CORPORATE GOVERNANCE REPORT

BOARD AND BOARD SUB-COMMITTEES

BOARD AND BOARD SUB-COMMITTEES

CORPORATE GOVERNANCE OVERVIEW

Our vision of global leadership in sustainable healthcare and our ability to fulfil our stakeholder promises requires the highest standards of corporate governance.

AfroCentric Group is committed to sound and robust corporate governance standards and practices; compliance with legislation, regulation and governance principles; and recognising the correlation between good corporate governance and long-term sustainable performance. AfroCentric’s Board of Directors (“the Board”) adopted an integrated approach to managing the Group to ensure that the governance structure actively identifies, responds to and communicates on those material issues that impact on its ability to create value. Corporate governance is an integral element in improving efficiency, growth and enhancing investor relations.

The Board of Directors is the highest governing authority of the Group, and the Board’s charter articulates its objectives and responsibilities. AfroCentric recognises that strategy, performance, sustainability and risk are inseparable. In all activities, at all levels, the Group is committed to the highest standards of governance, while embedding a culture that values and rewards ethical standards, integrity and mutual respect.

As the stewards of public trust, the Board acts for the good of the organisation, exercising reasonable care in all decision-making without placing the organisation under undue risk. Corporate governance provides the Board with a framework that supports transparency, sustainability, fairness and ethical conduct.

The Board promotes and supports high standards of corporate governance and, in so doing, endorses the principles espoused in the Companies Act, King III, King IV and the JSE Listings Requirements. The Board remains committed to the full implementation of these governance frameworks throughout the Group. All internal controls, policies and procedures governing corporate conduct within the Group are aligned to the spirit and principles of these governance frameworks.

We apply good corporate governance through the following:

  • We improve standards of independence by instilling Directors’ values in line with their fiduciary requirements to ensure effective control as well as an ethical consciousness that drives a culture of integrity and transparent stakeholder communication. The Board believes that this will build trust, strengthen our reputation and ultimately drive value creation.
  • We strengthen our ICT governance to ensure that IT risks are appropriately mitigated. In light of recent security breaches globally, the security of our ICT environment is a priority for the Board.
  • Internal Audit assesses that risk controls in place are working appropriately. External audit ensures legal regulatory compliance and the integrity, accuracy and adequacy of accounting records.
  • Risk assessments on business risks facing our business and the Group are conducted quarterly.

APPLICATION OF AND APPROACH OF THE KING III AND IV PRINCIPLES

As previously reported, the Directors confirmed that the Group, in all material respects, applied the recommendations of King III. The Board was satisfied with the way in which the Group applied the recommendations of King III, and that it had put alternative measures in place where necessary. The Board is also monitoring developments regarding the migration to the broader, bolder governance envisioned in the King IV Report – in particular, the emphasis on being less prescriptive, yet more transparent, through the consolidation of the number of principles and clear disclosures. All JSE-listed companies will be expected to report on the application of King IV principles as from the third quarter of 2017 financial year, thus 1 October 2017. We have already commenced with processes towards full application of King IV principles.

COMPANY SECRETARY

The Board selects and appoints the Group Company Secretary and recognises their pivotal role in good corporate governance. All Directors have access to the advice and services of the Company Secretary. The Board has an established procedure for Directors to obtain independent professional advice at the Group’s cost. The Company Secretary assists Directors, Board Committees and their members in obtaining professional advice.

The Company Secretary provides dedicated support to the Board, in particular the Non-executive Directors, and is a point of reference and support for all Directors. The Company Secretary consults regularly with the Directors to ensure they receive any necessary information. Along with the Board Chairperson, the Company Secretary will regularly review the Board’s and AfroCentric’s governance processes to ensure they are fit for purpose and recommend or develop initiatives to strengthen the governance of AfroCentric.

As stipulated in the JSE Listings Requirements, a detailed assessment was conducted by the Board Chairperson, who is satisfied with the competence, qualifications and experience of the Company Secretary. During the reporting period, Ms Shireen Lutchan resigned as the Group Company Secretary and was replaced with Mr Billy Mokale as an interim Company Secretary until such time that the Board has pronounced on the permanent appointment of a Company Secretary. Ms Shireen Lutchan did not serve as a Director of the Board and the assessment confirmed her arm’s-length relationship.

BOARD OF DIRECTORS

FUNCTIONING OF THE BOARD

The Board of Directors, guided by the mission statement, formulates strategies and policies which focus on optimising value for stakeholders, including consumers, shareholders and the society at large.

The Board exercises leadership and judgement in directing the Group to achieve sustainable growth, and to act in the best interests of the business and its stakeholders. The Board is responsible to shareholders for creating and delivering sustainable shareholder value by managing the Group’s businesses, and, therefore, it determines the strategic objectives and policies of the Group to deliver such long-term value. In providing overall strategic direction, the Board ensures that management strikes an appropriate balance between promoting long-term growth and delivering short-term objectives.

In demonstrating ethical leadership and promoting the Company’s vision, values, purpose, culture and behaviour, Directors act in a way they believe promotes the success of the Company for the benefit of the stakeholders. The charter defines the roles and responsibilities of the Board. The Board adheres to the fiduciary duties and duty of skill and care codified in the Companies Act. This is reflected in the conflicts of interest policy, which also applies to Directors. Declarations of interest are confirmed at each Board and Committee meeting and are recorded in the minutes.

Board meetings

During the year under review, the Board had four scheduled meetings in addition to the Annual General Meeting (“AGM”) and Board strategy session. Non-executive Directors have unfettered access to Senior Executives in seeking explanation and clarification on matters prior to or following a Board meeting. This facilitates the Board’s discussions and assists in reaching prompt and informed decisions.

Operational responsibility for the Group’s subsidiary companies has been delegated to the individual Boards, which are accountable to the main Board for the ongoing management of the businesses. Operational reports are presented to the Board, prompting interactive engagements at meetings.

BOARD COMPOSITION

AfroCentric has a unitary Board structure with three Executive Directors, five Non-executive Directors and five Independent Non-executive Directors.

The following changes were made to the Board:

  • Ms Yasmin Masithela resigned as an Independent Non-executive Director, Chairperson of the Audit and Risk Committee and member of the Social and Ethics Committee, effective 15 September 2016.
  • Mr Joe Appelgryn was not re-elected as a Non-executive Director at the AGM on 1 November 2016, and, therefore, no longer serves on the Board as a Director.
  • Mr Garth Napier resigned as an Independent Non-executive Director, Chairperson of the Social and Ethics Committee and member of the Audit and Risk Committee, effective 1 November 2016.
  • Ms Brigalia Bam resigned as an Independent Non-executive Director and member of the Social and Ethics Committee, effective 1 November 2016.
  • Ms Nomfundo Qangule was appointed as an Independent Non-executive Director and a member of the Audit and Risk Committee, effective 30 November 2016. Ms Nomfundo Qangule resigned from both these positions, effective 14 March 2017.
  • Mr Sello Mmakau was appointed as an Independent Non-executive Director, a member of the Audit and Risk Committee and a member of the ICT Steering Committee, effective 30 November 2016. This will be included for shareholder approval at the upcoming AGM on 8 November 2017.
  • Ms Grathel Motau was appointed as a Non-executive Director and a member of the Audit and Risk Committee effective 15 May 2017 to replace Ms Nomfundo Qangule. This will be included for shareholder approval at the upcoming AGM on 8 November 2017.

The Non-executive Directors bring with them the experience, knowledge and practices followed in other companies, giving AfroCentric the best practices in the industry. The Board induction is a process to onboard new Directors in line with the Companies Act and King III. The induction is carried out by the Company Secretary and exposes the new Directors to many facets of the Group, equipping Board members to be effective and fulfil their fiduciary duties. Director training and development is an ongoing exercise that requires their participation in various programmes designed to strengthen the shortfalls observed in the Board evaluation process. A development plan is being carried out by the Company Secretary wherein Directors are provided with necessary training identified in the induction process.

The roles of the Board Chairperson, Dr Anna Mokgokong, and the Group CEO, Mr Antoine van Buuren, are separate and clearly defined. The Board charter details the division of responsibilities between the Chairperson and the Group CEO. This helps to ensure a balance of power and authority and to guarantee that no Director has unfettered powers. As the Board Chairperson is not classified as independent, the Board has an appointed Lead Independent Non-executive Director, Mr Meyer Kahn. The Lead Independent Director serves as a liaison among Board members to ensure open and transparent Board relations.

The Non-executive Directors do not have a service contract, and all remuneration paid to Non-executive Directors for services as Directors is in terms of approval by the shareholders at the AGM.

The table illustrates the Directors’ attendance at meetings for the year ended 30 June 2017.

APPOINTMENT AND RETIREMENT OF DIRECTORS

One-third of the Directors is required to retire by rotation at the AGM of shareholders and may offer themselves for re-election. Being eligible for re-election, Directors offer themselves for reappointment by the Board. Directors appointed during the year are required to have their appointments ratified at the following AGM.

Mr Sello Mmakau and Ms Grathel Motau were appointed as Independent Non-executive Directors, effective 30 November 2016 and 15 May 2017 respectively. These appointments went through a formal process via the Nomination Committee and the Board. SENS announcements dated 29 November 2016 and 16 May 2017 were released notifying shareholders of these appointments. In line with AfroCentric’s Memorandum of Incorporation (“MOI”), any Board appointments made during a year under review must be confirmed by shareholders at the next AGM of shareholders, following such an appointment. Accordingly, Mr Sello Mmakau and Ms Grathel Motau shall be included in the notice.

Executive Directors have no fixed term of appointment and retire in line with AfroCentric’s internal employment policies.

BOARD EVALUATION AND PERFORMANCE

Board, Committee and individual Director evaluations are undertaken annually, as recommended by King III. The Board evaluation includes an evaluation of the Board, of each Board Sub-committee, of the Chairperson and each Director to review their ability to add value to the Board. This is performed through self-assessments and peer review processes. In addition, the Group Remuneration Committee facilitates the evaluation of executive management.

The performance review of the Board indicated sound corporate governance and positive collaboration with executive management. The Board is informed and attentive to key issues. It continues ensuring that the profile, skills set, diversification, qualifications and individual qualities of its Executive and Non-executive Directors serve the current and future needs of the business and the dynamic environment in which it operates.

DIRECTORS’ REMUNERATION

Non-executive Directors do not have a service contract, and all remuneration paid to Non-executive Directors for services as Directors is in terms of approval by the shareholders at the AGM.

They receive a fee for membership of the Board and of Sub- committees on which they serve. The fee structure is based on a retainer structure and is determined by the Group Remuneration Committee.

The remuneration of Executive Directors is determined by the Group Remuneration Committee according to AfroCentric’s policy.

Further information on Directors’ remuneration appears here and in the Group Annual Financial Statements.