Application of and approach to King III

 

 

 

The board, its subcommittees, and the boards and subcommittees of subsidiaries MIH, MultiChoice and Media24 made good progress in embedding the appropriate principles and practices contained in King III. The Naspers board approved revised board and subcommittee charters. The responsibilities of the audit and risk committees were separated and new risk committees formed. Similar changes were approved by the boards of MIH, MultiChoice and Media24. A plan to address aspects of King III was approved and implemented for the in-scope entities for 2011.

A disciplined reporting structure ensures the Naspers board is fully apprised of subsidiary activities, risks and opportunities. All controlled entities in the group are required to subscribe to the relevant principles of King III. Business and governance structures have clear approval frameworks. The process to address the principles of King III has been a top-down and bottom-up approach.

Naspers has an internal control oversight forum comprising the CFOs and risk and internal audit managers of Naspers, MIH, MultiChoice, Media24 and the group company secretary and group eneral counsel. The forum was tasked to ensure the Naspers group’s governance structures and framework and King III implementation plan were rolled out to in-scope entities in the group during the financial year. Progress was monitored by the audit and risk committees and reported to the board.

Set out below is a synopsis of changes to our governance framework during the past year:

       
  • Alternative dispute resolution policy
  • Directors’ right to take independent professional advice policy
  • Human resources and remuneration committee’s orientation policy
  • Investor relations policy
  • IT governance policy
  • Legal compliance policy
  • Nomination committee’s orientation policy
  • Risk committee’s orientation policy
  • Risk management policy
  • Sustainable development policy
 
       
       
  • Appointment of new directors policy
  • Audit committee’s orientation policy
  • Code of ethics and business conduct
  • Communication policy
  • Directors’ right to access information/documents policy
  • Group levels of authority
  • Orientation policy for new directors
  • Provision of services by independent auditor
  • Remuneration policy
  • Trading in securities policy
  • Whistle-blower policy
 
       
       
  • Risk committee charter
 
       
   
   
  • Board charter
  • Human resources and remuneration committee charter
  • Nomination committee charter
  • Audit committee charter
 

The composition of subcommittees of the board and subcommittees of the boards of MIH, MultiChoice and Media24 was reviewed and, where required, amended.

The formalisation of our risk management processes was a major focus. Details of the enterprise-wide risk management framework appear here.

In terms of JSE Listings Requirements reporting against King III applies for fiinancial year-ends from 1 March 2010. In line with the overriding principle in King III of apply or explain, the board, to the best of its knowledge, believes the group has applied or is embedding processes in support of the relevant principles of King III.

King III provides that directors should have a working understanding of the effect of applicable laws, rules, codes and standards on the company and its business. The company does not interpret these provisions to mean the board should have legal expertise in all spheres in which the company operates or be familiar with all laws applicable to the company and its various businesses, nor is it practical to do so, since Naspers operates in 131 countries and in several subsectors of these economies.

However, the Naspers board does ensure adequate structures and systems are in place and populated with people of sufficient competence for group compliance with the relevant laws. The board further manages corporate governance via its audit and risk committees, which monitor the proper operation of such structures and systems and report to the board.

Due to risk factors most notably the safety of our executives in the emerging markets in which we operate and possible contraventions of local privacy laws, the board has decided to report on the remuneration of executive management of the company, not the group. As such, remuneration of the two executive directors is set out in the remuneration report on page 119. Other company employees perform administrative functions.

The board believes the current non-executive directors’ fee structure of a single annual fee is more appropriate for the board and its committees and better relects member contribution.