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GOVERNANCE FRAMEWORK

The Board regards governance as a fundamental essential for the success of the Group’s business. It is committed to applying the principles of good governance in directing and managing the Group in order to achieve its strategic objectives. The Board is the focal point for, and custodian of, the Group’s governance framework, supported by its committee structures, relationship with management, shareholders and other stakeholders of the Company. The Board is ultimately accountable for the performance and affairs of the Company.

The governance framework facilitates a balance between the Board’s role of providing direction and oversight with accountability to support acceptable risk parameters, consistent compliance with regulations, standards and codes relevant to the Group, while encouraging entrepreneurial and innovative spirit, which are key drivers of Group performance. In the operating subsidiaries, governance processes are aligned with the governance framework established by Blue Label. Each subsidiary Company has its own Board of directors and its strategy, business plan and performance criteria are clearly defined. The strategy and business plan of each subsidiary are presented to the Blue Label Board by the subsidiary’s management each year. Subsidiary boards comprise executive and non-executive directors, some of whom are executive and non-executive directors of Blue Label.

GOVERNANCE FRAMEWORK

APPLICATION OF KING III

Blue Label is committed to King III and continues to develop its governance policies, practices and procedures, in line with an integrated governance, risk and compliance framework. The Board is responsible for ensuring the principles contained in King III are applied. The JSE Listings Requirements further stipulate compulsory adherence to certain specific requirements of King III. A summarised table of Blue Label’s application of King III is available on the Company’s website at www.bluelabeltelecoms.co.za.

BOARD OF DIRECTORS

Board composition

Blue Label has a unitary Board structure, comprising 10 directors. Four are independent non-executive directors, while two are non-executive and four are executive directors. A short curriculum vitae of each of the directors appear on pages 21 to 25 of the integrated annual report.

The Board has an appropriate balance of independent directors and non-executive directors. In line with King III, the roles of the Chairman and the Chief Executives are separate. The Board is led by Larry Nestadt, an Independent Non-Executive Chairman. The Joint Chief Executives are Brett Levy and Mark Levy.

The Chairman’s role includes setting the ethical tone for the Board and in ensuring that the Board remains efficient, focused and operates as a unit. The Chairman provides overall leadership to the Board, without limiting the principle of collective responsibility for Board decisions. He also ensures appropriate communication with shareholders and facilitates constructive relations between the executive and non-executive directors.

The Joint Chief Executives’ principal role is to provide leadership to the executive team in running the Group’s businesses. The Board defines the Group’s levels of authority, reserving specific powers for the Board, while delegating others to senior management. The collective responsibility of management vests in the Joint Chief Executives who regularly reports to the Board on the Group’s objectives and strategy.

The Group Financial Director is Dean Suntup. The Audit, Risk and Compliance Committee is satisfied that he has the appropriate expertise and experience for this position.

The role of the Board and Board procedures

The Board directs the Group towards and facilitates the achievement of Blue Label’s strategy and operational objectives. It is accountable for the development and execution of the Group’s strategy, operating performance and financial results. Its primary responsibilities include: determining the Group’s purpose and values, providing strategic direction to the Group, appointing the Joint Chief Executives, identifying key risk areas, key performance indicators of Blue Label’s businesses, monitoring the performance of the Group against agreed objectives, deciding on significant financial matters and reviewing the performance of executive management against defined objectives. A range of non-financial information is also provided to the Board to enable it to consider qualitative performance factors that involve broader stakeholder interests.

The Board, which meets at least quarterly, retains full and effective control over all the operations. Additional Board meetings, apart from those planned, are convened as circumstances dictate.

The Board has unrestricted access to all Group information, records, documents and resources to enable it to properly discharge its responsibilities. Management is tasked with ensuring that Board members are provided with all relevant information and facts to enable the Board to reach objective and informed decisions.

Board meetings are scheduled well in advance and Board documentation is provided timeously. The Board agenda and meeting structure assist the Board in focusing on corporate governance, its legal and fiduciary duties, Group strategy and performance monitoring, thus ensuring that the Board’s time and energy is appropriately applied. Directors are kept informed of key developments affecting the Group between Board meetings. Non-executive directors have access to management and may meet separately with management without the attendance of executive directors.

The Board acts in the best interests of the Group by ensuring that individual directors:

	adhere to the legal standards of conduct set out in the Act;
	are permitted to take independent professional advice in connection with discharging their duties following an agreed procedure;
	disclose real and perceived conflicts to the Board annually and prior to each Board meeting; and
	deal in securities only in accordance with the Dealings in Securities Policy adopted by the Board.

The Board is kept appraised of the Group’s going-concern status and monitors the solvency and liquidity of the Company and Group on a regular basis.

Board Charter

The Board has adopted a written charter to assist it in conducting its business in accordance with the principles of good corporate governance and legislation.

The purpose of the Board Charter is to ensure that each director is aware of the powers, duties and responsibilities when acting on behalf of the Company. The Board Charter is subject to the provisions of the Act, JSE Listings Requirements, the Company’s Memorandum of Incorporation, and all other applicable legislation. The salient features of the Board Charter are:

	role and function of the Board;
	detailed responsibilities;
	discharge of duties;
	Board composition; and
	establishment of committees.

Board appointments

A third of the directors retire by rotation every three years in terms of the MOI. If eligible, available and recommended for re-election by the Remuneration and Nomination Committee, their names are submitted for re-election at the Annual General Meeting, accompanied by a short curriculum vitae set out in the integrated annual report. Shareholders approve the initial appointment of each new director at the first annual general meeting of shareholders following that director’s appointment. In this regard Messrs, BM Levy, MS Levy and MV Pamensky will be retiring at the forthcoming Annual General Meeting and, being eligible, have made themselves available for re-election. A brief curriculum vitae of each director appears on pages 21 and 22.

The Remuneration and Nomination Committee assists the Board with the assessment, recruitment and nomination of new directors, subject to the whole Board approving these appointments. Board members are also invited to interview potential appointees.

A formal and transparent procedure applies to all Board appointments, which are subject to confirmation by the shareholders at the Annual General Meeting. Prior to appointment, potential Board appointees are subject to a fit and proper test, as per the JSE Listings Requirements.

Induction of a new director is tailored based on the knowledge and experience of the director in a listed environment. Focus is placed on providing information on the Board structure, business operations and Group strategy. Ongoing training and development of directors involve ad hoc presentations to the Board by professional advisers and senior management to ensure the Board is kept abreast with governance, regulatory and operational developments.

During the year the Board and its committees assessed its performance and effectiveness according to the following categories:

	effectiveness and composition
	dynamics
	risk management
	succession planning
	ethical leadership
	corporate citizenship

Based on the consolidated feedback from the assessment, the Board is satisfied with the overall performance and effectiveness of the Board, its members and the committees. No major areas of concern were identified.

Company Secretary

The Company Secretary’s roles and responsibilities are set out in the Act. According to the Act the Company Secretary has duties towards the Board, the Group and shareholders.

All directors have full access to all Group information, property and records, and the services and advice of the Group Company Secretary or, where appropriate, to the services of independent professionals and advisers. The Company Secretary is neither a director of the Board nor a director of the Blue Label Group’s operations and therefore maintains an arm’s-length relationship with the Board and its directors.

Board duties include ensuring that the Blue Label Board complies with procedures and regulations of a statutory nature, such as changes in legislation or practices that might affect Board members in their capacity as directors.

All meetings of shareholders, directors and Board committees are properly recorded and distributed.

The Company Secretary also ensures that all Board and committee charters are kept current, and assists in the evaluation of the Board, directors and committees. The Company Secretary offers advice to directors on business ethics and good governance. She also plays a role in ensuring that the Board’s policies and instructions are communicated to relevant persons in the Group and that pertinent issues from management are referred back to the Board where appropriate.

The performance appraisal of the Company Secretary for the year under review took into account the quality of support received and guidance provided to the Board. All parties were satisfied with the quality of support received as well as the competency and experience of the Company Secretary.

The Company Secretary is responsible for complying with the JSE Listings Requirements. This includes the preparation and submission of all relevant communication, including SENS announcements, to the stock exchange.

Board committees

The Board has delegated certain functions to well-structured committees without abdicating its own responsibilities. Board committees operate under written terms of reference approved by the Board. Board committees are free to take independent professional advice as and when deemed necessary, for which a formal policy is in place. The Group Company Secretary provides secretarial services for the committees.

There is transparency and full disclosure from Board committees to the Board. The minutes of committees are submitted to the Board for noting and discussion. In addition, directors have full access to all Board committee documentation and committee chairpersons provide the Board with verbal reports on recent committees activities.

The Board is of the opinion that all Board committees have effectively discharged their responsibilities, as contained in their respective terms of reference.

The committees, its members and principal functions are set out below:

Committee		Members and attendees		Principal activities
Executive (weekly)		MS Levy (C) EC de Villiers* BM Levy MV Pamensky DA Suntup		Implement strategies and policies of the Group Manage the business of the Group Senior Management appointments and performance management Prioritise the allocation of capital, technical and human resources Review and approve acquisitions, disposals and investments of up to R40 million per transaction.
Audit, Risk and Compliance (quarterly)		JS Mthimunye (C) EC de Villiers* GD Harlow NN Lazarus SC* BM Levy* MS Levy* DA Suntup* SJ Vilakazi		More information on the activities and responsibilities of the committee is included on pages 67 to 70.
Remuneration and Nomination (bi-annually)		NN Lazarus SC (C of RC) LM Nestadt (C of NC) EC de Villiers* GD Harlow BM Levy* MS Levy* DA Suntup*		Determine and agree with the Board, the framework or broad policy for the remuneration of the executive directors, non-executive directors and any other members of executive management or as it is designated to consider Review, for recommendation to the Board, the design of and targets for the Group’s forfeitable share plan Determine annually whether awards are to be made under the forfeitable share plan and the overall individual amounts of such awards Recommend to the Board the remuneration of non-executive directors for approval by shareholders Identify and nominate candidates for the approval of the Board, to fill vacancies as and when they arise Recommend the appointment of new executive and non-executive directors, including recommendations on the composition of the Board and the balance between executive and non-executive directors and any adjustments that are deemed necessary More information on the activities and responsibilities of the RNC is included on pages 62 to 66.
Social, Ethics and Transformation (bi-annually)		SJ Vilakazi (C) MJ Campbell* EC de Villiers* KM Ellerine GD Harlow IJ Hindley* NN Lazarus SC* BM Levy (alternate DA Suntup)		The main function of the Committee is to monitor the Group’s activities and compliance with legislation relating to equality, black economic empowerment, good corporate citizenship, the environment, health, public safety, and consumer and labour relations, as well as to advise the Board of directors, where necessary and appropriate The Group’s ethical business conduct, including any activity on the ethics hotline, is reviewed by the Committee The report of the Committee is on page 71.
Investment (ad hoc, minimum two)		GD Harlow (C) EC de Villiers* KM Ellerine DR Hilewitz (Consultant) NN Lazarus SC BM Levy MS Levy JS Mthimunye MV Pamensky DA Suntup		Review acquisitions, investments and disposals made within the Executive Committee’s mandate Review, consider and approve proposed acquisitions, investments and disposals of the Group recommended by the Executive Committee ranging from between R40 million and R100 million per transaction Recommend to the Board acquisitions and investments of the Group above R100 million Review the performance of each investment and acquisition made.

Attendance at Board and committee meetings