Pax Resources Ltd (“Pax SA”) endorses and is fully committed to compliance with the principles of the King II Report’s Code of Corporate Practices and Conduct. The Board advocates sound governance practices by all entities the Company is invested in and all the Company’s listed subsidiaries and associated companies endorse the Code of Corporate Practices and Conduct where applicable.
Pax SA is an investment holding company. Each entity in which the Company is invested has its own governance structures. Effective corporate governance forms part of the Group’s investment assessment criteria which is further monitored by non-executive board representation on those
In giving effect to its risk management responsibilities, Pax SA has implemented and maintained a continuous risk management review programme to ensure a coherent governance approach throughout the Company.
The following are the notable aspects of the Group’s corporate governance.
The Board has adopted a formal charter which has been implemented to:
· identify, define and record the responsibilities, functions and composition of the Board, and serve as a reference to new directors.
The charter has been endorsed by all directors of Pax SA and is available for inspection at the registered address.
COMPOSITION OF THE BOARD
Pax SA has a fully functional Board that leads and controls the company
The roles of the chairman and the chief executive officer are separated. The chairman is a non-executive director but is not independent.
ROLE AND RESPONSIBILITIES OF THE BOARD
The Board is ultimately responsible for the strategic direction, risk appetite, performance and affairs of the Company. In directing the Group, the Board exercises leadership, integrity and judgement based on fairness, accountability, responsibility and transparency so as to achieve sustainable prosperity for the Group.
After approving operational and investment plans and strategies, the Board empowers executive management to implement these and to provide timely, accurate and relevant feedback on progress made.
The Board remains accountable for the overall success of the approved strategies, based on values, objectives and stakeholder requirements, and for the processes and policies to ensure the effectiveness of risk management and internal controls. The Board is the focal point of the Group’s corporate governance and is also responsible for ensuring that it complies with all relevant laws, regulations and codes of best business practices.
The Board is responsible for monitoring the operational and investment performance of the Group, including financial and non-financial aspects. It is also responsible for ensuring that procedures and practices are in place which will protect the Group’s assets and reputation through accurate and transparent reporting.
The Board has established the following subcommittees to assist it in discharging its duties and responsibilities:
· The Remuneration and Nomination Committee, comprising four non-executive directors, advises the Board on the remuneration philosophies and terms of employment of all directors and members of senior management and is responsible for succession planning. The committee is also responsible for nominating directors for appointment and it annually participates in evaluating the performance of executive and non-executive directors. Directors do not have long-term contracts or exceptional benefits associated with the termination of services. The chairman of the Board is chairman of this committee. The chief executive officer attends meetings by invitation.
The committee has a formal mandate and its effectiveness is evaluated by the Board in terms thereof.
· The Audit and Risk Committee, comprising three independent non-executive directors, reviews the adequacy and effectiveness of the financial reporting process; the system of internal control; the management of financial, investment, technological and operating risks; risk funding; accounting policies; interim and annual financial statements; the internal and external audit processes; the Company’s process for monitoring compliance with laws and regulations; its own code of business conduct; and procedures implemented to safeguard the Company’s assets. The committee furthermore evaluates the effectiveness of the treasury committee and also approves the appointment of the external auditor and the external auditor’s fees for audit services and non-audit services.
As required in terms of the Companies Act, as amended by the Corporate Laws Amendment Act (No. 24 of 2006), the committee is satisfied that it complied with and performed its functions and that the Company’s external auditors are independent of the Company.
An independent non-executive director is chairman of the committee. The committee has a formal mandate and its effectiveness is evaluated by the Board in terms thereof.
· The Executive Committee, comprising all six executive directors, meets regularly between Board meetings to deal with issues delegated by the Board.
The Board is responsible for the appointment and induction of new directors. Non-executive directors are selected for their broader knowledge and experience and are expected to contribute effectively to decision-making and the formulation of strategies and policy.
Executive directors contribute their insight of day-to-day operations, enabling the Board to identify goals, provide direction and determine the feasibility of the strategies proposed. These directors are generally responsible for taking and implementing all operational decisions.
MEETINGS AND QUORUMS
The Articles of Association requires three directors to form a quorum for Board meetings. A majority of members, preferably with significant representation of the non-executive directors, are required to attend all committee meetings.
The Board meets at least six times a year. The Audit and Risk Committee meets at least four times a year, and the Remuneration and Nomination Committee meets at least once a year.
MATERIALITY AND APPROVAL FRAMEWORK
Issues of a material or strategic nature, which can impact on the reputation and performance of the Group, are referred to the Board. Other issues, as mandated by the Board, are dealt with at senior management level.
The minutes of all the committee meetings are circulated to the members of the Board. Issues that require the Board’s attention or a Board resolution, are highlighted and included as agenda items for the next Board meeting.
The Company’s policy that guides the remuneration of all directors and senior management is aimed at:
· Retaining the services of existing directors and senior management
· Attracting potential directors and senior managers
· Providing directors and senior management with remuneration that is fair and just
· Ensuring that no discrimination occurs
· Recognising and encouraging exceptional and value-added performance
· Ensuring that remuneration structures are consistent with the Company’s long-term requirements
· Protecting the Company’s rights by means of service contracts
In accordance with these objectives, the Remuneration and Nomination Committee annually reviews and evaluates the contribution of each director and member of senior management and determines their annual salary adjustments. For this purpose it also considers salary surveys compiled by independent organisations.
DUTIES OF DIRECTORS
The Companies Act places certain duties on directors and determines that they should apply the necessary care and skill in fulfilling their duties. To ensure that this is achieved, best practice principles, as contained in the King II Report on Corporate Governance for South Africa, are applied.
The Board is also responsible for formulating the Company’s communication policy and ensuring that spokespersons of the Company adhere to it. This responsibility includes clear, transparent, balanced and truthful communication to shareholders and relevant stakeholders.
After evaluating their performance in terms of their respective charters, the directors are of the opinion that the Board and the subcommittees have discharged all their responsibilities.
Mechanisms are in place to recognise, respond to and manage any potential conflicts of interest. Directors sign, at least once a year, a declaration stating that they are not aware of any undeclared conflicts of interest that may exist due to their interest in, or association with, any other company. In addition, directors disclose interests in contracts that are of significance to the Group’s business and do not participate in the voting process of these matters.
All information acquired by directors in the performance of their duties, which is not disclosed publicly, is treated as confidential. Directors may not use, or appear to use, such information for personal advantage or for the advantage of third parties.
All directors of the Company are required to comply with the Pax SA Code of Conduct and the requirements of the JSE regarding inside information, transactions and disclosure of transactions.
COMPANY SECRETARY AND PROFESSIONAL ADVICE
All directors are entitled to seek independent professional advice concerning the affairs of the Group, at the Company’s expense.
All directors have unlimited access to the services of the company secretary, who is responsible to the Board for ensuring that proper corporate governance principles are adhered to. Board orientation or training is done when appropriate.
At least once a year the Board considers the going concern status of the Group with reference to the following:
· Net available funds and the liquidity thereof
· The Group’s residual risk profile
· World economic events
· The following year’s strategic business plan, budgets and cash flow models
· The Group’s current financial position
RISK MANAGEMENT AND INTERNAL CONTROLS
DEALINGS IN SECURITIES
In accordance with the Listings Requirements of the JSE, the Company has adopted a code of conduct for insider trading. During the closed period directors and designated employees are prohibited from dealing in the Company’s securities. Directors and designated employees may only deal in the Company’s securities outside the closed period, with the authorisation of the chairman or the managing director. The closed period lasts from the end of a financial reporting period until the publication of financial results for that period. Additional closed periods may be declared from time to time if circumstances warrant it.