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, and is supported by its committee structures, 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. At the same time the Board encourages entrepreneurship and innovation, which are recognised as key drivers of Group performance. At the operations, 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 board each year. Subsidiary boards comprise executive and non-executive directors, some of whom are executive and non-executive directors of Blue Label.
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. As at 18 August 2015 five are independent non-executive directors, while one is non-executive and four Executive Directors. A biography of each Director appears on pages 20 and 21 of the integrated annual report.
The Board has a 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 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 facilitates appropriate communication with shareholders and enables 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 with the Joint Chief Executives who regularly report to the Board on the Group’s progress in delivering its objectives and strategy.
The Group’s 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 the Group’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 Executive Officers, identifying key risk areas and key performance indicators of the Group’s businesses, monitoring the performance of the Group against agreed objectives, deciding on significant financial matters and reviewing the performance of the Executive Directors 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 ad hoc Board meetings are convened as circumstances require.
The Board has unrestricted access to all Group information, records, documents and resources to enable it to discharge its responsibilities in a proper manner. The Executive Directors are tasked with ensuring that Board members are provided with all relevant information and facts to enable them 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 operational performance monitoring, thus ensuring that the Board’s time and energy is appropriately applied. Between Board meetings, Directors are kept informed of key developments affecting the Group.
Non-Executive Directors have access to management and may meet 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 Companies 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 as well as 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 informed 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 MoI, and all other applicable legislation. 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
One-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 RNC, their names are submitted for re-election at the AGM, accompanied by a short biography set out in the integrated annual report. In this regard Messrs KM Ellerine, GD Harlow and SJ Vilakazi will be retiring at the forthcoming AGM and, being eligible, have made themselves available for re-election. A brief biography of each Director appears on pages 20 and 21.
The RNC 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 new Board appointments, which are subject to approval by shareholders at the first AGM following that Director’s appointment. Prior to appointment, candidates are required to complete a fit and proper test, as per the JSE Listings Requirements.
Induction of a new Director is tailored according to 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 of governance, regulatory and operational developments.
The Board Charter provides for assessing of the Board and its Committees every other year. The next assessment is due in 2016.
Company Secretary
The Company Secretary’s roles and responsibilities are set out in the Act, which stipulates 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 Group’s operational companies and therefore maintains an arm’s-length relationship with the Group and its Directors.
Duties include ensuring that the 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, such as SENS announcements, to the securities 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 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, their members and principal functions are set out below:
| Committee | Members and attendees | Principal activities | ||||
Executive (weekly) |
MS Levy (C) |
|
||||
Audit, Risk and
Compliance |
JS Mthimunye (C) |
More information on the activities and responsibilities of the Committee is included on page 65. The report of the Committee is on pages 65 to 68. |
||||
Remuneration
and
Nomination |
GD Harlow (C of RC) |
The report of the Committee is on pages 60 to 64. |
||||
Social, Ethics
and |
SJ Vilakazi (C) |
The report of the Committee is on page 69. |
||||
Investment |
GD Harlow (C) |
|
||||
C – Chairman.
* Attendee.
| Board | Special Board |
Audit, Risk and Compliance |
Remuneration and Nomination |
Social, Ethics and Transformation |
Investment | |
| Total number of meetings held for the year | 4 | 3 | 4 | 2 | 2 | 3 |
| Actual attendance/possible maximum of meetings | ||||||
| LM Nestadt | 4/4 | 3/3 | – | 2/2 | – | – |
| KM Ellerine | 4/4 | 3/3 | – | – | 1/2 | 3/3 |
| GD Harlow | 4/4 | 3/3 | 4/4 | 2/2 | 2/2 | 3/3 |
| BM Levy | 4/4 | 1/3 | 4/4* | 1/2* | 1/2 | 1/3 |
| MS Levy | 4/4 | 2/3 | 3/4* | 2/2* | – | 3/3 |
| NN Lazarus SC~ | 3/3 | 2/2 | 3/3* | 1/1 | 0/1 | 1/1 |
| JS Mthimunye | 3/4 | 3/3 | 4/4 | 1/1# | – | 3/3 |
| MV Pamensky | 4/4 | 2/3 | – | – | – | 3/3 |
| SJ Vilakazi | 3/4 | 3/3 | 3/4 | – | 1/2 | – |
| DA Suntup | 4/4 | 3/3 | 4/4* | 2/2* | 1/1^ | 3/3 |
| DR Hilewitz | – | – | – | – | – | 3/3 |
* Attendee.
~ Resigned January 2015.
# Appointed February 2015.
^ Alternate to BM Levy.