Corporate governance report
The board of directors (the board) is ultimately responsible for the ethical behaviour of the business. In conducting the affairs of the company, the board endorses the principles of fairness, responsibility, transparency and accountability advocated by King IV.
The directors ensure effective ethical leadership and regularly review the company's governance structures, to ensure these remain relevant and effective in achieving these objectives.
A code of conduct is in place, is reviewed regularly and applies to all employees. The social and ethics committee monitors compliance with the code. There were no reported contraventions of this code during the year.
The board evaluates and approves group strategy, scrutinises group performance and measures executive management's performance against key performance deliverables. There is a clear division of responsibilities at board level, to ensure that no one director has unfettered power of decision-making.
In determining the optimal number of directors to serve on the board, the remuneration and nomination committee considers requirements of the group and the knowledge, skills and experience of individuals. At present, the size of the board is considered appropriate, given Hyprop's scale and geographical diversification. This is reviewed periodically against the size of the company and its needs.
At 30 June 2019, the board comprised 11 directors: six independent non-executives, two non-executives and three executives. The classification of directors is based on an annual assessment of their independence.
The chairman is an independent non-executive director, appointed to the board in June 2013, and is not a former CEO. The chairman's role is separate from that of the CEO. He provides leadership and guidance to the board and encourages deliberations on all matters requiring directors' attention.
The non-executive directors have diverse backgrounds in commerce and industry. Their collective experience enables them to provide sound, objective judgement in decision-making. At least one-third of directors retire by rotation every year, in line with the JSE Listings Requirements and Hyprop's Memorandum of Incorporation (MOI). If eligible and available, these directors offer themselves for re-election. Directors who have been appointed to fill a casual vacancy during the year, retire at the next annual general meeting, when they may make themselves available for re-election.
A directors' code of conduct is contained in the board charter. Independent non-executive directors serving for more than nine years are subject to an annual review process by the board to evaluate their continued independence.
Having served for more than nine years, Mike Lewin and Stewart Shaw-Taylor's independence was considered and reviewed by the board and the board is satisfied that there are no factors that impair their independence. Mike and Stewart continue to be classified as independent non-executive directors.
Directors' and officers' liability insurance is provided by the company.
The board is satisfied that all board committees fulfilled their responsibilities during the year, in terms of their approved charters. Each committee's performance is reviewed annually. The need for additional and/or ad hoc committees is evaluated regularly. Hyprop's remuneration and nomination committees are combined. Discussions on nomination matters are led by the board chairman.
The chairs of the committees provide feedback to the board on a regular basis. In addition, the chairman of the board and the committee chairs attend Hyprop's annual general meeting to answer questions from shareholders.
The board committees utilise the services of independent external advisers, as and when required.
|The board of directors
Stewart Shaw-Taylor(1) (remuneration)
Gavin Tipper (chair(1), nomination)*✝
All details at 30 June 2019.
|The chairs of these committees are all independent non-executive directors.
|Non-executive ✝ Independent
The committee charters are available to view online at www.hyprop.co.za
Board and committee meeting attendance
The board meets at least four times a year, with ad hoc meetings as required. Notice of meetings and documentation is provided to directors timeously, allowing them to adequately prepare for meetings and ensuring that they can make informed decisions.
Attendance at board and committee meetings for the period 1 July 2018 to 30 June 2019 is set out below.
|Independent non–executive directors
|GR Tipper (board chairman and chair nomination committee)
|TV Mokgatlha (chair audit and risk committee)
|MJ Lewin (chair social and ethics committee)
|S Shaw–Taylor (chair remuneration committee)
|PG Prinsloo (former CEO)(2)
|MC Wilken (CEO)(4)
|Meetings attended/meetings held while in office.
|Resigned 30 November 2018
|Resigned 31 January 2019
|Appointed 1 October 2018
|Appointed 27 December 2018
The board is committed to the promotion of good corporate governance and to outcomes that are based on an ethical culture, good performance, effective control and legitimacy.
The board recognises the importance of the triple context in which the company operates (economy, society and the environment) and seeks to ensure that operations are conducted in a manner that takes account of the six capitals (financial, intellectual, manufactured, human, social and relationship, and natural).
Corporate governance is approached with a view to meeting the following objectives:
- Reinforcing corporate governance as a holistic and interrelated set of arrangements to be understood and implemented in an integrated manner
- Encouraging transparent and meaningful reporting to stakeholders
- Presenting corporate governance reports with reference to structure and process, as well as ethical consciousness and conduct.
Please view the full King IV principles application report online at www.hyprop.co.za.
Directors have access to independent experts and other advisers for assistance in carrying out their duties if required (and after following an approved process). The board ensures that inexperienced directors are developed through mentorship programmes and continuing professional development programmes are implemented as required. Directors are encouraged to further their professional development in their personal capacity, while the board ensures that directors are regularly briefed on changes to risks, laws and the business environment.
A formal induction programme is in place for new directors. This includes a briefing by the chairman, CEO, CFO and Hyprop's JSE sponsor. New directors are introduced to key senior management at company and shopping centre levels, and site visits to shopping centres are facilitated.
Dealing in securities
The board complies with the Financial Markets Act and the JSE Listings Requirements applicable to trading in Hyprop's shares by directors, the company secretary, their associates and affected employees in closed periods (as defined). In conjunction with the CFO and the JSE sponsor, the board ensures that trading in Hyprop shares by these individuals is disclosed on SENS.
In line with company policy, directors and senior employees with access to Hyprop's financial results and other price sensitive information are prohibited from dealing in the company's shares for specified periods before relevant announcements are released on SENS. All directors, employees and affected parties are notified before the company enters a closed period.
Conflicts of interest
In terms of the company's code of conduct, directors must declare to the chairman and company secretary their shareholdings, other directorships and any potential con?icts of interest.
Hyprop's company secretary during the year ended 30 June 2019 was CIS Company Secretaries Proprietary Limited, an independent practice providing company secretarial services to numerous JSE-Listed companies. The board is satisfied that the company secretary and its representative, Gillian Prestwich, are sufficiently qualified and skilled to act in accordance with, and advise directors on, the recommendations of King IV, the Companies Act and other relevant legislation and regulations.
The board reviews the relationship between the company secretary and itself as well as its committees annually. The board has determined that the company secretary is independent of management and does not take on any management or executive duties. The company secretary is not a director of Hyprop, nor a material shareholder in the company or any subsidiary, and has no major contractual relationship with the company or any director. Accordingly, the board is satisfied that the company secretary maintained an arm's length relationship with all directors during the year under review.
The functions of the company secretary include:
- Guiding directors, collectively and individually, on their duties, responsibilities and powers
- Providing information on legislation, regulations and relevant matters of ethics and good corporate governance
- Recording the minutes of meetings, maintaining attendance registers, resolutions and directors' declarations of personal and financial interests, and records of all notices and circulars issued by the company
- Preparing the notice of the annual general meeting
- Filing annual and other statutory returns with the Companies and Intellectual Property Commission (CIPC) in terms of the Companies Act.
Subsequent to 30 June 2019, Statucor Proprietary Limited was appointed as the company secretary.
Board appointment process
The board, supported by the remuneration and nomination committee, is responsible for the appointment of executive and non-executive directors. Identification and selection of candidates is conducted in a formal and transparent manner. The remuneration and nomination committee considers the blend of skills and experience required to drive the company's strategic and operational objectives and transformation goals. The appointment of new directors is confirmed by shareholders at the first annual general meeting following their appointment.
Gender and race diversity at board level
Diversity at board level receives regular consideration and the company's policies on gender and race diversity are available on our website at www.hyprop.co.za.
The Hyprop board recognises that diversity of skills, experience, background, knowledge, thought, culture, race and gender strengthens the board's ability to effectively carry out its duties and add value to the group. We acknowledge that further work is required to improve gender equality at board level. At the date of this report the Hyprop board included three female directors, translating to 25% of board members being female.
The remuneration and nomination committee is responsible for ensuring that adequate succession planning is in place for directors and senior management, and that committees are appropriately constituted and chaired. The board is satisfied that the depth of skills among current directors meets succession requirements. Succession planning at executive and management level is actively monitored and succession planning is in place for the role of the CEO.
Board effectiveness is evaluated annually through an online questionnaire. Results are reviewed by the chairman and any identified issues are discussed with the board and addressed as appropriate. The board and the committees were last evaluated in August 2019.
Access to information
Directors have unrestricted access to company records, information, documents, property and the company secretary. Non-executive directors have full access to the external and internal auditors, and to management. All directors are entitled, at Hyprop's expense, to take independent advice on any matters concerning the affairs of the company (in terms of an approved procedure).
Technology and information governance
The information and IT governance policy is guided by the governance principles of King IV and complies with applicable legislation. The full policy is available on the website at www.hyprop.co.za.
The board, through the audit and risk committee, is responsible for information technology governance and for considering technology risks. Executive management is tasked with managing IT risks, with oversight from the audit and risk committee.
The board is mindful of the importance of safeguarding company information and intellectual capital, and ensures that appropriate technology is maintained to protect information. A governance framework supports effective management of IT resources. The board reviews opportunities for improvements that technology can add and is conscious of risks that may affect classified information and intellectual capital.
The designated IT executive is responsible for IT and has the appropriate levels of knowledge and experience. She reports to the CFO on IT-related matters and interacts regularly with the audit and risk committee and executive management on IT governance matters.
The objectives of IT governance are:
- Responsible use of resources
- Appropriate management of IT-related risks
- Alignment of IT processes and resources
- Exploring new IT methods and technology
- Managing IT infrastructure
- Responsible incident response to stakeholders.
IT governance ensures that IT goals are met and IT risks are mitigated. Hyprop has established baseline principles for IT governance, being:
- Business alignment and enablement
- Operations performance
- Responsible and adequate procurement
- Supplier performance management
- Business continuity/disaster recovery
- Responsible use of IT resources
- Responsible incident response
- Personal information protection.
The IT skills of the board have been supplemented with the recent appointment of Annabel Dallamore. The appointment of additional IT skills at an operational level is under consideration.
Access to the board
Shareholders can provide recommendations to the board at the annual general meeting, at one-on-one meetings and investor presentations, and through investor polls.
Compliance with laws, rules, codes and standards
The board monitors the company's compliance with applicable legislation, regulations, codes and standards. The board has discharged its responsibility to ensure an effective compliance framework by:
- Establishing appropriate structures, including training programmes, stakeholder communication channels and compliance measurement systems
- Tasking compliance to the legal executive, and human resources executive, supported by the company's sponsor and the company secretary
- Highlighting and addressing areas of non-compliance, through the risk management process, supervised by the audit and risk committee
- Periodically reviewing the property sector charter, particularly as regards transformation and related issues.
As Hyprop is a listed REIT, it is required to comply with the JSE Listings Requirements and rules specific to REITs in South Africa, along with country-specific legislation and standards. These are set out on the website.
There were no material non-compliance issues identified/reported during the year.
During the year under review, Hyprop has not been party to anticompetitive behaviour or monopoly practices.
Documents available online
The following documents are available to view online at www.hyprop.co.za:
- Board charter
- Audit and risk committee charter
- Investment committee charter
- Remuneration and nomination committee charter
- Social and ethics committee charter
- Employment equity policy and plan
- Memorandum of Incorporation
- Board gender diversity policy
- Board race diversity policy
- BEE compliance certificate