| The board is committed to an open and disciplined governance process
based on integrity, transparency, independence and accountability.
The board recognises that governance is a developing discipline to
be followed for the good of shareholders and stakeholders. During
the year under review, the board believes that it complied in all material
respects with the Code of Corporate Practices and Conduct as set
out in the King Report 2002 (King II), except as noted below. Board of directors King II recommends that the board comprise a balance of executive and non-executive directors, preferably comprising a majority of non-executive directors. For the duration of the year the board comprised three executive directors and five non-executive directors. The non-executive directors are independent of management and promote the interest of stakeholders. Three of the non-executive directors are independent in terms of the King II classification. Whilst Ethan Dube and Khosi Sibisi are representatives of the BEE consortium that acquired an ownership interest in Peregrine Holdings Ltd, they are independent in terms of all other criteria as detailed in King II. Following the year under review, the following board changes were implemented and announced on SENS on 1 April 2009: |
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| Per the recommendations of King II, the chairperson of the board
should be an independent, non-executive director. Although, for the
duration of the year, the chairman was an executive director, the non-executive
directors provided the necessary objectivity for the board’s
effective functioning and carried sufficient weight in the board’s deliberations
and resolutions. Following on the appointment of Leonard
Harris as chairman with effect from 1 April 2009, the board complies
with the King II recommendations. The board composition reflects
people with different skills, knowledge and experience all of whom
are cognisant of the duty to ensure that the group maintains a high
standard of corporate governance. The roles of the chairman and CEO
are separated. Background information on the directors appears in
Board of director's and Notice of annual general meeting. The board undertakes the role of nominations committee and the selection and appointment of new directors is agreed to by the board as a whole. All directors are selected, appointed and removed by the board, subject to the ratification by shareholders. In terms of the articles of association, newly appointed directors hold office until the next annual general meeting at which they retire and their reappointment is required to be approved by shareholders. The board appointed Jan van Niekerk as a director with effect from 1 April 2009. Mr Van Niekerk will retire but will be eligible for re-election by shareholders at the forthcoming annual general meeting. There are no service contracts for non-executive directors. The executive directors have service contracts with the group, terminable upon one month’s written notice. No executive director has a fixed-term contract. In terms of the articles of association, one third of the directors, excluding the CEO, are required to retire each year. The retiring directors may make themselves eligible for re-election. The board meets at least quarterly to review and monitor the performance of the group and executive management. The board maintains full and effective control of the group through senior management and subsidiary boards. The board considers and approves group strategy, corporate governance policies and compliance structures, risk management and internal control policies and structures, business continuity plans and board composition. All material decisions affecting the group are considered by the board or an appropriate subcommittee thereof. Attendance at meetings held during the course of the current financial year is as detailed below. |
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| 1resigned with effect from 31 March 2009; 2appointed as chairman with effect from
1 April 2009.
Jan van Niekerk, who was appointed as a board member from 1 April 2009, attended 4/4 meetings as an invitee. |
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| The board recognises its duty and responsibility to act in accordance
with the JSE Limited’s (JSE) Listing Requirements and to ensure that
the principles set out in King II are observed. The board has not adopted a formal charter. During the course of the year under review, the board commenced a process of reviewing the group’s governance structures, with particular reference to the role of the board committees and that of the audit committee in relation to risk management responsibilities, in order to ensure that the structure is in line with company law changes and the anticipated recommendations under King III. It is anticipated that a formal board charter will be adopted as part of this process. |
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| Board committees The board has established subcommittees with specific responsibilities to manage specific risk areas of the business and to assist the board in carrying out its responsibilities. Each of the committees is chaired by an independent non-executive director. The principal standing committees that have been established are as detailed below. Audit committee The members of the audit committee are Steven Stein (Chairman) and Clive Beaver. In line with the Corporate Laws Amendment Act (the CLAA), 2006, the group audit committee fulfils the function as audit committee for all subsidiaries in the group, other than for Citadel Life and the Stenham group. The Citadel Life audit committee is a requirement of the Long Term Insurance Act and operates as an independent committee. Membership of this committee has been augmented, as required, to meet the requirements of the CLAA. As an offshore subsidiary, the Stenham group, which became a subsidiary with effect from 4 April 2008, does not fall within the requirements of the CLAA. Given the size of the Stenham business and the complexities of the offshore environment in which it operates, a decision was made to continue the operations of the Stenham audit committee as a separate committee (“the SAC”). This decision will be reviewed as part of the current review of the group’s governance structures. In order to integrate the operations of the committee into those of the group, the group financial director was appointed as a member of the SAC, the minutes and papers of the SAC are made available to the group audit committee, the chairman of the SAC presents regular feedback on the functioning and deliberations of the SAC at the group audit committee and the group auditors attend the SAC meetings as they pertain to financial matters affecting the group accounts. Attendance at the group audit commitee meetings held during the course of the current financial year is as noted below. |
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| In addition to the regular quarterly meetings, the audit committee
held an additional meeting during the course of the year, largely to
deal with the Stenham acquisition. In line with its charter, the overall objective of the committee is to assist the board and directors in discharging their responsibilities in regard to financial matters affecting the board. The committee: |
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| The commitee has adopted formal terms of reference. View the report of
the audit committee. Remuneration committee The members of the committee are Leonard Harris (Chairman) and Steven Stein. Remuneration committee meetings are attended by the CEO. The group remuneration committee meets annually prior to release of the group’s annual results or more frequently if required. The committee determines a remuneration policy for executive directors which is aligned with the group’s strategy and performance goals. The committee appraises the performance of executive directors, determines conditions of employment and remuneration packages of executive directors and determines the award of share options to executives and staff. The committee makes proposals to the board for fees to be paid to non-executive directors. The remuneration of staff at a subsidiary level is determined by remuneration committees at an operating subsidiary level. The committees are staffed by appropriate executive management including executive directors on the Holdings board. These committees ensure that senior management at a subsidiary level are rewarded in line with performance and that incentive structures are appropriate to ensure that key members of management are retained. Other subcommittees The group executive committee comprises members appointed from management of the group’s major subsidiaries. The committee’s role is to discuss various strategic and other key issues affecting the group incorporating the unique perspectives and requirements of the individual business units. The group transformation forum, which oversees implementation of the group’s transformation strategy, operated effectively for its third year. The board is apprised of the progress of these committees through regular communication and report back at board meetings. The members of the executive committee are regular invitees to board meetings. The committees are in addition to those committees set up to manage specific risk and control issues across the group, the most significant of which are discussed under the heading of risk management. |
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