CORPORATE GOVERNANCE |
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| CORPORATE GOVERNANCE |
Approach
Our system of corporate governance is based on the values and
principles that underpin the day-to-day activities of our group,
including responsiveness, collaboration, transparency, integrity
and accountability. This approach encompasses a commitment to
excellence in corporate governance standards that we regard as
fundamental to the sustainability of the group’s performance.
Applying governance principles
The board is committed to applying the recommendations of King III,
complying with the JSE Listings Requirements and the Companies Act, as well as incorporating relevant standards of best practice. In line with
King III’s “apply or explain” approach, the directors disclose the extent
to which Hyprop applies these principles to create and sustain value
for stakeholders over the short, medium and long term, and explain
any instances of non-compliance. The King III application is in our online report. Hyprop has elected to participate in the
Institute of Directors Southern Africa’s (IoDSA) governance assessment
instrument, achieving the highest application score of AAA. There is
scope to improve our application in terms of independent assurance.
| ASSESSING OUR CORPORATE GOVERNANCE |
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Please view the full report on compliance to each of the King III principles online.
Ethical leadership and corporate citizenship
Hyprop’s board and management team understand that ethical
conduct and good corporate citizenship underpin the King III code,
where leadership is expected to direct business strategy and operations
to ensure long-term sustainability. In line with its charter, the board
is the guardian of the group’s values and ethics. This is achieved by
effectively managing corporate ethics and aligning business strategy
to corporate values, while considering our impact on the economy,
society, stakeholders and the environment.
The board leads by example and embodies the values set
out in our code of conduct and ethics, published online. The social and ethics committee of the board monitors compliance with Hyprop’s code of conduct and ethics and other relevant social,
ethical and legal requirements, as well as best practice. It reports to
shareholders on matters in its mandate at the annual general meeting
and via this integrated report.
Ethical behaviour is monitored through the Hyprop whistleblower’s
line (0800 555 317), an independent hotline operated by an external
provider that provides regular call analysis to enable Hyprop to
investigate all allegations promptly. Formal reports on matters that may
impact financial performance are submitted to the audit committee.
One report was received during the period, which was appropriately
addressed.
2015 governance highlights
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Participated in IoDSA’s governance assessment for the second time – achieved overall AAA score, indicating the highest application of the principles
and recommendations of King III |
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Audit committee comprises only independent non-executive board members |
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Majority of the board is independent. |
The chairmen of key committees – audit, remuneration and nomination, and social and ethics – are all independent non-executive directors.
View charters of each committee online.
Composition of the board
Hyprop’s board comprises 11 directors: six independent non-executives,
three non-executives, and two executive directors.
The diverse experience in commerce and industry of our non-executive
directors enables them to make informed and independent decisions.
Strategy is evaluated and approved, group performance scrutinised and
executive management monitored against key performance indicators.
Their guidance and outlook on the group’s financial, audit, corporate
governance and risk management systems and controls are especially
valuable. Transformation, succession planning and the remuneration
process (at senior level) is reviewed to ensure sustainable leadership.
Non-executive directors are not involved in the daily operations of the
company.
Hyprop has processes in place to ensure all directors have no conflicts
of interest in fulfilling their duties, or in the event that conflicts do
exist, they are properly declared and dealt with in accordance with
relevant regulatory requirements. Constructive debate at meetings
contributes to informed decisions.
The chairman, Gavin Tipper, is an independent non-executive director.
His role is clearly defined and separated from that of the chief
executive officer, Pieter Prinsloo. Similarly, the responsibilities of chief
executive officer and financial director are strictly separated from
those of non-executive directors to ensure that no single director
can make unilateral decisions. The chairman provides leadership and
guidance to the board and encourages proper deliberation on all
matters requiring directors’ attention, while obtaining input from
other directors. The chief executive officer and financial director are
responsible for implementing strategy and operational decisions.
Board changes
There were no changes to the board or to its committees during the
period under review, save for the appointment of Mike Lewin, an
independent non-executive director, as chairman of the social and
ethics committee.
Board appointment process
With support from the remuneration and nomination committee, the
board is responsible for new appointments, and following a formal and
transparent process to identify and select candidates. The board and
committee consider the mix of skills and experience required to drive
Hyprop’s operational progress and sustainable transformation, as well as
other relevant factors, including diversity and regulatory compliance.
Induction for new directors includes a briefing by the chairman, chief
executive officer, financial director and sponsor, Java Capital. They are
also introduced to key senior management at company and shopping
centre levels, with site visits to shopping centres.
In terms of the memorandum of incorporation, the appointment of
new directors is confirmed by shareholders at the subsequent annual
general meeting.
Rotation of directors
Hyprop’s Memorandum of Incorporation stipulates that one-third of
directors retire by rotation after a three-year term. If eligible, these
directors will offer themselves for re-election.
Directors standing for re-election by rotation at the upcoming
annual general meeting are Louis van der Watt, Louis Norval and
Thabo Mokgatlha.
Succession planning
The remuneration and nomination committee is responsible for
ensuring adequate succession planning for directors and management,
and that all committees are appropriately constituted and chaired.
The board is satisfied that the depth of skills contributed by current
directors meets its succession requirements.
Director development
Directors have access to experts and other parties required to carry
out their duties. In addition, they are encouraged to continue their
professional development in their personal capacity.
Company secretary
CIS Company Secretaries Proprietary Limited is an independent
practice providing services to numerous JSE-listed companies. The
board is satisfied that the company secretary and its representative,
Neville Toerien, have maintained an arm’s-length relationship with the
board and are sufficiently qualified and skilled to act in accordance
with, and update directors on, the recommendations of King III and
other relevant regulations and legislation.
The board reviews the relationship between the company secretary
and the board members on an annual basis. The board has determined
that the company secretary is independent from management and
does not take on any management or executive duties on behalf of
the board of directors or on behalf of any subsidiary companies. The
company secretary is not a director of the company or a material
shareholder of the company or any of the company’s subsidiaries
and has not entered into any major contractual relationships with
the company or any director. Accordingly, the board is satisfied
that the company secretary maintained an arm’s-length relationship
with the board of directors.
The functions of the company secretary includes:
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Guiding directors, collectively and individually, on their duties,
responsibilities and powers |
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Providing information on legislation, regulations and matters of
ethics and good corporate governance relevant to the company |
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Recording the minutes of meetings, including attendance registers,
resolutions, directors’ declarations of personal and financial
interests and all notices and circulars issued by the company |
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Preparing the notice of the annual general meeting |
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Assuming responsibility for filing annual and other returns in terms
of the Companies Act. |
The company secretary updates the board on developments relating
to ethics, corporate governance, legislation and regulation. The board
then reviews any changes and appropriate measures are implemented
to comply with best practice and support sustainable performance.
Performance self-assessment
The board is satisfied that all independent non-executive directors
meet the criteria of King III.
Access to information
Directors have unrestricted access to the advice and services of the
company secretary and to company records, information, documents
and property. 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 professional advice on any
matters concerning the affairs of the company.
Access to the board
Shareholders can provide recommendations or direction to the
board at the annual general meeting, one-on-one meetings, investor
presentations and through investor polls.
Dealing in securities
The board complies with the JSE Listings Requirements that restrict
trading in Hyprop’s shares by directors, company secretary and
employees in defined closed periods. In conjunction with the financial
director and sponsor, the board ensures the required disclosure of
trades in Hyprop shares is published on SENS. Directors and senior
employees with access to the company’s financial results and other
price-sensitive information are barred from dealing in Hyprop shares
for specified periods before relevant announcements. A notification
to all directors and affected staff alerts them that the company is
entering a closed period.
Hyprop uses dividend per share as the relevant measure of financial
results for the purpose of reporting on trading statements, if any.
Conflicts of interest
As per the code of ethics and conduct, directors must declare to
the chairman and company secretary their shareholdings, additional
directorships and any potential conflicts of interest.
Board committees
Please see the outline of board committees.
The board is satisfied that all committees have fulfilled their
responsibilities during the year as per their approved charters.
Each committee’s performance is reviewed annually
The need for additional committees is evaluated regularly. Hyprop’s
remuneration and nomination committees are combined. Discussions
on agenda items for nomination committee matters are chaired by the
board chairman.
There is full disclosure from committees to the board, including
verbal reports on recent activities by committee chairmen to the
board. Minutes of committee meetings are made available to all
board members. In addition, the board chairman and chairmen of
each committee attend Hyprop’s annual general meeting to answer
questions from stakeholders.
Board and committee meetings
The board meets at least four times a year, with ad hoc meetings when
necessary. Relevant notice and information is supplied in advance,
ensuring directors can make well-researched and reasoned decisions.
The investment committee meets on an ad hoc basis as necessary.
Attendance at board and committee meetings for the review period (1 July 2014 to 30 June 2015) is reflected below.
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Board |
Audit |
Risk |
Remuneration
and nomination |
Social
and ethics |
| Independent non-executive directors |
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| GR Tipper (chairman of the board) |
4/4 |
5/5 |
2/2(e) |
2/2 |
2/2(e) |
| EG Dube(c) |
4/4 |
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2/2 |
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| L Engelbrecht(a) |
4/4 |
5/5 |
2/2 |
2/2 |
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| TV Mokgatlha |
4/4 |
5/5 |
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| MJ Lewin(d) |
4/4 |
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2/2 |
| LLS van der Watt |
2/4 |
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| Non-executive directors |
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| KM Ellerine |
4/4 |
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| L Norval |
4/4 |
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| S Shaw-Taylor(b) |
4/4 |
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2/2 |
2/2 |
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| Executive directors |
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| PG Prinsloo (CEO) |
4/4 |
5/5(e) |
2/2 |
2/2(e) |
2/2 |
| LR Cohen (FD) |
4/4 |
5/5(e) |
2/2 |
2/2(e) |
2/2(e) |
| Executives and management |
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| M de Klerk |
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2/2(e) |
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| K Eichhorn |
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2/2(e) |
2/2(e) |
2/2(e) |
| D Nafte |
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1/2(e) |
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2/2(e) |
| S Riley |
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2/2(e) |
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2/2(e) |
| B Frylinck(e) |
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1/2(e) |
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| V Watson |
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1/2(e) |
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1/2(e) |
| T Rasiluma |
1/4(e) |
2/5(e) |
2/2(e) |
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2/2(e) |
| V Booysen |
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2/5(e) |
2/2(e) |
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2/2 |
| M Hattingh |
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4/5(e) |
1/2(e) |
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Chairman audit committee |
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Chairman risk committee |
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Chairman remuneration and nomination committee |
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Chairman social and ethics committee |
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By invitation |
Compliance with laws, rules, codes and standards
The national legal executive and executive management ensure Hyprop
complies with all current regulations and legislation, liaising closely with
the company’s sponsor. If there are areas of non-compliance, these
areas will be formally tabled through the risk management process
under the supervision of the risk committee.
There were no material compliance issues during the year. The Hyprop
board meets ad hoc to monitor progress against the property sector
charter, with particular focus on transformation.
Legislations/regulations with which the company is required to comply
include:
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Property sector charter |
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Basic Conditions of Employment Act 75 of 1997 |
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Companies Act 71 of 2008 |
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Compensation for Occupational Injuries and Disease Act 130 of 1993 |
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Competition Act 89 of 1998 |
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Employment Equity Act 55 of 1998 |
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Labour Relations Act 66 of 1995 |
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Occupational Health and Safety Act 85 of 1993 |
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Value Added Tax Act 89 of 1991 |
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Financial Intelligence Centre Act 38 of 2001 |
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Consumer Protection Act 68 of 2008 |
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Financial Markets Act 19 of 2012 |
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Income Tax Act 58 of 1962 |
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Promotion of Access to Information Act 2 of 2000 |
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Protection of Personal Information Act 4 of 2013 |
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Protected Disclosures Act 2000 |
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Securities Services Act 36 of 2004 |
As Hyprop is a listed Real Estate Investment Trust (REIT), it is required to
comply with the JSE Listings Requirements and rules that are specific to
REITs in South Africa.
Anti-competitive behaviour
Hyprop has not been party to any legal actions for anti-competitive
behaviour or monopoly practices during the period.
Policy documents available online
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