King III application

ANNEXURES
 Institute of Directors Southern Africa’s (IoDSA) Website

Principle   Board requirement Comment Applied/
partially
applied/
not applied
 
Chapter 2: Boards and directors      
  The board should act as the focal point for and custodian of corporate governance. In line with its charter, the board acts as the focal point for and custodian of corporate governance by conducting its relationship with management, shareholders and other stakeholders along sound corporate governance principles. No one director has unfettered powers of decision making. Applied  
  The board should appreciate that strategy, risk, performance and sustainability are inseparable. The board, in line with its charter, is responsible for aligning the strategic objectives, vision and mission with risk and performance. The group’s formal risk management process considers the full range of risks including strategic and operational risk, encompassing performance and sustainability. A social and ethics committee is responsible for sustainability issues. Applied  
  The board should provide effective leadership based on an ethical foundation. In line with its charter, the board is the guardian of the values and ethics of the group and provides effective leadership on an ethical foundation. The group’s code of ethics sets out its commitment to the highest level of ethical conduct, fair dealing and integrity in business practice as an operational imperative. Applied  
  The board should ensure the company is and is seen to be a responsible corporate citizen. See 2.3.    
  The board should ensure the company’s ethics are managed effectively. The board ensures Hyprop’s ethics are managed effectively. The social and ethics committee assists the board in overseeing social and ethical matters for the group. Hyprop’s code of ethics, to which all members of the board, management and employees are required to adhere, promotes ethical business practices. Employees and the public can report any acts of fraud and unethical behaviour on a confidential fraud hotline. Applied  
  The board should ensure the company has an effective and independent audit committee. The audit committee comprises three independent non-executive directors in line with King III. Members are elected by shareholders at the annual general meeting. Applied  
  The board should be responsible for the governance of risk. The risk committee is responsible for overseeing the group’s risk management programme. It reports to the board which retains ultimate responsibility for the control and management of risk. The risk committee is responsible for reviewing and assessing the company’s risk control systems and ensures that risk policies and strategies are effectively managed. Specifically the role of the committee is to assist the board in ensuring that:
The company has implemented an effective policy and plan for risk management that will enhance its ability to achieve its strategic objectives
Disclosure on risk is comprehensive, timely and relevant.
Applied  
  The board should be responsible for IT governance The board, through the risk committee, is responsible for effectively managing relevant IT risks. Applied  
  The board should ensure that Hyprop complies with applicable laws and considers adhering to non-binding rules, codes and standards. In line with its charter, the board ensures Hyprop complies with applicable laws and considers adherence to non-binding rules and standards, assisted by the risk committee. Applied  
  The board should ensure there is an effective risk-based internal audit. The outsourced internal audit service provider offers an independent, risk-based internal audit function. The internal auditor reports directly to the audit committee and is invited to attend all audit committee meetings. Applied  
  The board should appreciate that stakeholders’ perceptions affect the company’s reputation. The board recognises that engaging with appropriate individuals or groups enhances our operations and enables us to manage risk and reputation. Investor relations and stakeholder engagement are key focus areas for the board. Applied  
  The board should ensure the integrity of the company’s integrated report. The audit committee oversees integrated reporting and is responsible for recommending the board to approve this report.    
  The board should report on the effectiveness of the company’s system of internal controls. The audit committee oversees internal audit, including the appointment of this function, monitoring its performance and approving the internal audit plan. It ensures the internal audit function is subject to an independent quality review, as the committee deems appropriate. Internal audit is outsourced and independent. It assists management in assessing whether systems of internal control are adequate and effective. Internal audit prepares a plan aligned to Hyprop’s key risks. Applied  
  The board and its directors should act in the best interests of the company. The board acknowledges its role as trustee on behalf of shareholders. In terms of its charter, it acts in the best interests of the group by ensuring individual directors adhere to legal standards of conduct; are permitted to take independent advice in connection with 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 line with the policy adopted by the board. Applied  
  The board should consider business rescue proceeding or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act. The board is responsible for initiating business rescue proceedings if warranted. The audit committee reviews the going-concern principle, as well as the solvency and liquidity principle, as set out in the
Companies Act.
Applied  
  The board should elect a chairman who is an independent non-executive director. The chief executive officer (CEO) should not also fulfil the role of chairman of the board. The chairman of Hyprop is an independent non-executive director. His role is to provide strategic guidance as well as encourage and allow adequate debate at board level. The company’s MoI provides for one-third of directors to retire by rotation after a three-year term of office. Applied  
  The board should appoint the CEO and establish a framework for delegation of authority. The board appointed Pieter Prinsloo as CEO and has approved a framework for delegation of authority. The CEO is responsible for strategy execution and the oversight of day-to-day operations. Applied  
  The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent. The majority (nine) of directors are non-executive, with six categorised as independent. Applied  
  Directors should be appointed through a formal process. There is a formal and transparent process for appointment of directors. The remuneration and nomination committee assists with the process of identifying suitable candidates to be proposed to shareholders.    
  The induction, and ongoing training and development, of directors should be conducted through formal processes. There is a formal induction programme for new directors. Inexperienced directors are developed through mentorship programmes. Continuing professional development programmes are implemented to ensure directors receive regular briefings on changes in risks, laws and the environment. Applied  
  The board should be assisted by a competent, suitably qualified and experienced company secretary. CIS Company Secretaries Proprietary Limited, an independent company secretarial practice, was appointed in compliance with the Companies Act, JSE Listings Requirements and recommendations of King III. The board deems its representative, Neville Toerien, to be suitably qualified. The company secretary operates on an arm’s-length basis from the board and is not a member of the board. Applied  
  The evaluation of the board, its committees and individual directors should be performed every year. The board was evaluated in July 2014. Applied  
  The board should delegate certain functions to well-structured committees, but without abdicating its responsibilities. Without abdicating its own responsibilities, the board delegates certain functions to specific committees:
Audit committee
Risk committee
Investment committee
Remuneration and nomination committee
Remuneration and nomination committee

Each committee has a formal charter approved by the board and reviewed regularly.

Applied  
  A governance framework should be agreed between the group and its subsidiary boards. All policies and procedures are followed by subsidiary boards. Applied  
  Companies should remunerate directors and executives fairly and responsibly. The board is responsible for ensuring Hyprop has an appropriate remuneration strategy. The remuneration and nomination committee has an independent role, making recommendations to the board for its consideration and final approval to ensure the group remunerates directors (including fees for non-executive directors) and executives fairly and responsibly; and that disclosure of directors’ remuneration is accurate, complete and transparent. Remuneration is set out in the remuneration report. Fees for board and committee members are approved annually at the annual general meeting. Applied  
  Companies should disclose the remuneration of each individual director and prescribed officers. The remuneration of directors and prescribed officers is disclosed and applied in note 24 of the financial statements. Applied  
  Shareholders should approve the company’s remuneration policy. Details of the remuneration policy are on page 66. The remuneration policy is submitted to shareholders to consider and endorse by way of a non-binding advisory vote at the annual general meeting. Applied  

 
REGISTERED OFFICE AND BUSINESS ADDRESS

Registration number: 1987/005284/06
2nd Floor, Cradock Heights, 21 Cradock
Avenue, Rosebank, 2196
PO Box 52509, Saxonwold, 2132
Tel: +27 11 447 0090
Fax: +27 11 447 0092
Website: www.hyprop.co.za

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