Summary of critical matters during the 2017/18 financial year *
|Most material matters arising during the year||Main undertakings and considerations|
|*||A more detailed table of key activities and outputs for the 2018 financial year is contained online in the full Governance Report available at www.transnet.net|
|1||Ms Kinley was appointed as a director and member of the Audit Committee with effect from 21 December 2017 and the Chairperson of the Acquisitions and Disposals Committee with effect from 30 January 2018.|
|2||Mr Mahlalela passed away on 29 March 2018.|
|3||Ms Mathekga was appointed as a member of the Remuneration, Social and Ethics Committee and ceased to be a member of Corporate Governance with effect from 30 January 2018.|
|4||Mr Shane retired as a director of the Company with effect from 29 June 2017.|
|5||Mr Stagman retired as a director of the Company with effect from 10 December 2017.|
|6||Mr Radebe was appointed as a director and the Chairperson of the Audit Committee with effect from 21 December 2017.|
Chairperson and Group Chief Executive
The roles of the Chairperson and the Group Chief Executive are separate, with their individual responsibilities clearly defined. The Chairperson is an independent non-executive director and is responsible for leading the Board and ensuring its effectiveness. The Group Chief Executive is responsible for the execution of the Company’s strategy and the day-to-day business of the Company. He is supported by the Group Leadership Team (GLT), of which he is the Chairperson.
The Delegation of Authority Framework records the nature and extent of the authorities delegated by the Board to the Group Chief Executive and specified governance structures and, in turn, by the Group Chief Executive to the members of the GLT to implement certain actions by or on behalf of the Company. It includes – to the extent necessary and incidental thereto - the authority to discharge all duties, obligations and powers imposed upon the deemed Authority under the National Ports Act. The new Board has undertaken a process to review the Delegation of Authority Framework.
Non-executive directors are appointed to the Board by the Shareholder Minister, on a three-year term, renewable annually. The Chairperson of the Board engages continuously with the Shareholder Minister, who is the final arbiter on the Boards’ succession plans and approval of transaction applications in accordance with the provisions of section 54 of the PFMA.
Management of potential conflicts of interest
The Companies Act codified the fiduciary duties of directors, and prohibits the use of position, privileges and/or confidential information for personal gain or to improperly benefit another person. The Board adheres to the prescribed standards of ethical and professional conduct.
Where a director or a prescribed officer has any direct or indirect personal or private business interest in a particular matter, that director or prescribed officer must be recused from the proceedings when the matter is considered, unless the Board, committee or the GLT, as the case may be, decides that the member’s interest in the matter is trivial or irrelevant. The declaration of interest and related-party disclosures registers are signed by the members and attendees at all formal meetings of the Board and the GLT, and their committees. These registers are maintained by the Group Company Secretary. In addition, non-executive directors, the GLT, Extended Leadership Team members, line management (Levels C – F) and any employee who has an interest, either directly or indirectly, are required to file an annual declaration of interest form with the Group Company Secretary at the beginning of each year or within 30 days from date of appointment. Any changes in interests during the course of the year necessitate the filing of revised declaration of interest forms, which are formally noted by the relevant governance structures.
The Board and the GLT note their respective Annual Declarations of Interests Registers. The Corporate Governance and Nominations Committee and the Remuneration, Social and Ethics Committee conduct annual reviews of the filed declaration of interest forms of the Board and GLT members for adequacy and oversight.
The Declaration of Interests process is conducted through an electronic filing system. In addition, the Company requires all employees to sign confidentiality and declaration of interest forms when adjudicating on procurement contracts and this practice is strictly enforced. The Declaration of Interest and Related Party Disclosure policies for directors and employees are revised every five years, or as required, in line with the Company Policy Framework.
The non-executive directors, appointed on 23 May 2018, have diverse skills, experience and backgrounds. They are principally free from any business relationship that could hamper their objectivity or judgement in terms of the business and activities of the Company. All the non-executive directors have unrestricted access to the Company’s information, documents, records and property in the interest of fulfilling their fiduciary duties and responsibilities.
The non-executive directors have direct, unfettered access to the Company’s employees, external auditors, professional advisers and internal auditors. The non-executive directors continue to act in the best interest of the Company at all times.
Group Company Secretariat function
The Board adheres to the requirement of the Companies Act and has appointed a competent and qualified Group Company Secretary. The Group Company Secretary is responsible for developing systems and processes to enable the Board to discharge its functions efficiently and effectively. The Group Company Secretary prepares Annual Work Plans for the Board, as informed by the strategic direction of the Company. The Annual Work Plans are approved for implementation by the respective governance structures and are continually tracked to assess progress. The Group Company Secretary advises the Board on corporate governance issues, the requirements of the Companies Act and other relevant legislation.
The Board has unfettered access to the services and advice of the Group Company Secretary. The Group Company Secretary is qualified to perform duties in accordance with applicable legislation and is considered by the Board to be fit and proper for the position. The Group Company Secretary does not fulfil an executive management function and is not a director. Therefore, the Board is satisfied that the Group Company Secretary maintains an arm’s-length relationship with the Executive Management Team, the Board and the individual non-executive directors.
The Group Company Secretariat has shared and learnt the knowledge it has gained in the corporate governance sphere with other SOCs, with the objective of enhancing uniformity, standardisation and alignment of best practice across the SOCs.
During the year, the Company continued to comply with the Companies Act’s requirements for the functioning and reporting of the Audit Committee. PFMA requirements for the composition and election of the Audit Committee are strictly observed.
The Audit Committee comprises independent non-executive directors who are duly elected by the Shareholder Minister at the annual general meeting in line with legislative requirements. Overall four scheduled and two special meetings were held during the year and all quorum requirements were met accordingly. The Audit Committee provides the following support activities to the Board:
- Assists the Board in discharging its duties for the safeguarding of assets and the evaluation of internal control frameworks;
- Reviews and assesses the integrity and effectiveness of the accounting, financial, compliance and other control systems;
- Considers the internal and external audit process, accounting principles and policies;
- Strengthens the independence of the internal and external audit functions to ensure their effectiveness;
- Ensures effective communication between the internal auditors, external auditors, the Board, management and regulators;
- Ensures compliance with and adherence to applicable legal, regulatory and accounting requirements;
- Contributes to a climate of discipline and control which will reduce the opportunity for fraud; and
- Assists the Board in discharging its duties as it pertains to ICT governance.
Ms Mmathabo Sukati
Chief Audit Executive