GOVERNANCE

INTRODUCTION

The board of directors conducts the group’s business with integrity by 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. 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 and Report on Corporate Governance in South Africa are presently being analysed. Naspers also has a secondary listing of its American Depositary 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 management committees of the board.

The board’s audit, 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 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. 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. They make provision for employees to anonymously report unethical conduct in the workplace.

STATUS: NEW COMPANIES ACT AND KING III

The impact of the new South African Companies Act and King III was a focus over the past year. To achieve compliance with the new Companies Act, shareholders will be asked at the upcoming annual general meeting to approve a new memorandum of incorporation with effect from the still-to-be-announced effective date of the new act.

The board, its subcommittees and the boards and subcommittees of subsidiaries MIH, MultiChoice and Media24, made good progress in assessing the principles and practices contained in King III. Subsequent to the year-end the Naspers board approved revised board and subcommittee charters, which will come into effect in the new financial year. The responsibilities of the audit and risk management committee were separated and a new risk management committee was formed. Similar changes were approved by the boards of MIH, MultiChoice and Media24. A plan to address aspects of King III was approved, the implementation of which is well under way. Where appropriate for the group, the necessary changes to our governance policies and practices will be made. If any principles or practices are found to be inappropriate for the group, the reason for not implementing or not complying with King III’s recommendations will be disclosed.

Naspers will produce an integrated report for the financial year ended 31 March 2011 and report on the application of King III at that time.

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. In terms of the JSE Listings Requirements, reporting with regard to King III is applicable for financial year-ends beginning from 1 March 2010. Naspers will report on the application of King III in its integrated report for the year ended 31 March 2011. 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

Composition
The details of directors at 31 March 2010 are set out on pages 66 to 69 of this annual report.

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 and independent of management, to ensure that no one individual has unfettered powers of decisionmaking and authority. The roles of chair and managing director are separate, ensuring a clearly defined division of responsibilities.

On 1 April 2009 Mr Pacak was reappointed to the board as financial director after a three-month sabbatical. On 25 November 2009 Prof D Meyer was appointed as a new member of the board. 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 2010 the board comprised 11 independent, non-executive directors, one nonexecutive director and two executive directors, as defined under the Listings Requirements of the JSE. Six directors (43%) are from previously disadvantaged groups and three directors (21%) 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 also, on occasion, 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 about 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 with this. Directors are invited to give their input in identifying potential candidates. Members of the nomination committee, who are all non-executive, 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 non-executive 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 to pages 66 to 69 of this annual report) 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
Potential conflicts of interest are appropriately managed to ensure that candidate directors, as well as existing directors, are free of conflicts of interest between the obligations they have to the company and their personal interests. Any interest in contracts with the company must be formally disclosed and documented. Directors must also adhere to a policy on the trading of securities of the company.

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
  • 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 subcommittees.

Board meetings and attendance
The board meets regularly, at least four times a year, and also when specific circumstances require it. The executive committee will attend to urgent matters that cannot wait for the next scheduled meeting. 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.