Governance/ Governance structures

Governance structures

The Company’s governance framework is defined as “freedom supported by a framework” and the overall intention of this framework is to ensure that there is continual performance improvement by Group businesses while ensuring that at the same time all governance and regulatory obligations are met. There is an ongoing process of confirming that the framework that supports the governance of the Group remains relevant, efficient and clear and aligns the expectations of the Board, management and the general stakeholder community.

The decision-making role of the Board is exercised through the formulation of fundamental policy and strategic goals in conjunction with management, whereas the oversight role concerns the review of management’s decisions, the adequacy of systems and controls and the implementation of policies.

THE BOARD OF DIRECTORS

STRUCTURE AND COMPOSITION OF THE BOARD

AECI has a unitary Board structure led by an Independent Non-executive Chairman, six other Independent Non-executive Directors and two Executive Directors. The Board charter as well as the terms of reference of the Nominations Committee detail the procedures for appointments to the Board.

Such appointments are formal and transparent and a matter for the Board as a whole. Non-executive Directors are appointed on the basis of their skills and expertise appropriate to the strategic direction of the Company.

Diversity, race and gender are also taken into account when appointments are made and the Board, through its Nominations Committee, ensures that it has the right balance of skills, expertise and experience.

ROTATION, TENURE AND SUCCESSION

There is no set retirement age for Non-executive Directors. Non-executive Directors may generally serve for up to nine years, subject to retirement and re-election by rotation as set out in the Company’s MOI. Extensions of this period may be granted, provided the Nominations Committee remains satisfied that the Director’s independence has not been compromised. The independence assessment is conducted on a case-by-case basis and all Board members participate in the review process. One-third of the Executive and Non-executive Directors must retire by rotation at each AGM.

TERMS OF EMPLOYMENT OF DIRECTORS

Executive Directors are employees of the Company and have standard terms and conditions of employment. Their notice periods are six months. They do not receive any special remuneration or other benefits for their additional duties as Directors. The Board, through its Nominations Committee, has had ongoing discussions with the two Executive Directors regarding succession planning for all key roles including the Executive Directors. The Board is satisfied that the potential risk associated with the continuity of leadership at this level has been adequately mitigated.

The Board, on the recommendation of the Remuneration Committee, continues to determine the remuneration of Executive Directors, Executives and other Senior Managers as underpinned by the remuneration philosophy of the Company. None of the Non-executive Directors are Company employees. Non-executive Directors’ remuneration is arrived at after an annual benchmarking exercise performed by the Executive Directors and the approval by shareholders of the proposed fees, on the Board’s recommendation.

DIRECTORS’ MANAGEMENT OF CONFLICT OF INTERESTS

AECI has a Conflict of Interests policy (embedded in the Group’s Code of Ethics and Business Conduct) which provides guidance and procedures for Directors on managing and dealing with potential conflict of interests situations. The same policy applies to all Group employees. The Group Company Secretary is charged with maintaining a comprehensive register of Directors’ declarations of interests and this is submitted for updating by the Directors before each Board meeting.

INDUCTION AND ONGOING DEVELOPMENT OF DIRECTORS

The Company’s Directors have expertise and experience in diverse industries including banking, chemicals, mining, technical, accounting and strategic matters. Upon appointment, all new Directors undergo a Group-specific induction programme which includes one-on-one meetings with Executives, Senior Managers and the Managing Directors of subsidiaries.

On their appointment, all Directors also consider key documentation that is the backbone of the Company’s governance framework (including but not limited to the JSE Listings Requirements, King III and King IV, the MOI and the Code of Ethics and Business Conduct).

With regard to formal training, the Group Company Secretary is charged with sourcing and organising relevant training for Board members, based largely on the specific needs of each Director.

BOARD COMMITTEES AND MEETINGS

COMMITTEE SUMMARISED DUTIES AND RESPONSIBILITIES
Audit Committee
  • monitor the adequacy of financial controls and reporting;
  • review audit plans and adherence to these by assurance providers;
  • ascertain the reliability of the internal and external audit processes;
  • ensure that financial reporting complies with IFRS, the Companies Act and the JSE Listings Requirements; and
  • nominate the external auditor.

Both the internal and external auditors have unrestricted access to the Chairman of the Committee and it is standard operating procedure for them to meet privately with the Committee. The Chief Executive, the Chief Financial Officer and the external and internal auditors attend meetings of the Committee by invitation. The Chairman of the Board has a standing invitation for attendance.

Owing to the size and geographic diversification of AEL, a FRRC for this business assists the Audit Committee in its work relating to this business.

Risk Committee
  • oversee the overall management of risk, operational resilience and business continuity;
  • monitor Company decisions to ensure alignment with the risk appetite;
  • ensure that proper controls and mitigations are in place to prevent risk;
  • oversee IT governance and related risks; and
  • oversee the compliance management processes.

In the reporting period this Committee comprised five Non-executive Directors and all the Executive Committee members, including the two Executive Directors.

Social and Ethics Committee

Monitor the Company’s compliance with section 72(8) of the Companies Act, read together with regulation 43. Focus is on the following:

  • recommendations on corruption of the Organisation for Economic Co-operation;
  • Employment Equity Act, No. 55 of 1998 in South Africa;
  • Broad-based Black Economic Empowerment Act, No. 53 of 2003;
  • labour and employment principles in line with global best practice; and
  • safety, health and environmental issues and performance.
Nominations Committee
  • consider suitable nominations for appointment to the Board and Executive succession planning, and make appropriate recommendations based on qualifications, experience, race and gender;
  • oversee the appointment of Board members to serve on various Committees; and
  • oversee the assessment of the Board and its Committees to ensure continual governance improvement.

This Committee is comprised solely of Non-executive Directors and chaired by the Chairman of the Board.

Remuneration Committee
  • establish the Group’s remuneration philosophy;
  • determine the remuneration framework for Executives and Senior Managers; and
  • consider, review and approve Group policy on Executive remuneration and communicate this and the implementation thereof to stakeholders in the Company’s integrated report.

This Committee is comprised solely of Non-executive Directors.

Executive Committee

The Board has delegated the day-to-day running of the Company to the Chief Executive who works with an Executive Committee to assist him in this task. The Executive Committee is the highest executive decision-making structure in the Group. Central to its role is the formulation and implementation of the Group’s strategy and policy direction, and ensuring that all business activities are aligned in this respect and that the business strategy is implemented accordingly.

Furthermore Board members may collectively or individually, at the expense of the Company, consult external professional advisors on any matter of concern to themselves or the Company after having advised the Chief Executive or the Chairman.