INTRODUCTION
The board of directors aspires to conduct the group’s business with integrity. It is committed to applying appropriate corporate governance policies and practices in each company in the group.
Naspers is a multinational media group with operations in various countries in 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 contained in the King Report on Corporate Governance for South Africa 2002 (King II), as well as legislation applicable to publicly listed companies in South Africa. Naspers also has a secondary listing of its American Depositary Shares (ADSs) on the London Stock Exchange (LSE). Although Naspers is not required to adhere to the corporate governance requirements set out under the UK’s Combined Code, certain LSE Listings Requirements must be complied with.
Independent boards of directors, all of which have established their own governance practices and subcommittees that comply, as appropriate to the companies, with the necessary governance and regulatory requirements, govern several of Naspers’s subsidiaries.
Compliance with both the JSE and applicable LSE Listings Requirements is monitored by the audit and risk management committee of the board.
The board’s audit and risk management, human resources and nomination committees fulfil 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 and the boards of major group companies on matters of corporate governance.
The board has a process to annually review the effectiveness and role of the board and its chair, as well as the effectiveness of the respective board committees. Self-assessment of the functioning of the audit and risk management committee includes a focus on the key competencies of the committee. Those subsidiaries with their own audit and risk management committees follow the same practice.
Whistle-blowing facilities are in place at most of the major subsidiaries locally and abroad where allowed. They make provision for employees to anonymously report unethical conduct in the workplace.
IMPROVEMENTS MADE DURING THE PAST YEAR AND PLANS FOR THE YEAR AHEAD
For South African subsidiaries like MIH Holdings Limited, MultiChoice South Africa Holdings (Proprietary) Limited and Media24 Limited, the implications of the Corporate Laws Amendment Act of 2006, were analysed and appropriate steps were taken. The key focus was on the need for, as well as the composition and functioning of, audit committees of the respective boards of these subsidiaries. Group governance policies were also implemented in several of our new multinational subsidiaries, such as Allegro, Ricardo and Gadu-Gadu.
Planning and reporting on the group’s corporate social investments and environmental impact has also been reviewed.
For the ensuing financial year, Naspers will continue to evaluate areas where governance at a corporate and subsidiary level can be strengthened. The implications of the new Companies Act, No. 71 of 2008 in South Africa (signed into law on 8 April 2008), as well as the King III Code on Corporate Governance (currently under review) will also be analysed and appropriate steps taken.
STATEMENT OF COMPLIANCE
The Listings Requirements of the JSE require that JSE-listed companies report on the extent to which they comply with the principles set out in King II. The board, to the best of its knowledge, believes that throughout the period under review the company has applied the principles of King II.
The board recognises that practices and procedures can always be improved, and therefore reviews progress annually.
THE BOARD
Composition
The details of directors at 31 March 2009 are set out here.
Naspers has a unitary board, which fulfils oversight and controlling functions. The board has a charter evidencing a clear division of responsibilities. The majority of board members are non-executive directors, who are independent of management, to ensure that no one individual has unfettered powers of decision making and authority. The roles of chair and managing director are separate, ensuring a clearly defined division of responsibilities.
Mr Koos Bekker was reappointed to the board on 1 April 2008 after a one-year sabbatical. Mr Steve Ward was for the last quarter of the financial year the acting chief financial officer during Mr Steve Pacak’s sabbatical. Subsequent to the year-end, Mr Pacak was reappointed to the board as financial director. Mr Boetie van Zyl fulfils the role of lead director in all matters not dealt with by the independent non-executive chair.
At 31 March 2009 the board comprised ten independent non-executive directors, one non-executive director and one executive director, as defined under the Listings Requirements of the JSE. Five directors (42%) are from previously disadvantaged groups and two directors (17%) are female. These figures are above the average for JSE-listed companies.
The chair
The chair is an independent, non-executive director. He provides guidance to the board as a whole and ensures that the board is efficient, focused and operates as a unit. He acts as facilitator at board meetings to ensure a flow of opinions and attempts to lead discussions to optimal outcomes in the interests of good governance. He represents the board in external communications in consultation with the managing director and financial director.
The managing director
The managing director reports to the board and is responsible for the day-to-day business of the group and the implementation of policies and strategies approved by the board. Chief executives of the various businesses assist him in this task. Board authority conferred on management is delegated through the managing director, in accordance with approved authority levels.
Appointments to the board
The board has adopted a policy on procedures for the appointment and orientation of directors. The nomination committee periodically assesses the skills represented on the board by non-executive directors and determines whether these skills meet the company’s needs.
Annual self-evaluations conducted by the board and its subcommittees also assist in this regard. Directors are invited to give their input in identifying potential candidates. The members of the nomination committee, who are all independent, propose suitable candidates for consideration by the board. A “fit and proper” evaluation is performed for each candidate identified.
Retirement and re-election of directors
All non-executive directors are subject to retirement and re-election by shareholders every three years. In addition, all nonexecutive directors are subject to election by shareholders at the first suitable opportunity in the case of an interim appointment. The names of non-executive directors submitted for election or re-election are accompanied by brief biographical details (refer here) to enable shareholders to make an informed decision on their election. The reappointment of non-executive directors is not automatic.
Orientation and development
An induction programme is held for new members of the board and of key committees, specifically tailored to the needs of the individual appointees. This involves industry and company-specific orientation, such as meetings with senior management to facilitate an understanding of operations. Board members are also exposed to the main markets in which the group operates. The company secretary assists the chair with the induction and orientation of directors, including arranging specific training if required.
The company will continue director development to build on expertise and develop an understanding of the businesses and main markets in which the group operates.
Conflicts of interest
Naspers has adopted an official code that deals with the management of potential conflicts of interest. This ensures that candidate directors, as well as existing directors, are free of conflicts of interest between the obligations they have to the company and their private businesses. Any interest in contracts with the company must be formally disclosed and documented. Directors must also adhere to an official policy on the trading of securities of the company and its listed subsidiaries.
Independent advice
Individual directors may, after consulting with the chair or the managing director, seek independent professional advice, at the expense of the company, on any matter connected with the discharge of their responsibilities as directors.
Role and function of the board
The board has adopted a charter setting out its responsibilities. Among other obligations, it:
- determines the company’s mission, provides strategic direction to the company and is responsible for the adoption of strategic plans and the implementation of values that support this
- evaluates and approves the annual business plan and budget compiled by management
- retains full and effective control over the company and monitors management on the implementation of the approved annual budget and business plan
- appoints the managing director or chief executive officer, who reports to the board, and ensures that succession is planned
- approves the company’s financial statements, interim and provisional reports, and is responsible for their integrity and presentation
- evaluates the viability of the company and the group on a going-concern basis
- determines the company’s communication policy
- determines director selection, orientation and evaluation
- ensures that the company has appropriate risk management, internal control and regulatory compliance procedures in place and that it communicates adequately with shareholders and other stakeholders
- establishes board subcommittees with clear terms of reference and responsibilities as and when appropriate
- defines levels of authority for specific matters, and delegates required authority to board subcommittees and management
- monitors non-financial aspects pertaining to the business of the company
- considers and, if appropriate, declares the payment of dividends to shareholders, and
- regularly evaluates the performance and effectiveness of the board and its sub- committees.
Board meetings and attendance
The board meets regularly, at least every quarter, and when specific circumstances require it. The executive committee will attend to urgent matters that cannot wait for the next scheduled meeting, as delegated by the board. The board held five meetings during the past financial year. The independent non-executive directors meet at least once annually without the managing director, financial director and chair present, to discuss the performance of these individuals.
The company secretary acts as secretary to the board and its subcommittees and attends all meetings. Details of attendance at meetings are provided here.
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