TOPIC 1 Some Notes On Corporate Governance

Lecturer responsible for AUE2602:
Topic 1: Corporate Governance
Ms Nicolene Coetzee
Contact details:
[e-mail]

CORPORATE GOVERNANCE
What does CORPORATE GOVERNANCE mean:
It is the system or process whereby companies are directed or controlled. It follows then that:
Healthy, honest, open, competent and responsibly controlled companies will improve the quality of modern society.

CORPORATE GOVERNANCE
Key aspects of King III:
Effective leadership
* Ethical values of responsibility
* Fairness

* Accountability
* Transparency

Sustainability
* Inclusivity of stakeholders
* Innovation, fairness and collaboration
* Social transformation

Corporate citizenship
* Consider not only financial performance
* Consider impact of operations on society and environment
* Protect, Enhance and Invest in well-being of society, environment and economy

APPLY OR EXPLAIN
WHY?
• Cost/benefit ratio
• One size does not fit all
• Attention to performance
• Therefore: Apply King III Principles and if not,
Explain why not.

BOARD OF DIRECTORS
• Chairman
Independent non-executive director (principle 2.16).
CEO of the company not chairman of the board (principle 2.16).
Must be a formalised appointment
Performance to be assessed annually

• Membership
The board should comprise a balance of power with a majority of non- executive directors.
Majority of non-executive directors should be independent (principle 2.18).

• Members
Minimum of two executive directors - CEO and CFO (principle 2.18).
⅓ to be rotated annually

• Meetings
Meet at least four times a year (principle 2.1.2).

EXAMPLE - BOARD COMPOSITION
• XYZ Ltd’s board of directors consists of 8 directors
How should the board be structured in order to comply with the requirements of King III?

BOARD OF DIRECTORS

Example - Board Composition (Continued)

Executive

Non-executive

Example - Board Composition (Continued)

Executive

Minimum: CEO and Finance

Non-executive

Example - Board Composition (Continued)

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