King III summary

SUMMARY OF THE APPLICATION OF KING III PRINCIPLES

It is the responsibility of the Board to ensure the application of the principles contained in the King III Code, without diluting the Group’s focus on sustainable performance. Blue Label’s approach and application of King III is explained in the table below, which also summarises chapter 2 of the principles of King III. The complete register is available on our website.

Chapter and principle     Comments on application

Chapter 2 – Board and Directors

      

The Board should act as the focal point for and custodian of corporate governance

    

The Board Charter sets out the Board’s role, powers and responsibilities both in terms of the latest governance developments as well as the requirements for its composition, meeting procedures and work plan. The Board Charter has been reviewed to ensure alignment to governance requirements.

The Board should appreciate that strategy, risk, performance and sustainability are inseparable

    

The Board is active in forming the strategy of the Group, ensuring appropriate alignment with the purpose and mandate of the Group. The Board appreciates that strategy, risk, performance and sustainability are inseparable.

The Board and its Directors should act in the best interests of the Company

    

The Board Charter requires the Directors to act in the best interest of the Company by ensuring that individual Directors:

  • adhere to the standard of Directors’ conduct as set out in the Companies Act;
  • recognise that his/her primary fiduciary duty is towards the Company as an entity and to exercise such with the best interests of the Company at heart;
  • are permitted to take independent advice necessary to carry out their duties following an agreed procedure;
  • disclose real or perceived conflicts to the Board and deal with them accordingly; and
  • deal in securities only in accordance with the policy adopted by the Board.

The Board should consider business rescue proceedings or other turnaround mechanisms as soon as the Company is financially distressed as defined in the Act

    

No business rescue proceedings were required.

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

    

The Chairman of the Board is an experienced Independent Non-Executive Director elected by the Board. See Chairman’s curriculum vitae on page 20.

The Board should appoint the Chief Executive Officer and establish a framework for the delegation of authority

    

The Board approved the role of Joint Chief Executive Officers and has formalised the role and function of the Joint Chief Executive Officers, including the adoption of a governance guideline and delegation of authority framework. Both guideline and framework were updated in August 2015.

The Board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent

    

Presently, the Board comprises:

  • four Executive Directors;
  • one Non-Executive Director; and
  • five Independent Non-Executive Directors:
    – NN Lazarus SC resigned 27 January 2015.
    – Y Mahomed appointed 18 August 2015.

Directors should be appointed through a formal process

    

The RNC is a Committee of the Board and assists in identifying and selecting suitable members who will meet the Board’s requirements in terms of knowledge, skills and resources. All appointments are made in compliance with the Companies Act, JSE Listings Requirements and the Company’s MoI.

The induction and ongoing training and development of Directors should be conducted through formal processes

    

Induction programmes for new Directors are tailored based on the knowledge and experience of the Director and focus on providing information on the Board structure and the Group’s strategy and operations. Ad hoc presentations are made to the Board by professional advisers and Senior Management to ensure that the Board is up to date with governance, regulatory and operational developments.

The Board should be assisted by a competent, suitably qualified and experienced Company Secretary

    

The role and function of the Company Secretary is in line with the requirements of the Act, governance principles and JSE Listings Requirements.

The evaluation of the Board, its Committees and the individual Directors should be performed every year

    
1. Performance evaluations of the Board and its Committees takes place every other year, as opposed to annually as recommended by King III. The Board is satisfied that evaluations every other year, as opposed to annually, are appropriate for the business;
2. Evaluations regarding the performance of individual Executive Directors take place annually, once during remuneration increase and performance bonus award periods and, as applicable, prior to the AGM regarding the re-election of Directors; and
3. Evaluations regarding the performance of individual Non-Executive Directors takes place annually (in respect of those standing for re-election at the AGM) and every other year for the remainder (as part of the Board and Committee evaluations).

The Board should delegate certain functions to well-structured committees but without abdicating its own responsibilities

    

The Board has appointed the following Committees to assist it in its duties:

  • Investment Committee
  • ARCC
  • RNC
  • Social, Ethics and Transformation Committee
  • Exco

A governance framework should be agreed between the Group and its subsidiary boards

    

The governance framework is applied by subsidiary boards.

Companies should remunerate Directors and executives fairly and responsibly

    

The RNC is in place and assists the Board in ensuring the Group’s remuneration policy attracts, retains and motivates top-quality people in the best interests of the Group.

Companies should disclose the remuneration of each individual Director and prescribed officer

    

The disclosure of Directors’ remuneration meets the requirements of the Act and this governance principle. No additional prescribed officers identified for the current year.

Shareholders should approve the Company’s remuneration policy

    

Approved at the AGM on 28 November 2014.