Our Memorandum of Incorporation and Board Charter
The Absa Group Memorandum of Incorporation (MOI), which is in accordance with the Companies Act 2008, regulates the rights, duties and responsibilities of shareholders, directors and others within the Group.
The foundation for our governance principles and practices. Our Board Charter sets out how the corporate governance provisions in the Companies Act No. 71 of 2008 of South Africa; the Banks Act No. 94 of 1990 as amended, the Financial Sector Regulations Act No. 9 of 2017, the JSE Listings Requirements and the King IV Report on Corporate Governance for South Africa, 2016™ will be put into practice. Further, it acknowledges that there are applicable regulations and codes in our presence countries outside of South Africa.
- Outlines our Board and committees’ mandates and specifies which matters are reserved for the Board.
- Defines separate roles for the Group Chairman and Group Chief Executive.
- Outlines a formal process for director appointment, induction and training.
- Dictates the Board’s expectations of the directors, the chairmen of our Board committees and the Lead Independent Director.
- Sets criteria for director independence and the assessment of such independence.
- Requires that non-executive Board members attest to their independence, capacity, fitness and propriety on at least an annual basis.
- Details how to deal with matters of conflict of interest, including disclosures and recusals where relevant.
- Describes the assessment methodology for Board and Committee activities.
- Sets out how the corporate governance provisions in King IV, the South African Companies Act, the Banks Act (including South African Reserve Bank Directive 4/2008) and the JSE Listings Requirements will be put into practice.
- Is further supported by the Group Governance Framework in these areas, and more recently, an Engagement Protocols Document which covers, inter alia, the way in which the directors and executives engage with each other; and a group fit and proper policy which deals with the requirement for fitness and propriety of directors at the stage of appointment and on an ongoing basis.
- Acknowledges that there are applicable regulations and codes in our presence countries outside of South Africa.
The MOI, Board Charter and various policies inform the Board’s responsibilities. The two policies and the register below are published in terms of the JSE’s Debt Listings Requirements:
The Board Conflict of interest Register:
- Sets and steers strategic direction: The Board challenges the Group strategy and approves the related value-creating goals and ambitions, ensuring that a robust strategy process is followed, and that management define and execute the strategy.
- Approves policy and planning: The Board approves major policies (such as the Enterprise Risk Management Framework) and related decisions, including financial plans and risk appetite, to support the Group’s strategic ambition and to protect the interests of the Group’s stakeholders.
- Provides oversight and monitoring: The Board delegates to management the authority and responsibility for the day-to-day running of the business and reviews management’s performance and effectiveness by overseeing strategy execution; delivery against plan; the customer franchise and the treating of customers fairly; the robustness of the control environment and the three lines of defence; the adequacy of data and information management and the resilience and suitability of technology systems, the attraction and retention of employees including through fair remuneration practices; the appropriate deployment of resources; and compliance with regulations and best practice.
- Ensures accountability: Frequent and detailed reports and presentations are made to the Board and committees to ensure the accountability of management and the executive. This culminates in a determination of Group, business unit and individual performance as part of the performance and reward cycle. External disclosures are subject to governance processes to ensure that disclosures enable stakeholders to effectively assess the performance of the Group.
King IV application
The King IV Report on Corporate Governance for South Africa, 2016™ is the primary corporate governance code in South Africa. It consists of a set of voluntary principles and leading practices with an ‘apply and explain’ disclosure regime. The JSE Listings Requirements oblige listed companies to apply King IV.
Our board has 9 committees to assist it in the discharge of its duties and responsibilities but remains ultimately responsible for decisions that the committees make. Each committee operates within a terms of reference approved by the board.
Directors' Affairs Committee
Assists the Board in establishing and maintaining an appropriate system of corporate governance aligned to King IV, the corporate governance provisions of the Banks Act, and other relevant regulations for the Group and material subsidiaries. This includes the composition and continuity of the Board and its committees; the induction of new Board members; director effectiveness evaluations; director independence and director’s conflicts and disclosures of interests; reviewing and proposing governance policies; monitoring the governance structures of subsidiary entities; and considering matters of regulatory and reputational risk.
Group Audit and Compliance Committee
Is accountable for the annual financial statements, accounting policies and reports; oversees the quality and integrity of the Group’s integrated reporting; is the primary forum for engagement with internal and external audit; and monitors the Group’s internal control and compliance environment. The Committee recommends the appointment of external auditors to the Board and shareholders.
Group Risk and Capital Management Committee
Assists the Board in overseeing the risk, capital, funding and liquidity management of the Group by reviewing and monitoring:
i. The Group’s risk profile against its set risk appetite.
ii. Capital, funding and liquidity positions, including taking into
account applicable regulations.
iii. The implementation of the Enterprise Risk Management
Framework and the 12 principal risks defined there.
It receives assurance that processes are in place to comply
with laws and regulations pertaining to risk, capital, funding and liquidity management in all relevant jurisdictions.
Group Remuneration Committee
Sets and oversees the implementation of the Group’s Remuneration Policy principles to deliver fair and responsible pay aligned with current and emerging market practice and to meet regulatory and corporate governance requirements, and to align the behaviour of executives with the strategic direction of the Group. It approves the total remuneration spend, including fixed pay, short-term and long-term incentives, and any other remuneration arrangements, and the particulars of a defined senior population. It also considers and approves the Group’s remuneration disclosure policies and ensures that disclosures are accessible, understandable, accurate, complete and transparent; and that the Group remunerates fairly and responsibly across the Group in the context of overall employee remuneration, with a particular focus on remuneration differentials.
Social, Sustainability and Ethics Committee
Monitors key organisational health indicators relating to social and economic development; good and responsible corporate citizenship; the environment, health and public safety; labour and employment; conduct and ethics; consumer relationships; stakeholder management and transformation; as well as the Group’s activities relating to its role in Africa’s growth and sustainability and the impact on the Group’s employees, customers, and environment. It applies the recommended practices and regulation as outlined in King IV and the Companies Act in executing its mandate.
Information Technology Committee
Provides effective oversight and governance of the Group’s information assets and the technology infrastructure used to generate, process and store that information. The focus is on resilience and stability; architecture; data management; security (cyber and other), and digitisation. The technology impact of the Separation was a key focus as it required the introduction of new systems and managing the related costs and the associated risk.
Board Finance Committee
Assists the Board in reviewing and approving certain levels of investment, outsourcing, acquisition and divestments within the committee’s mandate; considers and recommends to the Board the short-term and medium-term financial plan underpinning the Group strategy; and considers and finalises the profit commentary as it relates to the interim and year-end financial results. It also approves the publication of the dividend declarations within the parameters determined by the Board.
Group Credit Risk Committee
Considers and approves all large exposures that exceed 10% of qualifying capital and reserves including single name exposures and key country and sovereign risk limits within the credit risk appetite of the Group as approved by the Board from time to time. It has oversight over credit risk and monitors industry, sector, and single name concentration risks, trends and exposures.
Assists the Board in approving Absa’s material risk models on inception, and then annually, as per the Group model risk policy and the Prudential Authority guidelines. It also approves the model risk framework; approves and monitors model risk appetite; approves appropriate post model adjustments; sets thresholds and tolerances for models and related post model adjustments; and oversees the model governance process, the external audit findings and the combined assurance work for all models.