TOPIC 1 Some Notes On Corporate Governance
Lecturer responsible for AUE2602:
Topic 1: Corporate Governance
Ms Nicolene Coetzee
Contact details:
AUE2602@unisa.ac.za
CORPORATE GOVERNANCE
What does CORPORATE GOVERNANCE mean:
It is the system or process whereby companies are directed or controlled. It follows then that:
Healthy, honest, open, competent and responsibly controlled companies will improve the quality of modern society.
CORPORATE GOVERNANCE
Key aspects of King III:
Effective leadership
* Ethical values of responsibility
* Fairness
* Accountability
* Transparency
Sustainability
* Inclusivity of stakeholders
* Innovation, fairness and collaboration
* Social transformation
Corporate citizenship
* Consider not only financial performance
* Consider impact of operations on society and environment
* Protect, Enhance and Invest in well-being of society, environment and economy
APPLY OR EXPLAIN
WHY?
• Cost/benefit ratio
• One size does not fit all
• Attention to performance
• Therefore: Apply King III Principles and if not,
Explain why not.
BOARD OF DIRECTORS
• Chairman
Independent non-executive director (principle 2.16).
CEO of the company not chairman of the board (principle 2.16).
Must be a formalised appointment
Performance to be assessed annually
• Membership
The board should comprise a balance of power with a majority of non- executive directors.
Majority of non-executive directors should be independent (principle 2.18).
• Members
Minimum of two executive directors - CEO and CFO (principle 2.18).
⅓ to be rotated annually
• Meetings
Meet at least four times a year (principle 2.1.2).
EXAMPLE - BOARD COMPOSITION
• XYZ Ltd’s board of directors consists of 8 directors
How should the board be structured in order to comply with the requirements of King III?
BOARD OF DIRECTORS
Example - Board Composition (Continued)
Executive
Non-executive
Example - Board Composition (Continued)
Executive
Minimum: CEO and Finance
Non-executive
Example - Board Composition (Continued)
I am
Topic 1: Corporate Governance
Ms Nicolene Coetzee
Contact details:
AUE2602@unisa.ac.za
CORPORATE GOVERNANCE
What does CORPORATE GOVERNANCE mean:
It is the system or process whereby companies are directed or controlled. It follows then that:
Healthy, honest, open, competent and responsibly controlled companies will improve the quality of modern society.
CORPORATE GOVERNANCE
Key aspects of King III:
Effective leadership
* Ethical values of responsibility
* Fairness
* Accountability
* Transparency
Sustainability
* Inclusivity of stakeholders
* Innovation, fairness and collaboration
* Social transformation
Corporate citizenship
* Consider not only financial performance
* Consider impact of operations on society and environment
* Protect, Enhance and Invest in well-being of society, environment and economy
APPLY OR EXPLAIN
WHY?
• Cost/benefit ratio
• One size does not fit all
• Attention to performance
• Therefore: Apply King III Principles and if not,
Explain why not.
BOARD OF DIRECTORS
• Chairman
Independent non-executive director (principle 2.16).
CEO of the company not chairman of the board (principle 2.16).
Must be a formalised appointment
Performance to be assessed annually
• Membership
The board should comprise a balance of power with a majority of non- executive directors.
Majority of non-executive directors should be independent (principle 2.18).
• Members
Minimum of two executive directors - CEO and CFO (principle 2.18).
⅓ to be rotated annually
• Meetings
Meet at least four times a year (principle 2.1.2).
EXAMPLE - BOARD COMPOSITION
• XYZ Ltd’s board of directors consists of 8 directors
How should the board be structured in order to comply with the requirements of King III?
BOARD OF DIRECTORS
Example - Board Composition (Continued)
Executive
Non-executive
Example - Board Composition (Continued)
Executive
Minimum: CEO and Finance
Non-executive
Example - Board Composition (Continued)
I am