executive Officer. The internal audit team collectively possesses the knowledge, skills, experience, tenure and other competencies needed to fulfil its mandate in an effective and competent manner. Where specific specialist skills or additional resources are required, these are obtained from third parties.

The vision of Internal Audit is to add value on a proactive, objective and independent basis and assist with the achievement of the Group’s business strategy and objectives while upholding the core values of mutual respect, accountability, empowerment, integrity, innovation, accessibility, commitment, efficiency, proactiveness and professionalism. According to its core values, AfroCentric’s Internal Audit endeavours to comply with the highest professional standards of integrity, sound practice and transparency to build trust and maintain the interests of client schemes and shareholders at the forefront of our corporate agenda.

Internal Audit assists AfroCentric to accomplish its strategic objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes. This is achieved by managing the significant risk exposures and control issues, corporate governance issues and other matters. These detailed reports of specific results and their action plans are available on request from the Audit and Risk Committee. Detailed reports on all audit projects are distributed to executive management. Management action plans to audit findings are communicated in detailed form.

The Institute of Internal Auditors (“IIA”) standards require that an external quality assessment be conducted on the IAA of an entity at least every five years. AfroCentric Internal Audit has been subjected to two independent external quality assessment reviews in 2011 and recently in August 2016. The overall rating as assessed by the IIA was “Generally Conforms” in both years and thus the function is entitled to use the “in accordance with the Standards” statement in their internal audit reports. IAA aims to meet and exceed the IIA Standards and Code of Ethics.

INFORMATION AND SECURITY GOVERNANCE

IT governance is defined in King III as the “effective and efficient management of IT resources to facilitate the achievement of corporate objectives”. It exists to inform and align decision-making for IT strategy, planning, policy and operations to meet business objectives and to ensure that risks are managed appropriately.

The AfroCentric Group applies the principles of King III and is working towards full compliance with King IV in its governance frameworks, as far as it is appropriate, and also incorporates the requirements of Cobit, ISO 27001, ITIL, ISO 38500:2015 and ISAE 3402 in the governance of IT. The Group adopted a formal IT Governance Framework, which aims to provide standardisation of IT practices across the organisation and formalise the good governance requirements stipulated in Chapter 5 of King III. Security and prevention of data loss or leakage, remains a core focus.