Massmart Annual Report 2008

King II index

The following index represents the Group’s compliance with the King II Report. More detail can be found here.

  King II reference   Content
  2   Boards and Directors
  2.1   The Board
  2.1.1   Accountable and responsible for Company performance and affairs
  2.1.2   Unitary board structure of executive and non-executive directors
  2.1.3   Provide strategic direction, appoint CEO and plan succession
  2.1.4   Full and effective control over Company
  2.1.5   Ensure compliance to laws, regulations and codes of business practice
  2.1.6   Define levels of materiality
  2.1.7   Unrestricted access to all Company information
  2.1.8   Develop corporate code of conduct
  2.1.9   Option of independent professional advice
  2.1.10   Consider effectiveness due to size, diversity and demographics
  2.1.11   Identify key risk areas and key performance indicators
  2.1.12   Identify and monitor non-financial aspects
  2.1.13   Record facts and assumptions concluding going-concern status
  2.1.14   Explain effect of proposed special resolutions in notice
  2.1.15   Encourage shareholders to attend AGM
  2.1.16   CV of director standing for re-/election at AGM to accompany notice in annual report
  2.1.17   Charter of responsibilities disclosed in annual report
  2.1.18   Balance corporate governance and entrepreneurship
  2.2   Board composition
  2.2.1   Balance of executive and non-executive directors
  2.2.2   Procedures for appointments to the Board
  2.2.3   Programme ensuring staggered rotation for Board continuity
  2.3   Chairperson and Chief Executive Officer
  2.3.1   Clear division of responsibilities
  2.3.2   Chairperson preferably independent and non-executive
  2.3.3   Functions of CEO and Chairperson to be separate
  2.3.4   Requirements where role of CEO and Chairperson are not separate
  2.3.5   Board to appraise performance of Chairperson
  2.3.6   Chairperson to appraise performance of CEO
  2.4   Directors
  2.4.1   Appropriate balance of power and authority
  2.4.2   Quality of non-executive directors
  2.4.3   Capacity of directors categorised in annual report
  2.4.4   Shadow directors to be discouraged
  2.4.5   Holding non-executive directorships in other companies
  2.4.6   Formal orientation programme for incoming directors
  2.4.7   New directors to receive development and education
  2.4.8   ‘Fit and proper’ test for new directors
  2.5   Remuneration
  2.5.1   Sufficient for quality required by Boards
  2.5.2   Appoint Remuneration Committee
  2.5.3   Membership of Remuneration Committee disclosed in annual report and Chairperson to attend AGM
  2.5.4   Full disclosure of director remuneration on individual basis
  2.5.5   Substantial part of remuneration to be performance-based
  2.5.6   Shareholders to approve share options granted to non-executive directors
  2.5.7   Factors to consider when issuing share options
  2.5.8   Overriding principle of full disclosure by director apply to all share schemes
  2.5.9   Executive directors’ fixed-term contracts should not exceed three years
  2.5.10   Statement of Remuneration Philosophy in annual report
  2.5.11   Remuneration Committee to play integral part in succession planning of CEO and Executive Committee
  2.5.12   Remuneration Committee to determine non-executive director fees and approval to be obtained at AGM
  2.6   Board meetings
  2.6.1   Meet at least quarterly and disclose in annual report
  2.6.2   Efficient and timeous briefing of Board
  2.6.3   Non-executive directors to have access to management
  2.6.4   Regular review of effectiveness of internal controls
  2.6.5   Inclusion of relevant non-financial information
  2.7   Board Committees
  2.7.1   Assist Board
  2.7.2   Formal delegation of duties and responsibilities to committees
  2.7.3   To have clear terms of reference, lifespan, function, reporting process and scope of authority
  2.7.4   Transparency and full disclosure to the Board
  2.7.5   Minimum requirement: Audit and Remuneration committees
  2.7.6   Non-executive directors to play important role
  2.7.7   Preferably chaired by independent non-executive director
  2.7.8   Free to take independent outside advice
  2.7.9   Disclose composition, objectives and meetings held in annual report; and Chairpersons to attend AGM
  2.7.10   Subject to regular evaluation by Board
  2.8   Board and Director evaluation
  2.8.1 & 2.8.2   Board effectiveness to be assessed at least annually
  2.9   Dealings and securities
  2.9.1 & 2.9.2   Formal policy concerning closed periods of trading
  2.10   Company Secretary
  2.10.1   Pivotal role in corporate governance
  2.10.2   Empowered to fulfil duties
  2.10.3   Provide guidance to directors with regard to discharge of their duties
  2.10.4   Induct new directors and assist CEO with annual Board plan
  2.10.5   Central source of guidance and advice on ethics and good governance
  2.10.6   Subject to ‘fit and proper’ test
  3   Risk management
  3.1   Responsibility
  3.1.1   Board responsible for risk management process, management accountable for execution
  3.1.2   Set risk strategy policies and communicate to employees
  3.1.3   Determine Company’s tolerance for risk
  3.1.4   Maintain sound system of risk management and internal controls to provide assurance of organisational objectives
  3.1.5   Ensure documented assessment of key risks at least annually
  3.1.6   Board Committee to review risk management process and significant risks
  3.1.7   Risk management and internal control to be embedded in Company practice
  3.1.8   Confidential reporting process to cover fraud and other risks
  3.2   Application and reporting
  3.2.1   Comprehensive system of control to be established
  3.2.2   Risks to be assessed on on-going basis
  3.2.3   Develop system of risk management that enhances stakeholders’ interests
  3.2.4   Board to identify and monitor key risk areas and performance indicators
  3.2.5   Reports from management to provide balanced assessment of risks and effectiveness of system of control
  3.2.6   Board responsible for disclosure in annual report
  3.2.7   Risk to be viewed from negative and positive perspective
  4   Internal Audit (IA)
  4.1   Status and role
  4.1.1   Effective internal audit function
  4.1.2   Board to formally define purpose, authority and responsibility
  4.1.3   Consistent with Institute of Internal Auditors (IIA)
  4.1.4   Head of IA to report to CEO and have full access to chairpersons of the Board and Audit Committee
  4.1.5   Report at all Audit Committee meetings
  4.1.6   Audit Committee involved with appointment/dismissal of head of IA
  4.1.7   Segregation of duties between internal and external audit
  4.2   Scope of internal audit
  4.2.1   Independent, objective assurance and consulting activity
  4.2.2   Provide assurance on processes and confirmation of control systems
  4.2.3   IA plan based on risk assessment
  4.2.4   Audit Committee to approve IA work plan
  4.2.5   Coordinate with internal and external providers of assurance to ensure proper coverage of controls
  5   Integrated sustainability reporting
  5.1   Sustainability reporting
  5.1.1   Report at least annually
  5.1.2 to 5.1.4   Report on adopted principles, implementation of practices and demonstration of resulting changes and benefits
  5.2   Organisational integrity/Code of Ethics
  5.2.1   Codify standards of ethical behaviour
  5.2.2   Demonstrate commitment to Code
  5.2.3   Disclosure of adherence to Code
  5.2.4   Dealings with individuals/entities without same level of integrity
  6   Accounting and auditing
  6.1   Auditing and non-audit services
  6.1.1   Audit Committee to recommend external auditors
  6.1.2   Auditors’ professional ethics and independence
  6.1.3   External auditors to work in conjunction with Internal Audit
  6.1.4   Consultation between external and internal auditors
  6.1.5   Audit Committee to set principles for utilisation of external auditors for non-audit services
  6.2   Reporting of financial and non-financial information
  6.2.1   Audit Committee to determine review level of interim report
  6.2.2   Reasons and auditors’ review tabled at Board meeting
  6.2.3   Facts and assumptions used in going-concern assessment to be minuted by the Board
  6.2.4   Review going-concern assessment at interim
  6.2.5   State where non-financial aspect subject to external validation
  6.2.6   Distribution via broad range of communication channels
  6.3   Audit Committee
  6.3.1   Board-appointed with majority independent non-executive directors
  6.3.2   Chairperson to be an independent non-executive director and not the Chairperson of the Board
  6.3.3 & 6.3.4   Written terms of reference with fact disclosed in annual report
  6.3.5   Membership disclosed in annual report and Chairperson to attend AGM
  7   Relations with shareowners
  7.1 & 7.2   Constructive engagement with institutional investors
  7.3   Effect of proposed special resolutions to be included in notice of AGM
  7.4   Utilise poll for special business or contentious issues
  8   Communication
  8.1   Balanced and understandable report to stakeholders
  8.2   Transparency and accountability concerning non-financial matters
  8.3   Comprehensive and objective assessment of Company activities
  8.4   Directors to report on the following in annual report:
  8.4.1   Directors’ responsibility to prepare financial statements that fairly present state of affairs of the Company
  8.4.2   Auditors’ responsibility to report on fair presentation of affairs
  8.4.3   Maintenance of adequate accounting records, internal control and risk management
  8.4.4   Consistent use of appropriate accounting policies
  8.4.5   Adherence to applicable accounting standards
  8.4.6   Going-concern assumption
  8.4.7   Adherence to the Code
  9   Implementation of the Code: duty and responsibility of Board and individual directors
  na: not applicable