Governance

INTRODUCTION

The board of directors conducts the group’s business with integrity by applying appropriate corporate governance policies and practices.

Naspers is a multinational media group with operations in 131 countries including Africa, South America, Europe, China, India, south-east Asia and the USA. Its primary listing is on the JSE Limited (JSE). The company is therefore subject to the Listings Requirements of the JSE, the guidelines in the King Code and Report on Corporate Governance for South Africa 2009 (King III), as well as legislation applying to publicly listed companies in South Africa. Naspers also has a secondary listing of its American Depository Shares (ADSs) on the London Stock Exchange (LSE).

Compliance with both the JSE and applicable LSE listings requirements is monitored by the audit and risk committees of the board.

The board’s audit, risk, human resources and remuneration and nomination committees fulil key roles in ensuring good corporate governance. The group uses independent external advisers to monitor regulatory developments, locally and internationally, to enable management to make recommendations to the Naspers board on matters of corporate governance.

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
  
       
    rters
revised		    
  • 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.

STATUS: NEW COMPANIES ACT

The impact of the new South African Companies Act No 71 of 2008 (signed into law on 8 April 2008 and effective 1 May 2011) was a focus over the past year. To comply with this act, shareholders will be asked to appoint the members of the audit committee and consider special resolutions on directors’ fees and the provision of loans and other inancial assistance. A new memorandum of incorporation is being drafted and will be brought to shareholders for consideration and approval at the appropriate time. The new act provides transitional arrangements in terms of which Naspers has until 1 May 2013 to adopt a new memorandum of incorporation.

BUSINESS ETHICS STATEMENT

Naspers is formalising its compliance and ethics management process. The group code of business ethics was revised during the year, and is available on www.naspers.com.

This code applies to all directors and employees in the group. Ensuring that group companies adopt appropriate processes and establish supporting policies and procedures is an ongoing process. Management focuses on policies and procedures that address key ethical risks, such as conflicts of interest, accepting inappropriate gifts and acceptable business conduct.

The human resources and remuneration committee is the overall custodian of business ethics. The disciplinary codes and procedures of the various companies are used to ensure compliance with policies and practices that underpin the overall code of business ethics. Unethical business behaviour by senior staff members is reported to this committee, along with the manner in which the company’s disciplinary code was applied.

Naspers is committed to conducting its business on the basis of complying with the law, with integrity and with proper regard for ethical business practices. It expects all directors and employees to comply with these principles and, in particular, to avoid conlicts of interest and to desist from insider trading, illegal anti-competitive activities and bribery and corruption.

Whistle-blowing facilities at most major subsidiaries enable employees to anonymously report unethical business conduct.

COMPLIANCE FRAMEWORK

Naspers has established a legal compliance programme formalising practices followed for some time. The programme involves preparing and maintaining inventories of material laws and regulations for each business unit, implementing policies and procedures based on these laws and regulations, establishing processes to supervise compliance and mitigate risks, monitoring compliance, implementing effective training and awareness programmes and reporting to the various boards and management on the effectiveness of these efforts.

The compliance programme is managed by the general counsel, André Coetzee, acting as the chief compliance officer, while implementation at each business unit is undertaken by a local compliance officer and compliance committee. Each local compliance committee reports to the chief compliance oficer who, in turn, reports to the relevant risk committees.

Litigation in the business units is reported monthly by the respective heads of legal affairs to the general counsel, but material litigation is notiied to the general counsel as soon as possible after it arises. The general counsel, in turn, reports regularly on material litigation to the applicable boards and risk and audit committees.