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BOARD CHARTER
SPESCOM LIMITED (“SPESCOM” OR “THE COMPANY”)
1. Leadership of the company
The board of Spescom shall exercise leadership enterprise, integrity and discerning judgement in directing the Spescom group (“the group”) so as to achieve continued prosperity for Spescom and always act in the best interests of Spescom.
2. Role and function of the board.
The Spescom board shall exercise all the powers of the company subject to only the limitations contained in law and its Memorandum and Articles of Association. It is expected that the Spescom board shall fulfil the following functions:
- Exercise leadership, enterprise, integrity and sound judgement in directing the group so as to achieve continuing prosperity and to act in the best interest of the enterprise while respecting the principles of transparency and accountability.
- Ensure that through a managed and effective process, board appointments are made that provide a mix of proficient directors, each of whom is able to add value and bring independent judgement to bear on the decision making process.
- Determine the group’s purpose and values, determine the strategy to achieve its purpose and to implement its values in order to ensure it survives and thrives, and ensure that procedures and practices are in place that protect the group’s assets and reputation.
- Monitor and evaluate the implementation of strategies, policies, management performance criteria and business plans.
- Establish policies and procedures that ensure that the group complies with all relevant laws, regulations and codes of best business practice.
- Ensure that the group communicates with shareowners and other stakeholders effectively.
- Serve the legitimate interest of the shareowners and the group and account to them fully.
- Identify the group’s internal and external stakeholders and agree on a policy, or policies determining how the group should relate to them.
- Ensure that no one person or a block of persons has unfettered power and that there is an appropriate balance of power and authority on the Spescom board which is, inter alia, usually reflected by separating the roles of the chief executive officer and chairperson, and by having a balance between executive and non executive directors.
- Regularly review processes and procedures to ensure the effectiveness of its internal system of control, so that its decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times.
- Regularly and through the remuneration committee assess its performance and effectiveness as a whole, and that of the individual directors, including but not limited to the chief executive officer.
- Appoint the chief executive officer and at least participate in the appointment of senior management, ensure the motivation and protection of intellectual capital intrinsic to the group, ensure that there is adequate training in the group for senior management and employees, and a succession plan for senior management.
- Ensure, through the audit committee, that an effective internal control system is being maintained such that all technology and systems used in the group are adequate to properly run the business and for it to remain competitive.
- Identify key risk areas and key performance indicators of the business and monitor these factors.
- Enable the group to annually survive, thrive and continue as a viable going concern.
3. Meetings and procedures.
In order to fulfil its functions the Spescom board shall:
- meet regularly, but not less than on a quarterly basis;
- facilitate the mix and composition of the Spescom board;
- define the limits of authority of the Spescom board (and senior management) and office of the Chairperson;
- review and approve strategic plans and facilitate that meaningful plans are produced at all levels within the group on an ongoing basis covering a realistic time scale;
- devote sufficient time to their responsibilities as directors of Spescom as set out in this charter, Spescom’s Memorandum and Articles of Association, the King Report on Corporate Governance for South Africa – 2002 (“the King Report”) and the Companies Act of 1973, as amended;
- monitor senior management’s performance;
- define how the Spescom board will operate, including but not limited to;
- the nature and type of board committees required;
- what information or reports it requires;
- how and with what data it will monitor management performance and financial progress of the group; and
- how it will evaluate its own performance on an annual basis.
- Ensure that the group is properly managed; and
- Ensure that the group complies with all statutory requirements.
4. Composition of the board
The Spescom board shall include a balance of executive and non executive directors (including independent non executive directors) such that no individual or group of individuals or interests can dominate its decisions.
The Spescom board shall be chaired by an independent non executive director and the chief executive officer shall be responsible for the day to day operational requirements of the group.
Role of the Chairperson
The role of the Chairperson is to:
- chair meetings of the Spescom board and its members ensuring proper order and conduct of meetings, affording participants a reasonable opportunity to speak, ensuring decisions are fairly made and applying the businesses judgement rule, deciding on technicalities and casting a deciding vote in the case of a deadlock;
- to maintain relations with the company’s members and certain of its important stakeholders;
- to facilitate effective board management thereby ensuring that all directors play a full and constructive role in the affairs of the company;
- to involve himself in the group affairs as contemplated in the King Report.
Role of the Chief Executive
- to develop and recommend business plans, policies and objectives for consideration by the Spescom board;
- to submit reports, financial statements and consolidated budgets for consideration by the Spescom board;
- to implement all approved plans, policies and programmes;
- to oversee the effective operation and administration of the company;
- to oversee the financial management of the company including financial planning, cash flow and management reporting;
- to ensure appropriate human resource strategies are in place to meet the company’s objectives and legal compliance obligations;
- to maintain personal awareness of business, economic and political trends that may affect the operations of the company;
- to ensure compliance by the company with statutory and regulatory requirements;
- to attend Spescom board meetings as chief executive;
- to involve himself in the group affairs contemplated in the King Report and his service contract; and
- to comply with such other obligations as may be associated with the office of chief executive including but not limited to those set out in the King Report.
5. Appointments to the board
There will be formal and transparent procedures for nomination and appointment of new directors to the Spescom board.
The Spescom board shall collectively:
- Assess the skills, attributes and experience required on the Spescom board as outlined in Appendix “B” hereto;
- Establish processes for the review of the performance of individual directors and the Spescom board as a whole;
- Establish processes for the identification of suitable candidates for the appointment to the Spescom board; and
- Establish a succession plan for the individual directors on the Spescom board including the chairperson and chief executive officer.
The Spescom board of directors will formally review its composition and performance annually to ensure that the mix of membership is appropriate and that non-executive directors commit adequate time to their responsibilities and contribute effectively.
Executive directors should be encouraged to hold other non-executive directorships only to the extent that this does not interfere with their immediate management responsibilities.
Non-executive directors should carefully consider the number of appointments they hold so as to ensure that the companies they serve enjoy the full benefit of their expertise.
Service contracts for executive directors shall be executed with notice periods, which shall not exceed 90 days.
6. Remuneration
An independent remuneration committee with written terms of reference shall be established which shall:
- Review the senior management of Spescom’s remuneration and fix the remuneration packages of individual executive directors;
- ensure that the level of remuneration shall be sufficient to attract and retain the quality and calibre of directors needed to run the Spescom board successfully; and
- ensure that the company’s annual report outlines the details of the remuneration and benefits of each director.
7. Disclosure of information by directors (declarations of interests)
On first appointment and at regular intervals (at least once every quarter), or at any time when circumstances change, all directors shall, in good faith, disclose to the company secretary of Spescom, for recording and disclosure, any business or other interest that is likely to create a potential conflict of interest, including:
- all business interests (direct or indirect) in any other company, partnership or other business venture;
- membership to trade, business or other economic organisations; and
- their shareholding, share options and/or other interest in the company.
8. Supply of information to directors
For Spescom board members to exercise informed, intelligent, objective and independent judgement on corporate affairs, they shall have access to accurate, relevant and timely information. In this regard:
- all directors shall have unlimited access to senior management;
- all directors shall have unlimited access to the advice and services of the company secretary of Spescom who has a statutory duty to advise the Spescom board on matters of procedure, rules and regulations;
- round robin resolutions shall at all times be supported by a preamble summarising the reason for the resolution together with and where appropriate copies of other supporting papers such as draft agreements, circulars, letters etc.
- the company secretary of Spescom shall ensure that the directors of Spescom are in receipt of their board papers at least 5 days prior to the scheduled Spescom board meeting;
- the company secretary of Spescom shall ensure that all directors of Spescom receive copies of announcements and press releases prior to the release thereof to the public.
9. Director training and development
All directors when initially appointed must undergo a director induction with the chief executive officer, company secretary of Spescom and where appropriate, with the group’s human resources department. The induction of directors shall cover, inter alia, the following:
- role, duties and responsibilities of the Spescom board of directors;
- rights and obligations of a director;
- statutory liabilities and duties of a director under criminal and company law;
- Spescom board practices and procedures;
- corporate strategy and organisation;
- disclosure and communication policies;
- financial management systems, internal control procedures and internal audit;
- external audit and the Spescom board;
- the corporate environment;
- performance targeting, monitoring and evaluation;
- information technology and information to the Spescom board; and
- any other matters of interest to the Spescom board.
10. Annual financial statements
It is the statutory duty of directors, jointly and severally, to be responsible for the annual financial statements of the company. Consequently, the Spescom board is responsible for:
- maintaining adequate systems of financial management and internal control over the group, including procedures designed to minimise the risk of fraud;
- ensuring the integrity and adequacy of the accounting and financial systems;
- ensuring that competent and qualified persons are employed to undertake accounting and financial responsibilities;
- ensuring that the company complies with relevant accounting standards where applicable.
11. Auditing
The Spescom board shall establish formal and transparent arrangements for maintaining an arms-length relationship with the external auditors, and ensure that there is timely and accurate disclosure to shareowners of any information that would materially affect either the value or worth of their investment in the group. All information affecting shareowners shall be prepared, audited (where appropriate) and disclosed in accordance with high quality standards of financial disclosure and objectivity.
12. Audit committee
The Spescom board shall establish an audit committee, which will be composed of the majority of non-executive directors and be a sub committee of the Spescom board and whose responsibility would be for a thorough and detailed review of audit matters and will assist the non executive directors to play a positive role on the Spescom board.
The audit committee shall be given written terms of reference which would deal adequately with their membership, authority and duties and shall meet a least three times a year. The audit committee will:
- review the half year and annual financial statements before submission to the Spescom board focusing particularly on:
- changes in accounting policies;
- significant adjustments arising from the audit;
- major judgemental areas;
- compliance with accounting standards, disclosure and legal requirements; and
- subject the financial statements to independent critical appraisal.
- Consider the appointment, remuneration and the resignation or dismissal of external auditors;
- Discuss and agree on the scope, nature and priorities of audit;
- Discuss with external auditors any reservations and problems arising in the course of audit and any audit management letters and management responses prior to the issuance of the audit certificate;
- Review and discuss with the external auditors aspects relevant to internal control procedures, risk management and internal audit;
- Review major findings on internal audit and investigations and consider management response or actions thereto; and
- Undertake such other duties or function as may be assigned by the Spescom board which are relevant to audit and investigations.
13. Code of ethics and code of conduct.
As part of the Spescom board’s commitment to the highest standards of behaviour and accountability, the company adopts a code of ethics and code of conduct to guide executive, management and employees in carrying out their duties and responsibilities. The code covers such matters as:
- responsibilities to shareowners;
- relations with customers and suppliers;
- employment practices; and
- responsibilities to the community.
14. Board evaluation
The Spescom board shall review its performance on an annual basis, which evaluation form is attached as “Appendix A” to this charter. This evaluation is subject to review from time to time.
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