NATIONAL NURSES ASSOCIATION Seminar

1. NATIONAL NURSES ASSOCIATIONSeminar On Corporate Governance Ronald Mukhesi SANNAM Finance Officer ronaldm@denosa.org.za Pretoria, South Africa 1 October, 2006

2. Background and Definition Development of Corporate Governance Characteristics of CG Contextual Application The 2nd King Report on CG This Presentation Covers

3. Committee Composition Problems

4. What is Corporate Governance? Background: The concept was born in the late 1980’s Separation of ownership from Management Definition: System whereby entities are managed and controlled Background and Definition

5. Treadway Commission (US) Investigated and made recommendations relating to financial aspects of Corporate Governance Cadbury Commission (UK) (setup in 1991) Considered financial reporting and accountability, good practices concerning responsibilities of directors King Committee (RSA) Recommendation on effective implementation of CG in South Africa Development of CG

6. Discipline – Commitment to adhere to correct and proper behavior Transparency – An outsider is able to make meaningful analysis of the company Independence – Management is not dominated by its largest shareowners Accountability – Decision makers are held accountable Fairness – The rights of Various groups are acknowledged and respected Social Responsibility- Awareness and responsiveness to social issues Principles of Corporate Governance

7. Company = Organization Shareholders = NNA’s (Nurses) Director = Network Member Board of Directors = Network Executive Directors = Executive Committee Non Executive Directors = Non Exco Members Contextual Application

8. All companies with securities listed on the JSE Banks, Financial and Insurance entities Public Sector Enterprises and Agencies (PFMA) All other Companies are encouraged to adopt the code The 2nd King Code (RSA)Application of Code

9. The Board The board is ultimately accountable and responsible for performance and affairs of the company The board can not discharge their responsibility by delegating to board committees. (no Shield) A brief CV of each director standing for election or re-election should accompany the notice of the AGM A charter setting out the responsibilities of the board should be disclosed in the annual report The 2nd King Code (RSA)Board and Directors

10. The board must: Give strategic direction to the company Appoint the Chief Executive Officer and ensure succession planning Retain full and effective control over the company Monitor management in implementing board plans and strategies Identify and monitor key risk areas that affect the enterprise and develop KPIs accordingly The 2nd King Code (RSA)Board and Directors

11. The Board Composition Should comprise a balance of Executive and non-executive directors A majority of non-Executive is preferred of whom sufficient number should be independent of management Consider demographics (gender) The 2nd King Code (RSA)Board and Directors

12. The Chairman and CEO The Chairman should be an independent non-executive director The function of the CEO should be separate from that of the Chairperson The performance of the CEO and the Chairperson should be appraised at least annually The 2nd King Code (RSA)Board and Directors

13. Directors Directors should have necessary skills and experience to bring informed judgment on issues of importance to the company Directors should be categorized as follows: Executive directors – Involved in the day to day running of the company Non-Executive directors – Not involved in day to day Independent directors – A non-executive director who The 2nd King Code (RSA)Board and Directors

14. An informed third party with relevant knowledge would conclude that the director is independent Is not a member of immediate family of an individual who has been in any of the past three years employed by the company or acted as an executive director Is not a significant supplier or customer Is free from any business relationship that could materially interfere with his/her capacity to act in an independent manner The 2nd King Code (RSA)Board and Directors

15. Board committees (Sub-Committees) Are an aid to assist the board and its directors The board should formally delegate some of its functions to board committees Board committees should have formally determined TORs, life span, clearly reporting procedures and written mandates As a minimum, boards should have audit and remuneration committees (nominations) Performance & effectiveness thereof be evaluated The 2nd King Code (RSA)Board and Directors

16. Audit committee (Sub-Committees) Consists of majority of independent non-executive directors and financial literate The Chairperson should be independent – non executive directors Audit com…to have written TORs Recommends the appointment of external auditors The 2nd King Code (RSA)Board and Directors

17. Remuneration committee (Sub-Committees) Should determine remuneration of Executive directors Consist entirely of independent directors A substantial portion of total remuneration should be performance based The 2nd King Code (RSA)Board and Directors

18. Nomination committee (Sub-Committees) Assists in the appointment of directors Comprise only of non-executive directors of whom majority should be independent The 2nd King Code (RSA)Board and Directors

19. Cal de Sac THE END