Corporate Governance Report

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King IV Report


The Board

The Board of directors is ultimately responsible for ensuring that governance standards are met and it is therein assisted by senior management who aim to instil a culture of compliance and good governance throughout the Group.

The Board consists of ten non-executive elected directors and two executive directors. The chairman of the board is a non-executive director. The terms of service of the executive directors are limited to their terms of service as employees, while the elected non-executive directors rotate on a three-yearly basis.

The Board is responsible for the overall performance of the group and compliance with good corporate governance. The Board fulfils its responsibility by giving strategic leadership, appointing competent management, delegating responsibilities in a structured manner, assessing business plans and budgets and monitoring their implementation and results, and overseeing the risk management programme. In the implementation of these duties, the Board also pays attention to the sustainability of the business within the framework of the community and environment.

In conducting its responsibilities, the Board meets regularly and also makes use of the committees to advise it on auditing, human resources, financing and investments matters. The committees function on the basis of clearly defined mandates that set out their duties, powers and responsibilities.

Audit Committee

The Audit Committee consist of three non-executive directors of the Group. The committee is responsible for ensuring that a proper system of internal control and risk management exists and is applied, and that the management information, accounting policy and reporting to shareholders and other interested parties meet appropriate standards and comply with relevant legislation. The external auditors and internal auditors have unrestricted access to the chairman of the committees, which ensure that their independence is not impaired.

The chairman of the Board, the CEO, and the financial director attend meetings by invitation, and any other director may also attend the meetings if the director so requests.

The committee meets with internal and external auditors on a regular basis, without management and other directors being present, and considers its finding and recommendations, as well as other information that may be relevant in carrying out their mandate or specific tasks entrusted to it by the Board.

Human Resource Committee

The Human Resources Committee consists of three non-executive directors. The committee meets periodically to consider matters such as remuneration policy, the remuneration of executive management, succession planning, director’s remuneration, incentive schemes and other human resource matters. The performance-linked remuneration philosophy of the Group makes provision for incentive schemes and is regularly rated against professional external remuneration surveys.

Social Ethics Comittee

The Social and Ethics Committee consists of three directors, as well as a member who serves on the board of Kaap Agri Bedryf Limited. The role, function and responsibilities of the committee are defined by the Companies Act, of 2008. The committee considers the company’s performance as responsible corporate and social role player in its social and physical environment and advises the Board accordingly.

Nomination Committee

The Nomination Committee consists of three non-executive directors. The Committee assesses the effectiveness of the actions of the Board and its committees and also plays a leading role in recommendations on the composition of the Board in order to achieve the correct balance of expertise, diversity, knowledge and independence.

Finance Committee

The Finance Committee consist of three non-executive directors, two additional members (farmers) and the Financial Director and is supported by regional credit committees, as well as outside experts, where necessary.The committee meets regularly and sets guidelines and policies for the granting of credit and production finance and monitors the implementation of such guidelines and policy according to clear decision-making powers. The committee is also ultimately responsible for overseeing the evaluation of the recoverability of debts and write-offs and provision against debtors.

Internal Control

In order to accept responsibility for the corrections of the financial statements, the Board relies on systems of internal control and accounting and information systems with the objective to provide a reasonable assurance that assets are being safeguarded and that the risk of errors, fraud or losses are effectively being kept to the minimum, and that the financial reporting is relevant, up to date and correct. These control measures, which are contained in written policy documents and procedures, include the delegation of responsibilities and powers within a clearly defined framework, effective accounting procedures and a separation of duties, and monitoring by a qualified internal audit and risk management division. All material risks in the Group have been identified and documented in a comprehensive risk framework.

The Audit Committee monitors the appropriateness of and compliance with internal control measures and advises the Board in this regard.

Information Technology

The IT systems and environment are central to the way in which the company runs its business and to its internal control systems. The IT function is a centrally integrated system, with its main function being system development and programming, technology and maintenance, and data security and disaster recovery processes. Where necessary, certain functions are outsourced and also duplicated to limit the company’s risk exposure. Investing in technology, both physical and in human resources, happens on a continuous basis in order to ensure best business and security solutions. External audit strongly relies on the integrity of the IT systems and environment and therefore executes annual audits on, and investigations into, the IT environment.

Risk Management

The Group is involved in the trading of grain products, mainly wheat. This involvement entails various risks, including delivery risk, storage risk and price risk. It is the Group’s policy to hedge these risks by way of legal contracts, good administration, insurance and price hedging.

By their very nature and extent, debtors entail certain risks. The Board makes use of a specialised Finance Committee to ensure that these risks are properly managed through the application of a structured credit policy and the acquisition of securities where this is considered appropriate.The Financial Director acts as the Compliance Officer, together with the Group Secretary and other underlying disciplines and responsible persons in the Group, with the object to make sure that all acts, regulations and rules which may be applicable, are identified and complied with promptly. Staff are continually trained to be aware of relevant legislation and how to understand this legislation in practice and to comply with it.

Related Party Transactions

A number of non-executive directors are direct or indirect customers of the Group and do business with the Group on an ongoing basis. This business is in the ordinary course of events and takes place on an arm’s length basis through the normal operating points. No director’s business with the Group exceeds 1% of the total business.

Certain directors, directly or indirectly, also hold shares in the company.

The director’s conduct in relation to any dealings with the Group is prescribed by an agreed written charter.

Share Trading

Kaap Agri Limited is listed on the JSE. Computershare fulfills the role of Transfer Secretary for Kaap Agri and is responsible for the administration of the share register.

Trading by directors and identified employees is subject to a written policy that prescribes certain closed periods as well as specific approval for every transaction. In addition to the written policy, the Board regularly considers whether there are any circumstances or information in their possession that is not generally known and that might have an impact on the share price, which would therefore prohibit trading.

Health & Safety

The safety, welfare and health of employees and stakeholders are non-negotiable. The management of health and safety is done in accordance with the Occupational Health and Safety Act at all operational points as part of the risk management programme. Compliance with the requirements of the legislation is monitored strictly in order to ensure that a safe working environment is created and maintained.

Whistle Blow

Kaap Agri has a whistleblow policy which gives its employees an independent means of making protective disclosures of improper conduct in the workplace, and which guarantees protection against victimisation, disciplinary action, or any other professional disadvantage, subject to the correct following of the regulations  and conditions of the policy. This policy is governed by the Protected Disclosures Act, no, 26 of 2000.