Royal Bafokeng Holdings (RBH) is a private company wholly owned by the Royal Bafokeng Nation (RBN). RBH is a holding company for its direct and indirect subsidiaries that hold investments (together with RBH, the RBH Group).
The Board of Directors of RBH appreciates the growing demand for accountability, honesty and transparency in fulfilling its fiduciary duties towards the shareholders and the company.
The Board believes that the observance of generally accepted corporate governance standards provides a company with legitimacy, reduces its vulnerability to a financial crisis, and broadens and deepens its access to capital.
The Board believes that RBH should adopt the highest corporate governance standards it can for its stage of development – both to enhance its reputation as a leading community-based investment company and to facilitate any future changes in its ownership and capital structure, for example, public listing or private equity or debt offering.
The shareholder has the ultimate power to remove directors and is governed in its relationship with the company through the articles of association. The shareholder of RBH will hold an annual general meeting (AGM) in the third quarter of every year.
The Board of Directors is responsible to the shareholder for the performance of the RBH Group. Its role includes the establishment, review and monitoring of strategic objectives, the approval of major acquisitions, disposals and capital expenditure, and overseeing the RBH Group's systems of internal control, governance and risk management.
The Chief Executive Officer is responsible for the execution of strategy and the day-to-day management of RBH, and is supported by the Executive Committee.
The company is conscious of the need to maintain an appropriate mix of skills and experience on the Board, and to progressively refresh its composition over time. As a private company, there is no legislative requirement regarding Board size or composition other than the requirement to have at least one director.
The RBH Board will have at all times a minimum of three directors, a majority of whom must be non-executive. The Chairman of the Board is responsible for leading the Board and for its effectiveness, and will at all times be a non-executive director.
The Board currently comprises, in addition to the non-executive Chairman, two executive directors, two non-executive directors and one independent director.
The Board reviews its composition on an annual basis and determines the optimal number of directors, subject to the maximum limit of 15 members imposed by the Board Charter.
The Board will have an appropriate balance of independent, non-executive and executive directors for the Board to discharge its function and responsibility. This balance will take account of the nature of the company’s shareholding and its stage of corporate development.
Number of meetings
The Board of RBH meets four times a year. Additional Board meetings may be
convened during the year when required. The number of meetings of the boards of RBH’s subsidiaries will comply with statutory requirements.
General
Subject to those matters reserved for its decision, the Board delegates certain responsibilities to standing committees – the Human Resources and Nominations Committee and the Audit and Risk Committee.
Human Resources and Nominations Committee
The Human Resources and Nominations Committee is responsible for establishing and developing RBH’s general policy on remuneration for executive management and non-executive directors and has been delegated the power to approve specific packages for individuals.
The committee has a minimum of three members. The chairman must be non-executive and the majority of the members must be non-executive.
The Human Resources and Nominations Committee makes recommendations to the Board on the appointment of new executive and non-executive directors, including making recommendations as to the composition of the Board and its committees and the balance between executive and non-executive directors.
The Human Resources and Nominations Committee regularly reviews and updates the succession plans for directors and senior managers.
Audit and Risk Committee
The Audit and Risk Committee consists of a minimum of three members. The Board, in consultation with the Audit Committee chairman, makes appointments to the committee. The Board determines that the committee members have the skills and experience necessary to contribute meaningfully to the committee's deliberations. In addition, the chairman has requisite experience in accounting and financial management.
The primary role of the Audit and Risk Committee is to ensure the integrity of financial reporting and the audit process, and that a sound risk management and internal control system is maintained.
In pursuing these objectives, the Audit and Risk Committee oversees relations with the external auditors. It approves the external auditors' terms of engagement, scope of work, the annual audit and the applicable levels of materiality.
The Audit and Risk Committee also monitors developments in corporate governance to ensure that RBH continues to apply high and appropriate standards. The Audit and Risk Committee's recommendations are submitted to the Board for approval.
The Board is responsible for the total process of risk management, while management is accountable for designing, implementing and monitoring the process of risk management.
The Board policy will define acceptable risk tolerance levels and identify continuous monitoring of risk and control processes, across business-specific risk areas, that will provide the basis for regular and exceptional reporting to business management and boards, the Executive Committee and the Board.
RBH seeks to have a sound system of internal control, based on its policies and guidelines, in all of its subsidiaries, material associates and joint ventures. In those companies that are independently managed, as well as joint ventures, the directors who are representing RBH on these investee companies' boards seek assurance that significant risks are being managed.
Effectiveness of internal controls and risk management
The Board receives inputs on the effectiveness of internal control mechanisms as follows:
Internal audit is an independent objective activity to add value to a company’s operations by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The internal audit activities are performed either by teams of appropriate, qualified and experienced employees, or through the engagement of external practitioners upon specified and agreed terms.
The King Report on Corporate Governance 2002 (King II) recommends that where the Board of a company decides not to establish an internal audit function, it needs to disclose its reasons. RBH does not currently have an internal audit function, due to the nature of its business and the small size of the team.
The Board is committed to the implementation of the principles of transparency and disclosure in all its relations with its stakeholders. In practice, this means making material, accurate and meaningful information available to its stakeholders in a timely manner.
The Board is committed to the objective of sustainable development, which is a broader term than the principle of ‘Social Responsibility’ referred in the King II Code. Sustainable development is a concept that applies to the company itself and to its shareholders.
As a community-based investment company, RBH is particularly sensitive to the need to deliver effective sustainable development and to present information on the company in accordance with triple bottom line standards and the principles of the Global Reporting Initiative.
The board is committed to developing a sustainable development policy, based on the results of stakeholder consultation.
The company publishes a website www.bafokengholdings.com and keeps current the following information:
The following documents (downloadable with Acrobat Reader) outline the responsibilities and duties of the board of directors.
The RBH Board approves the terms of reference for the Audit and Risk Committee and its members.
Annual financial statements (AFS) are prepared and audited in accordance with Statements of South African Generally Accepted Accounting Principles (GAAP). These standards are the highest standards that apply to South African companies. The 2006 audited financial statements were presented at the AGM during the third quarter of 2007.
Although they are prepared to the highest standard, the GAAP-compliant AFS do not necessarily represent a meaningful and useful picture of the RBH Group activities. Shareholders are interested primarily in whether net asset value has been created or destroyed. RBH will produce supplementary information in order to illustrate movements in net asset value.
RBH has appointed PriceWaterhouseCoopers, an internationally recognised accounting firm, as its independent external auditors for the year ending 31 December 2007. The external auditors report to the Audit and Risk Committee and RBH expects that it will rotate the external auditors regularly.
The Board is ultimately responsible for the compliance of the company with the board-approved governance policies. In this task, the Board has delegated certain responsibilities to management. The Chief Executive Officer has overall management responsibility for ensuring that the company complies with the law and the Board Charter and policies regarding corporate governance and the company’s code of ethics.
The Executive: Corporate has primary responsibility for the implementation and monitoring of governance policies and procedures. The Company Secretary (reporting to the Executive Corporate) is responsible for the preparation and execution of the RBH Board of Directors meetings and the AGM.
The Board believes that it is the responsibility of every employee and director of RBH to observe and implement the company’s governance policies. The company’s code of ethics applies to every individual in the company and establishes the general culture of governance and compliance with rules and policies.
The approval framework, delegation of authority and internal guidelines of RBH establish responsibility for compliance at every level of the company. In particular, internal control processes are used to ensure compliance at various levels of the company. These internal controls are assessed by external parties and their effectiveness reported to the Board.
The Board will address any shortfalls in compliance identified by the external audit process, recommend any changes and annually review the need for a standing committee on governance.
Compliance can also be monitored by external parties. The corporate governance policy is made available on the RBH website. It includes comments on the extent to which RBH complies with the King II Code and provides explanations for any divergences from compliance. The Board will update this policy every year, and provide a separate statement of changes noting specific changes in compliance.
Ms BE Mayekiso was appointed 1 March 2007 as the Company Secretary.
The board retains full and effective control over the company and is responsible for strategic direction, operational and financial performance, major investment expenditure and stakeholder communications.
