Governance > Corporate governance

Aveng believes that good corporate governance is central to its success. The Group is committed to maintaining high standards of governance, ensuring that the Group is being managed ethically within prudently determined risk parameters. The Group accepts the underlying principles and recommendations set out in the King Report on Corporate Governance South Africa 2002 (King II) and complies with the additional corporate governance and listing requirements of the JSE Limited. The Company is in the process of analysing the provisions of the Code of Governance Principles for South Africa 2009 (King III), which was issued on 1 September 2009 to ensure that it complies in all material aspects by the effective date.

Aveng strives to implement good governance in practical ways by not allowing form to replace substance. This commitment is demonstrated by the ongoing refinement of structures to reflect current best practice in corporate governance.

Aveng has always believed that high standards of corporate governance are fundamental to achieving its long-term strategic goals and meeting the needs of all stakeholders.

Integrity, ethical behaviour and compliance

Aveng has a pro-active approach to risk management, which results in the integration of governance, risk and compliance issues leading to an enhancement of the overall effectiveness and efficiencies in this area.

Integrity

Organisational and personal integrity is one of Aveng’s core values. The Group’s code of business conduct is set out here and is formally committed to annually by the directors of Aveng Limited, its principal subsidiaries, operating groups and business units. The code of business conduct is made known to employees through, inter alia direct communication, newsletters and reports and the like. The internal audit function monitors compliance with the code in a systematic manner. Behaviour that undermines the letter and spirit of the code is reported and dealt with as a matter of urgency. Where required, appropriate action is taken to ensure that the reputation of the Group is not impaired.

Aveng carefully reviews, prior to its dealings with other individuals and companies, their level of commitment to personal and organisational integrity to ensure alignment.

Ethical behaviour

Aveng is committed to a policy that requires ethical behaviour of all its employees in all facets of their business at all times. It is the Group’s stated intent to demonstrate, commit to and entrench a culture of zero tolerance to unethical behaviour. Unethical behaviour includes bribery, corruption, fraud and facilitation payments and may include certain gifts, hospitality, expenses and sponsorships, as well as charitable and political contributions made by the Group.

Aveng, its operating groups and business units support the multi-industry and multi-national anti-corruption initiative to strengthen efforts to counter bribery and corruption. This initiative was launched by the Engineering & Construction, Energy and Mining & Metals Governors of the World Economic Forum, in co-operation with Transparency International and the Basel Institute on Governance.

These principles have been developed into a broad framework by the World Economic Forum called the Partnering Against Corruption Initiative (PACI) – principles for countering bribery to which Aveng is a signatory. These principles call for a commitment to two fundamental actions, namely:
  • a zero tolerance policy towards bribery, corruption, fraud, with specific limitations placed on political contributions, gifts, expenses and charitable contributions; and
  • development of a practical and effective implementation programme.

The anti-corruption framework developed by Aveng takes cognisance of the World Economic Forum Programme Against Corruption Initiative, the relevant legislation applicable in South Africa and areas where the Group works if these are more onerous than South African legislation and the code of business conduct.

The framework covers the Aveng Group’s corporate values, code of business conduct, legislation, commitments, definitions, guidance, framework policies, controls, training and communication required for the effective implementation of the Group’s anti-corruption framework.

The complete anti-corruption framework was rolled out to all Group senior executives over the past 12 months. This has been followed by the requisite communication, production of information brochures for all employees and the implementation of the appropriate control, evaluation and audit systems.

Compliance

In addition to the roll out of the Group’s anti-corruption framework, which includes the aspect of compliance with competition legislation, a competition compliance programme has been formulated and implementation has commenced. The need for this programme was identified both by the Group and in terms of the Consent Agreement, confirmed by the Competition Tribunal of 25 February 2009.

The objective of the competition compliance programme is to ensure that all employees, management and directors within Aveng Limited, Aveng (Africa) Limited, its subsidiaries and business units and Trident Steel (Pty) Limited are made aware of the requirements and do not contravene the provisions of the Competition Act. Compliance Officers, which have been appointed at Aveng Limited and at each of the operating groups, are championing the implementation of this initiative.

Board of directors

The board is the focal point of Aveng’s corporate governance. It determines the purpose, values and strategic direction of the Group. It sets strategic objectives, key policies, risk parameters and financial performance criteria. It exercises leadership, enterprise and sound judgement in its quest for continued stakeholder prosperity.

The board delegates the detailed planning and implementation of policy to management, formally reviewing progress on a quarterly basis.

The protection of shareholders’ rights and responsibility to other stakeholders within the constraints of the regulatory environment is of paramount importance in all board decisions.

Aveng has a unitary board structure comprising 11 directors. Five are independent non-executive, one non-executive and five executive directors. Their details appear here.

Non-executive directors are at liberty to accept other board appointments, including directorships of industryrelated associations, government-sponsored boards and organisations with a CSI or charitable focus, provided the number of appointments so accepted does not impact on the director’s ability to discharge their responsibilities in terms of the board’s Charter.

The strong independent composition of the board ensures that no one individual has unfettered powers of decision and authority. There are no shadow directors.

Non-executive directors are not awarded share options or benefits other than directors’ fees. There are no service contracts with either executive or non-executive directors. Executive directors are required to retire from the board at age 60. In terms of the Company’s articles of association, non-executive directors are required to retire from the board upon reaching the age of 65. However, given the difficulties experienced in finding suitably qualified non-executive directors, it is proposed to increase the retirement age for non-executive directors, from 65 to 70 years. A special resolution amending the Company’s articles of association accordingly, will therefore be proposed at the forthcoming annual general meeting.

In accordance with the Company’s articles of association, all directors are subject to retirement by rotation and re-election by the shareholders at least once every three years. Non-executive directors can serve a maximum of three terms. Re-appointment of non-executive directors is not automatic. The appointment of directors is based on recommendations of the remuneration and nomination committee and approved by the board. In terms of the Company’s articles of association, newly appointed directors are then required to stand for re-election at the next annual general meeting.

New directors are inducted by the chairman, chief executive and the Company secretary. The chairman deals with the workings of the board, the chief executive with the business, and the Company secretary with legal and governance issues.

The board meets formally at least once a quarter, or more frequently if necessary, to consider and review matters specifically reserved for its decision. These include financial and operational results, issues of strategic direction, major acquisitions and disposals, approval of major capital expenditure, large construction tenders as well as any other material matters.

The timely dissemination of detailed board papers, which include financial, safety, health, environmental, operational, risk and other supporting documentation ensures that the directors are fully informed on those matters scheduled for discussion and decision at each board meeting. Directors may request the chairman to place a matter on the agenda.

Directors have unrestricted access to all Company information, records, documents and property. With the prior agreement of the chairman, they are entitled to obtain independent legal advice on Group-related matters at the Group’s expense.

In terms of the board’s Charter, the board is required to annually evaluate its performance as well as that of its committees. This evaluation was carried out during the year under review and the results thereof reported to the board. The board as well as the committees have formally reviewed their compliance with the respective mandates and are satisfied that they have materially fulfilled their obligations in terms of the charters for the 2009 financial year.