Legislation and guidelines

Eskom has adhered to the statutory duties and responsibilities imposed by the Companies Act and augmented by the Public Finance Management Act (1 of 1999). In addition, Eskom is guided on best practices by King III and the Protocol on Corporate Governance in the Public Sector, as well as international developments. Eskom’s systems and processes are regularly reviewed to ensure that compliance is monitored in this regard.

The new Companies Act recognises a state-owned company as a separate category of company and provides that the acronym “SOC” be added to the company and subsidiaries’ names, as follows:
  • Eskom Holdings SOC Limited (Reg No 2002/015527/06)
  • Eskom Enterprises SOC Limited (Reg No 1999/002761/07)
  • Escap SOC Limited (Reg No 1993/03340/06)
  • Eskom Finance Company SOC Limited (Reg No 1990/001322/07)

The Act also recognises a non-profit company as a separate category, and requires that the acronym “NPC” be added to the name. The Eskom Development Foundation will therefore change its name to the Eskom Development Foundation NPC (Reg No 1998/25196/08).

In 2009, Eskom established the Companies Act task team and the King III task team to ensure that Eskom was prepared for implementation of the amended Companies Act and King III. The teams identified, assessed and addressed provisions impacting on Eskom’s operations, identified gaps in the process and reported progress to various governance structures. Eskom is proceeding with the implementation of recommendations of the task teams and, in certain instances, implementation plans are in place to address longer-term issues.

Some committees were restructured, as follows:
  • Audit and risk committee established by combining the previously separate committees
  • People and governance committee established by combining the nomination and governance committee with the human resources and remuneration committee
  • Executive management committee (Exco) ceased to be a board committee and became a committee of the chief executive.

Further work is continuing with regard to the Memorandum of Incorporation which is being reviewed together with the Department of Public Enterprises.

Eskom has applied the King III principles and practices. As a state-owned enterprise, some of these cannot be applied. In other instances, Eskom has adopted alternative practices to those recommended by King III. Explanations are presented in the table found here. Where there are not approved policies, processes or procedures yet, these are reflected as areas for improvement. Draft documents do exist, and these will be approved by the relevant governance structures in the next reporting cycle.

Applying the King III principles and practices  

  Number and description of King III principle or practice not in place       Explanation  
  2.16.1 Board should elect a chairman on an annual basis       Determined by shareholder (DPE) 
  2.17.1 Board should appoint a chief executive       Determined by shareholder in conjunction with the Board  
  2.18.10 Board should be able to remove any director without shareholder approval       Consultation with the shareholder  
  1.1.6 Subsidiary mandates       Subject to Eskom’s strategic review  
  2.27 Company’s remuneration policy       Draft policy in place  
  2.24 Subsidiary governance framework       Draft framework in place  
  3.5.1 Combined assurance model       Practice being developed  
  5.1.2 IT charter       Charter being revised  
  5.3 IT governance framework       Framework being revised  
  6.1.1 Compliance register       Register being finalised  
  3.8.2.2 Internal financial control policy       Policy being developed as part of Back2Basics project  
  7.1.2.2 Internal control framework       Framework being developed as part of Back2Basics project  
  8.2.1 Stakeholder management strategy and policies       Strategy and policies being developed  
  8.6 Alternative dispute resolution process       Process being developed