The Board of Directors

The Board of Directors consist of executive, non-executive, independent and shadow directors. The directors have duties entrusted upon them by law and non -compliance could result in conviction, removal, fines and/or imprisonment.

Definition of Director

Composition of Board

a) a balance of executive and non-executive directors and should be small enough for effective decision-making
b) non-executive directors should comprise the majority, i.e. 49% executive : 51% non-executive
c) a sufficient number of non-executives should be “independent” directors, who are independent of management (see definition of independent director)

Unitary Board

The Board shall:
a) provide strategic direction;
b) retain full and effective control;
c) comply with laws and regulations;
d) communicate with shareholders;
e) delegate certain powers to management;
f) if material, reserve powers to itself;
g) have access to company information and records;
h) agree a procedure to allow directors to obtain independent professional advice;
i) decide on the number of directors required to make the Board effective;
j) identify and monitor key risk and key performance areas;
k) identify and monitor non-financial aspects;
l) record facts and assumptions which lead it to conclude that the business will be a going concern in the next financial year (if not, what steps are being taken)
m) explain the effect of all resolutions passed at shareholders meetings;
n) ensure the Chairperson of the Audit and Remuneration Committees and as many directors as possible attend shareholders meetings;
o) provide biographies of all directors who are to be appointed;
p) provide a balance between performance and governance.

Board meetings

Should be held at least on a quarterly basis. Many larger organisations hold meetings up to 8 times per annum. (See Board meetings and committees.)

Appointment of Board of Directors

The King Report requires that the appointment of a director must be formal and transparent. Recommendations would be made to the full Board by a nomination committee, comprising of only non-executive directors, the majority being independent and chaired by the Chairperson of the Board. Once the director has been appointed and a resolution has been passed, the following procedure should be followed:

• A form CM27 must be completed and signed by the newly appointed director – this form will be filed by the company secretary for record purposes (S211)
• A formCM29 must be completed by the company secretary and lodged with the Registrar within 28 days of appointment (S216)
• The company register must be updated accordingly (S215)
  Any company failing to comply with the requirements will be guilty of an offence.

JSE Listings Requirement

• notify the JSE Securities Exchange immediately of the appointment/resignation of a director
• Completion of Schedule 21

Qualifications of a Director

Potential directors should be investigated to ensure they:

• qualify to be directors
• have suitable backgrounds

Duties and responsibilities of Board of Directors

Directors are required to exercise their duties with due care, diligence and skill and must act as a board and not individually.

Annual General Meeting

• Chairpersons of Board Committees should attend the AGM

Board meetings

• the Board should meet at least once every three months

Board committees

• a formal procedure for delegation should exist to discharge the Board's duties and to facilitate decision-making
• require written terms of reference/mandates
• set lifespan
• non-executive directors should play an important part in committees
• should be chaired by an independent director
• independent outside professional advice should be sought if required

Board Size

• not less than 2 directors in a public company
• board must be small enough for effective decision-making

Board Charter

The requirement for a Board charter results in the documentation of what is expected of the Board. The area of focus should be:

• Chair and CEO
• Board Composition
• Role of Board and Board Governance
• Board Committees
• Reserved Matters
• Management of Risks
• Procedural Issues

Code of Ethics

• should be supported by the Board and CEO – See Code of EthicsCommunication
• it is the Board's responsibility to report on significant and relevant matters, in a balanced and understandable manner.

Directorships (Other)

• Executive directors should be encouraged to hold non-executive directorships in other companies
• non-executive directors should consider the number of directorships they should hold, in order that they are able to perform effectively

Effectiveness

The Board has to ensure that it works effectively.

Evaluation

A board evaluation should be performed on a regular basis to ensure compliance (at least once a year). This process will take place through its nominee committee or a similar board committee.

Going Concern

• The directors are responsible to make a statement that there is no reason to believe that the company will not be a going concern in the year ahead.

Processes and Procedures

• review processes and procedures
• ensure the effectiveness of internal controls

Risk Management

• is responsible for the process of risk management
• authorise the risk strategy
• identify key risk areas and key performance indicators and to monitor these factors
• ensure disclosures in the annual report (See Disclosures in Annual Report)
• establish control systems for
  • mitigating risk
  • attaining company objectives
  • implementation of code of ethics
  • ensuring competence of employees

Stakeholders

• ensure they receive non-financial information to address broader stakeholder issues and measures

Strategic Planning

• The Board to look at strategic issues and the way forward.

Succession Planning

• the Board should ensure that a succession plan is in place for the future and succession of senior management.

Remuneration of Directors

• sufficient payment should be made to retain quality director
• a remuneration committee should be appointed to consider executive remuneration