Enterprise governance and compliance

UK COMBINED CODE

Old Mutual plc subscribes to the UK Combined Code. Nedbank as a subsidiary, takes cognisance of all corporate governance best practices including the UK Combined Code. An explanation of areas of non-compliance follows:

• The Chairman, Reuel Khoza, is a non-executive director, but not independent, because of his position at Aka Capital, a strategic business partner of Nedbank Group due to its BEE transaction. He is also a director of the group’s holding company, Old Mutual plc.
• Recognising that the Chairman is not an independent director, and in line with the recommendations of the UK Combined Code, Chris Ball was appointed to the position of senior independent director as of 16 February 2007. Chris Ball is, however, a member of more than one committee, which is not in line with the code. The Nedbank Board is of the opinion that it is both efficient and effective that the same independent director be a member of various committees, as this avoids any duplication of the activities of the committees and also ensures that no issues are overlooked.
• The code recommends that a majority of independent directors serve on the board to provide the necessary checks and balances and to ensure that the bank operates in a safe and sound manner. We continue to aspire to adhere to the requirements of the code. However, due to the limited number of experienced independent directors in South Africa, it is not always possible to adhere strictly to the code in this regard.
• The code states that a director is not independent if cross-directorships exist or if significant links with other directors exist. A significant number of directors of the Nedbank Board hold cross-directorships. Nedbank believes, however, that the directors have the strength of character to meet the independence criteria.
• The code also states that independence is compromised if a director has served on the board for more than nine years. Four directors – Prof Katz and Messrs Ndlovu, Magwaza and Mkwanazi – have served longer than nine years on the Nedbank Board.

Board meetings

In 2008 the Nedbank Group Board met eight times. Full details of attendance are included in the Nedbank 2008 Annual Report.

 

Board committees

The board committee structure remained unchanged in 2008. All the board committees have written terms of reference, which are reviewed on an annual basis and monitored by the board to ensure that the board retains effective control over the operations of the group. The key structures used to oversee corporate governance in the group are as follows:

• Nedbank Group Board of Directors
• Subsidiary companies’ boards of directors
• Group Remuneration Committee
• Group Audit Committee
• Group Transformation and Sustainability Committee
• Directors Affairs’ Committee
• Group Risk and Capital Management Committee
• Group Credit Committee
• Strategic Innovation Management Committee
• Group Finance and Oversight Committee

The year 2008 again saw full assessments of the effectiveness of the board and board committees being undertaken, as well as a comprehensive assessment of the Chairman. These assessments were conducted by the Institute of Directors, an independent third party. A 360° evaluation of the board by management was also completed.

Company Secretary

All directors enjoy full access to the Company Secretary, whose statutory obligations include:

• providing the directors with guidance as to their duties, responsibilities and powers;
• making the directors aware of all relevant legislation and regulations;
• reporting at shareholders’ meetings or directors’ meetings any failure to comply with such legislation and regulations;
• ensuring that minutes of all shareholders’ meetings, directors’ meetings and meetings of board committees are properly recorded;
• certifying in the annual financial statements that the company has lodged with the Registrar of Companies all required returns and that these are true, correct and up to date; and
• ensuring that a copy of the company’s annual financial statements is sent to every person who is entitled thereto in terms of the Companies Act.

The Company Secretary also ensures that all board rules and procedures are observed and ensures that new directors are inducted in a way that provides them with complete knowledge of both the business and their responsibilities.