Our corporate governance highlights

Statement of commitment

Good corporate governance is an integral part of the Group’s sustainability. Adherence to the standards and recommendations set out in the King III Report and other relevant laws and regulations is vital to achieving our strategic priorities. Corporate governance forms an overarching framework in which our business operates and we are committed to promoting good governance and ethics within all areas of our business.

To achieve this, the Group continues to enhance and align its governance structures, policies and procedures to support its operating environment and strategy.

Key governance developments for the year under review:

	Review of governance policies and procedures			A number of significant policies were approved in 2013, most of them in support of our ethics management programme and the standardisation of our governance processes. In order to promote transparency, to avoid any business-related conflicts and to prevent employees from any involvement in corrupt activities, it was decided that the Group should revise its gift policy and adopt a “no gifts policy”. The conflict of interest policy was also revised to further implement controls around conflicts of interest. In terms of the new policy directors and employees are required to declare any potential, actual or perceived conflicts and refrain from participating in any decision or transaction in which they have an interest. The share dealing policies have been implemented throughout the Group and the conflict of interest policy is being implemented. Pursuant to the promulgation of the Financial Markets Act, the MTN policies on share dealing by directors and employees were approved to align our share dealing practices with the new act. Various other policies such as the anti-bribery and corruption policy, the human rights policy and other policies related to ethics management were implemented to deal with ethical issues.
	Director orientation and development			The directors were engaged in several development sessions, which included a training session provided by Ethics SA on ethics management. The directors also received training presented by a representative of the JSE. The training covered market abuse and in particular insider trading.
	Board assessment			Subsequent to the external board appraisal conducted in 2012. In 2013 the board with the assistance of the nominations committee conducted an internal board assessment which assessed the contribution and performance of each director, by means of a questionnaire. To that effect the board endorses the re-election of the retiring directors.
	Application of King III principles			The application and adherence to the King III principles continues to be a key focus. In 2013 the Group reviewed its application of the King III principles against the JSE requirements and is satisfied that it has substantially applied the King III principles, save for a few instances which are explained in this integrated report. For details of our group’s application to each principle see the .

The board is comprised of an appropriate mix of executive, non-executive and independent non-executive directors, who are diverse in their academic qualifications, industry knowledge and experience, race and gender. This diversity enables directors to provide the board with the relevant judgment to work effectively when conducting and determining the business affairs of the Company.

The roles and duties of the non-executive chairman and the Group president and CEO are separated and clearly defined. This division of responsibilities ensures a balance of authority and power, with no individual having unrestricted decision-making powers.

Representation by gender on the board		Group board independence status

The MTN Group board retains full and effective control over the Group and is responsible, inter alia, for the adoption of strategic plans, the monitoring of operational performance and management, and the development of appropriate and effective risk management policies and processes. The full extent of the board’s responsibilities is contained in an approved board charter. The directors are of the opinion that they have adhered to the terms of reference as detailed in the board charter for the financial year under review.

The board, on the advice and recommendation of the exco, is responsible for setting the strategic direction of the Company. Annually, the board considers, debates and adopts with or without amendments, a strategic plan presented by the exco. This plan is further reviewed in the first quarter of each year.

The non-executive directors play a critical role as board representatives on the various board committees and ensure that the Company’s interests are served by impartial, objective and independent views that are separate from those of management and shareholders.

Chairman

The responsibility for managing the board and executive responsibility for the conduct of the business are separated. The chairman is responsible for the leadership of the board, ensuring effectiveness in all aspects of its activities and setting its agenda. It is the responsibility of the chairman to ensure that directors receive accurate, timely and reliable information. The chairman also ensures that no individual board member has unfettered powers in respect of decision making.

Lead independent director (LID)

Due to the fact that our chairman had been employed by the Group in an executive capacity within the preceding three financial years, he is not considered independent. The LID, AF van Biljon, provides guidance to the board in situations where the impartiality of the chairman is impaired or when a conflict of interest arises.

Delegation of authority

The ultimate responsibility for the Group’s operations rests with the board. The board retains effective control through a well-developed governance structure of board committees that specialise in specific areas of the business.

RS Dabengwa is the Group president and CEO and is responsible for the day-to-day management of the Group, supported by the exco. Necessary authorities have been delegated to the Group president and CEO to manage the day-to-day business affairs of the Company. The exco assists the Group president and CEO in discharging his duties and the duties of the board when it is not in session. However, certain matters are reserved for board and/or shareholder approval. The delegation of authority is reviewed periodically to ensure it remains aligned and relevant in relation to the rapid growth of the Company.

Group secretary

The Group secretary plays a key role in the continuing effectiveness of the board, ensuring that all directors are provided with adequate guidance on governance and applicable laws. She also ensures that directors have full and timely access to information and training that equips them to perform their duties and obligations properly and enables the board to function effectively.

The performance of the Group secretary, as well as her relationship with the board, is assessed on an annual basis. The board, with the assistance of the nominations committee, has considered the competencies, qualifications and experience of the Group secretary and also whether she maintains an arm’s-length relationship. The board is satisfied that she is suitably qualified to fulfil the role.

The board has approved a board charter which outlines the mandate of the directors. It stipulates that the operation of the board and the executive responsibility for the running of the Company’s business should be two key and separate tasks and that there should be a clear division of responsibilities at the head of the Company to ensure a balance of power and authority, ensuring that no individual or block of individuals has unfettered powers of decision making or can dominate the board’s decisions.

The general powers of the directors are set out in the Company’s Memorandum of Incorporation. They have further unspecified powers and authorities in respect of matters which may be exercised and dealt with by the Company, which are not expressly reserved to the members of the Company in general meetings.

All directors undergo a formal induction programme, which outlines their fiduciary and statutory duties and provides an in-depth understanding of the Group and its operations. Re-elected directors are also subject to an ongoing director training and development programme, which includes regular updates and informative consultations on legislative and regulatory changes.

Directors are subject to retirement by rotation at least once every three years and must avail themselves for re-election, in accordance to the Company’s Memorandum of Incorporation. For details on rotation in 2014, see page 91.

The majority of directors is independent. The chairman and all the non-executive directors are subject to an annual review of independence. Following the review of independence, directors who have been appointed on the board for a period in excess of nine years are subject to re-election.

The MTN Group board recognises that it is ultimately accountable and responsible for the performance and affairs of the Group and that the issue of delegated authorities to board committees and management in no way absolves the board and its directors from the obligation to carry out their fiduciary duties and responsibilities. All board committees operate under written terms of reference approved by the board. All committee chairpersons also provide the board with a report on recent committee activities.

The committees are as follows:

Attendance of scheduled and ad hoc meetings

Board members are required to attend all scheduled meetings of the board, including meetings called on an ad hoc-basis for special matters, unless prior apology with reasons has been submitted to the chairman or Group secretary. Ad hoc meetings are convened at short notice and therefore directors are not always available to attend.

Attendance register

Ad hoc committee meetings are not included in the register.

The board is satisfied that the board committees, set out in detail below, have effectively discharged their responsibilities as contained in their respective terms of reference during the year under review. The committees’ profiles are detailed as follows:

		Members		Terms of reference		Key focus for the year under review
		AF van Biljon (chairman), NP Mageza, MJN Njeke, J van Rooyen		The audit committee assists the board in discharging its duties relating to: • Safeguarding the assets of the Group; and • Monitoring the operations, financial systems and control processes including internal financial controls and the preparation of financial statements and related financial reporting in compliance with all applicablelegal requirements and accounting standards.		An annual audit was conducted by independent, competent and qualified auditors to provide external and objective assurance to the board and shareholders that the financial statements fairly represent the financial position and performance of the Company in all material respects. Ensured the integrity of the Company’s accounting and financial reporting systems, including internal audit. Made sure that appropriate systems of control, in particular systems for financial and operational control, were in place and ensured compliance with the law and relevant standards. More information on the audit committee is set out in the audit committee report .
		Members		Terms of reference		Key focus for the year under review
		J van Rooyen (chairman)1, KP Kalyan, NP Mageza2, MLD Marole, MJN Njeke, JHN Strydom                   1 Withdrawn as a member and chairman on 4 March 2014. 2 Nominated as chairman on 4 March 2014.		The risk management, compliance and corporate governance committee was established to improve the efficiency of the board and assist it in discharging its duties which include the following: • Identifying, considering and monitoring risks impacting the Company; • Ensuring compliance with prevailing legislation and other statutory requirements including voluntary corporate governance frameworks; and • Taking responsibility for the sustainability framework and sustainability reporting for the MTN Group.		• With the objective of ensuring a more integrated approach to managing risks that threaten the organisation, in 2011 the committee mandated the Business Risk Management Division to develop and implement a combined assurance methodology in line with the requirements of King III. This methodology continued to be a key focus area for the committee during 2013; • The committee also monitored the risk management framework and internal control systems in the Company in order to manage the Company’s material business risks; • One of the committee’s primary objectives was to review strategic, financial and operational risks that are inherent in operating in the telecommunications industry and assessing management’s responses to these risks; • The committee was instrumental in ensuring that new and emerging risks (such as cyber crime) are afforded the necessary consideration; • The committee was also involved in monitoring the corporate governance framework, including regulatory and listing requirements and business practices, with the objective of maintaining and strengthening risk management in the organisation; and • The committee recommended various governance policies for approval by the board.
		Members		Terms of reference		Key focus for the year under review
		A Harper (chairman), PF Nhleko, AT Mikati, F Titi J van Rooyen appointed as a member on 4 March 2014.		The committee oversees the formulation of a remuneration philosophy and human resources strategy to ensure that the Company employs and retains the best human capital possible relevant to its business needs and maximises the potential of its employees.		• Ensured that MTN’s remuneration strategies and policies are designed to attract, motivate and retain quality employees, directors and senior management committed to achieving the overall goals of the Company; • Benchmarked MTN’s remuneration against competitor companies; • Recommended the advisory note on the remuneration philosophy which was ultimately reviewed by shareholders; and • Recommended the submission to the board and the annual general meeting the remuneration of the chairman and members of the board.
		Members		Terms of reference		Key focus for the year under review
		KP Kalyan (chairman), NP Mageza, MLD Marole, J van Rooyen		The committee performs an oversight and monitoring role in partnership with other committees to ensure that MTN business is conducted in an ethical and properly governed manner and to develop or review policies, governance structures and existing practices. The committee’s responsibilities include: • Holding the Group president and CEO accountable for MTN’s ethics performance; • Monitoring activities with respect to legislation, other legal requirements and codes of best practice;` • Good corporate citizenship; • Environment, health and public safety; • Promotion of equality and prevention of unfair discrimination; • Prevention of fraud, bribery and corrupt practices; • Deterrence of human rights violations; • Consumer relations; and • Labour and employment.		More information on the social and ethics committee is set out on page 77 in the social and ethics statement.
		Members		Terms of reference		Key focus for the year under review
		PF Nhleko (chairman), AT Mikati, A Harper, AF van Biljon, JHN Strydom		The nomination of board members and senior management. The committee makes recommendations to the board on the composition of the board and board committees and on the development of directors.		• Ensured a formal and transparent board nomination and election process (guided by our director appointment policy); • Conducted board independence review; • Evaluated and recommended the audit committee members for re-election; and • Evaluated and recommended the retiring directors for re-election.

External advisors

The board and its committees make use of external advisors who advise on a variety of matters that require board consideration and approval.

Code of business conduct

The MTN Group is committed to promoting the highest standards of ethical behaviour among its directors, management and employees. In accordance with this objective and in the interests of good corporate governance, the code of business conduct is cascaded down to all operations.

MTN recognises that risk management and internal control are an integral part of good corporate governance.

MTN’s overall governance structure and integrated risk management framework guides the operation of our business units, which are primarily responsible and accountable for risk management.

MTN’s objective is to instil greater risk awareness throughout the organisation; to standardise the approach to risk management and to embed the process into the day-to-day running of the business.

Business continuity and crisis risk management

Business continuity management (BCM) establishes a fit-for-purpose strategic and operational framework that:

BCM’s understanding at the organisation’s highest level will ensure that the objectives of MTN’s operations are not compromised by unexpected disruptions. Through a proper and proactive BCM process, MTN ensures effective measures are in place to protect its people, facilities, technology, information, supply chain, stakeholders, reputation and brand. With that recognition, MTN can then take a realistic view on the responses that are likely to be needed as and when a disruption occurs, so that it can be confident that it will manage any consequences without unacceptable delay in delivering its products or services.

Insurance and risk transfer

The MTN insurance programme is built around the close connection between risk management and insurance using an annual assessment of risk management at each operating company.

To achieve this, there is a strong commitment to risk management assessment, improving operational management’s adoption of risk management best practice and to reduce risks across the entire insurance programme.

MTN has a comprehensive insurance programme in place that covers perils such as physical/material damage, business interruption, political risk, public liability, directors’ and officers’ liability, crime and professional indemnity. The limits of indemnity for these covers have been structured to ensure that MTN has adequate cover for its risks but at the same time ensure that the Group gets maximum value from the programme and that premium spend is efficient. MTN also believes that risk retention and self-insurance are necessary to keep premiums at reasonable levels and show commitment towards risk management. MTN’s retention levels differ from policy to policy, guided by the nature of the risk being transferred.

Information and technology governance

MTN acknowledges information and technology as integral strategic assets to the business in delivering a bold new digital world to its customers. MTN’s commitment to sound governance is supported by the ongoing activities and efforts in embedding the King III Code of Corporate Governance principles and recommendations, with specific focus on technology governance through the establishment of various responsibilities, processes and supporting governance structures.

A Group information security officer (GISO) has been appointed and charged with the responsibility for managing and monitoring the Group-wide information security programme.

Adequate effort at all levels and proper risk management practices will continue to ensure that technology governance is fully integrated across all MTN operations and that current and emerging information security risks, such as cyber security and data privacy, are proactively addressed.

Fraud risk management

The MTN Group fraud risk management strategy is based on the three core elements of prevention, detection and response to fraud, bribery and corruption-related risks.

The proactive management of fraud risk is embedded into MTN Group enterprise risk management processes and also informs the residual rating and consideration of risk on a principal risk level. MTN operating companies are required to identify, monitor, mitigate and report on significant fraud risks on a continual basis. All MTN stakeholders have access to the Deloitte Tip-offs Anonymous website (www. tip-offs.com) and email address (anonymous@tip-offs.net) to report fraud and corruption while 19 operations have an established and dedicated whistleblowing line.

In 2013, MTN received 687 whistleblowing reports about fraud and other administrative matters. The MTN fraud risk management framework ensures that every whistleblowing report is reviewed, investigated accordingly and reported to the audit committee where applicable and relevant. Current and emerging fraud risks such as mobile financial services, cybercrime and procurement fraud continue to be assessed and monitored.

Internal audit

The MTN Group and all its subsidiaries embrace the principles of The King III Report and recognise the significant opportunities that present themselves to companies that do so.

Internal audit’s role is that of an objective and independent value-adding assurance provider that embraces a riskbased auditing approach in line with King III to the Group exco and board. It considers the risks that may hamper the achievement of strategic priorities and further determines the effectiveness of MTN’s system of internal control and risk management.

MTN’s internal audit has adopted a combined assurance model as a coordinated approach to all assurance activities.

MTN has dedicated teams that perform internal audits across MTN and its subsidiaries. Internal audit reports functionally to the audit committee and administratively to the Group president and CEO. Its independence is explicitly stated within the business risk management charter. Internal audit assurance is guided by extensive and proactive risk assessment. Internal audit coverage is extended to all operations and all high-risk processes in line with the internal audit methodology.

In 2013, more than 180 000 hours were spent on internal audit and for 2014 we expect that internal audit activities will exceed 201 370 hours.