In regularly reviewing Gemgrow's governance structures, the board exercises and ensures effective and ethical leadership, always acting in the best interests of the company, at the same time concerning itself with the sustainability of its business operations.
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The board is responsible for the strategic direction and control of the company. It exercises control through a governance framework that includes the review and implementation of detailed reporting presented to it and its subcommittees and the implementation of a continuously updated risk management programme.
The board currently comprises seven directors of whom four are independent non-executive directors. The executive directors comprise a chief executive officer (CEO), a chief operating officer (COO) and chief financial officer (CFO). The chairman is an independent non-executive director whose role is separate from that of the CEO.
The CEO is fully responsible and accountable for the operations of the company. The chairman leads the board and facilitates constructive relations between the executive and the board. The chairman holds no other listed company chairman positions.
The board has adopted a charter that sets out the practices and processes it follows to discharge its responsibilities. The charter specifically sets a description of roles, functions, responsibilities and powers of the board, the shareholders, the chairman, individual directors, company secretary, and other prescribed officers and executives
of the company.
The terms of reference of the board and its committees deal with such matters as corporate governance, directors' dealings in securities, declarations of conflicts of interest, board meeting documentation and procedures for the nomination, appointment, induction, training and evaluation of the directors.
There is an appropriate balance of power and authority on the board so that no individual has unfettered powers of decision-making and no individual dominates the board's deliberations and decisions. The board regularly reviews the decision-making authority given to management as well as those matters reserved for decision-making by the board.
The procedure for appointments to the board is formal and transparent and a matter for the board as a whole. Any director appointed during the year is required to have the appointment confirmed by shareholders at the next annual general meeting. At each annual general meeting one third of the directors for the time being, or if their number is not three or a multiple of three, the number nearest to one third but not less than one third, shall retire from office, provided also that at least one third of the non-executive directors for the time being, or if their number is not three or a multiple of three, the number nearest to one third, but not less than one third, shall retire from office.
The board has delegated certain specific responsibilities to the following committees:
› Remuneration committee
› Audit and risk committee
› Social and ethics committee
The committees assist the board in discharging its responsibilities and duties, while overall responsibility remains with the board. Full transparency and disclosure of committee deliberations is encouraged and the minutes of all committee meetings are available to all directors.
Directors are encouraged to take independent advice at the cost of the company for the proper execution of their duties and responsibilities. The board has unrestricted access to the external auditors, professional advisors, the services of the company secretary, the executives and the staff of the company at any given time. An induction programme is provided for new directors.
A detailed assessment of all board members, including the chairman, will be undertaken annually.
Directors and committee members are supplied with comprehensive information that allows them to properly discharge their responsibilities. The members of the board bring a mix of skills, experience and technical expertise. The board meets at least four times a year.
The primary responsibility of the members of the remuneration committee is to monitor the remuneration policy of the company and more specifically the executive directors and ensure that directors and senior executives are remunerated fairly and responsibly.
The committee considers the mix of regular salary remuneration, annual bonuses and incentive elements that meet the company's needs. Incentives are based on targets that are stretching, verifiable and relevant.
Where necessary, the committee will assess, recruit and nominate new non-executive directors. Remuneration of non-executive directors, who do not receive incentive awards, is reviewed and set by the committee for ultimate approval by shareholders. The CEO, COO and CFO attend meetings by invitation.
The remuneration committee is mandated by the board to authorise the remuneration and incentivisation of all employees, including executive directors. In addition, the remuneration committee recommends directors' fees payable to non-executive directors and members of board subcommittees.
The remuneration committee's responsibilities and duties are governed by a charter.
The Companies Act has transformed the audit committee from being a committee of the board to a separate statutory committee that is appointed by the shareholders. However, the audit committee still forms part of the board even though it has specific statutory responsibilities over and above responsibilities assigned to it by the board. The committee members have the requisite financial and commercial skills to contribute to the committee's deliberations.
Gemgrow's audit and risk committee is integral to the company's risk management process. It reports to shareholders on the extent to which it carried out its statutory oversight duties in respect of the external auditors, the appropriateness of the financial statements and the accounting practices, as well as the internal financial controls.
The CEO, COO and CFO, as well as representatives of the external auditors, attend meetings by invitation.
Well in advance of meetings, the audit and risk committee receives reports on the financial performance, internal controls, adherence to accounting policies, compliance and areas of significant risk as well as written reports from the auditors.
One of the responsibilities of the committee is to monitor the adequacy and effectiveness of internal controls and risk management processes generally. The company has an effective ongoing process for identifying risk, measuring its potential impact and initiating and implementing measures to reduce exposure to an acceptable level. External specialist consultants are utilised, where required, to assist the committee with risk management measures. The committee also has unrestricted access to independent expert advice should the need arise
Having regard to the size and life-stage of the company, a dedicated internal audit function is not warranted at this stage and the board believes that the IT governance policy is appropriate. Use is made of external specialists (including resources of the external property managers) in respect of internal audit and IT functions. The situation and needs in this regard are reassessed by the committee on an ongoing basis.
The auditors have unrestricted access to the audit and risk committee. All non-audit services by the external auditors are required to be approved in advance by the audit and risk committee.
As required by the JSE, the audit and risk committee considers, on an annual basis, and satisfies itself of the appropriateness and expertise of the CFO. In this regard, the audit and risk committee is satisfied that the CFO has the necessary skills and qualifications to fulfil his responsibilities.
In accordance with REIT provisions of the JSE Listings Requirements, the risk management policy adopted by the board is in accordance with industry practice and Gemgrow may not enter into any derivative transactions that are not in the normal course of its business.
The board undertakes the role of a nomination committee and the selection, appointment and approval of new directors is therefore undertaken by the board as a whole in a formal and transparent manner, free from any dominance of any one particular shareholder. Any new appointees are required to possess the necessary skills to contribute meaningfully to board deliberations and to enhance board composition in accordance with recommendation, legislation, regulations and best practice.
The social and ethics committee assists the board with social and ethics related matters, as provided for in the Companies Act
The committee acts on behalf of the board and is responsible for evaluating social and ethics responsibilities and making recommendations to the board. The committee has all the functions and responsibilities provided for in the Companies Act. The CEO, COO and CFO attend meetings by invitation.
The board is assisted by a suitably qualified company secretary, who has adequate experience, who is not a director of the company and who has been empowered to fulfil his duties. The board is satisfied that the company secretary maintains an arms-length relationship with the board and is sufficiently qualified and experienced to execute the required duties. The company secretary advises the board on appropriate procedures for management of meetings and ensures the corporate governance framework is maintained. The directors have unlimited access to the advice and services of the company secretary.
The board satisfies itself on an annual basis on the competence, qualifications and experience of the company secretary.