BOARD MEETINGS AND MEETING ATTENDANCE

The IDC Board meets at least once every quarter and holds a strategy session at least once a year. Special Board meetings are convened when necessary. Our Board members attended the following meetings during the reporting period:

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√  Present     •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured
*  Mr Zalk was on sabbatical leave for the first two meetings during the reporting period

BOARD COMMITTEES

The Board has established five standing committees to assist it in exercising its authority, being the Board Investment Committee, Human Capital and Nominations Committee, Audit Committee, Risk and Sustainability Committee, and the Social and Ethics Committee. All Board Committees operate under Board-approved terms of reference which are updated from time to time to stay abreast of developments in corporate law and governance best practice.

The Chairperson of each Board Committee is a non-executive Director. The members of each Board Committee are appointed by the Board of Directors, except for Audit Committee members who are appointed by the shareholder at the Annual General Meeting. Following each Committee meeting, at a Board meeting, the Board receives a report on deliberations, conclusions and recommendations. The Board Committees are discussed in greater detail below.

BOARD INVESTMENT COMMITTEE (BIC)

The purpose of the BIC is to consider transactions mandated to it by the Board which would, prior to the creation of the committee, vest with the Board. The BIC considers transactions as per the delegation of credit approval which is summarised on page 57 in Section 2 of this report, and it makes recommendations to the Board.

BIC members have attended the following meetings during the reporting period:

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√ Present      •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured
*  Mr Zalk was on sabbatical leave for the first two meetings during the reporting period

The BIC contributed significantly to the overall funding approvals of R14.5 billion during the reporting period, particulars of which are provided in Section 2 (Impacting on industrial development) of this report.

HUMAN CAPITAL AND NOMINATIONS COMMITTEE (HCNC)

The main purpose of the Board Human Capital and Nominations Committee is to support the Board in overseeing the development and implementation of human capital policies. The Committee annually manages the Board's evaluation of the performance of the Chief Executive Officer and also support the Board in fulfilling its oversight responsibilities relating to succession planning as well as overall compensation and human capital policies for all IDC employees.

The specific responsibilities of the Board Committee, as set out in the Board approved terms of reference, include:

  • Recommend the appointment of Directors to the boards of key subsidiaries and investee companies for consideration by the Board;
  • Recommend the appointment of the Chief Executive Officer to the Board;
  • Set the criteria to evaluate the performance of the Chief Executive Officer;
  • In consultation with the Chief Executive Officer sets the criteria to evaluate the performance of Executives;
  • Determine the CEO’s salary based on the evaluation of his/her performance together with relative market benchmarks;
  • Oversee the setting and implementation of remuneration policies and programmes at all levels of the Corporation including the payment of performance incentives;
  • Ensure that the human capital expertise and capacity facilitates the achievement of the business objectives;
  • Ensure development of strategies to retain key IDC personnel and play an integral part in the succession planning, especially of the CEO and Executive management; and
  • Support the Board in defining corporate performance indicators as well as the evaluation of the performance thereof.

HCNC members have attended the following meetings during the reporting period:

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√ Present      •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured

Report of the Board Human Capital and Nominations Committee

During the past financial year the Committee ensured that the performance objectives of the Corporation, the Chief Executive Officer and that of Executives were aligned to achieve the strategic imperatives of the Corporation both from a short term and long term perspective. The Board’s oversight role included the evaluation of corporate performance and individual executive performance. On the basis of the achieved performance, the Committee recommended the payment of applicable incentives for the year under review.

In support of the new corporate strategy and to drive a culture of high performance, the Committee’s main focus for the year was the review of the Corporation Remuneration Philosophy and policy. The New Remuneration Philosophy was approved by the Board for implementation during the year under review. A detailed outline of the policy is provided on pages 51 to 52 in Section 2 of this report.

BOARD AUDIT COMMITTEE (AUDIT COMMITTEE)

The Audit Committee monitors the adequacy of financial controls and reporting; reviews audit plans and adherence to these by external and internal auditors; ascertains the reliability of the audit; ensures that financial reporting complies with IFRS and the Companies Act; ensures the integrity of integrated reporting; ensures that there are effective measures in place on Information Technology risks as they relate to financial reporting; reviews and makes recommendations on all financial matters; and recommends the appointment and removal of auditors to the Board.

The Audit Committee has complied with the King III principles including integrated reporting, as is evidenced by this, the fifth issue of the IDC’s Integrated Report.

The Audit Committee has made an assessment of the effectiveness of the control environment through application of the “Combined Assurance” concept. This included engagements with different assurance providers (e.g. Internal Audit, External Auditors, Corporate Secretariat, etc.) in order to formulate a holistic opinion in this regard.

Audit Committee members have attended the following meetings during the reporting period:

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√ Present      •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured

A summary of the Audit Committee’s work during the year under review is provided in the Report of the Board Audit Committee, on pages 76 to 78 in Section 3 of this report.

BOARD RISK AND SUSTAINABILITY COMMITTEE (BR&SC)

The primary duty of the BR&SC is the governance of risk. It also assists the Board to determine the maximum mandate levels for the various Credit, and Asset and Liability Committee decisions. The Committee assists management with the responsible stewardship of sustainability, including stakeholder impact, management of material issues, sustainability governance and reporting.

Board Risk and Sustainability members have attended the following meetings during the reporting period:

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√ Present      •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured

During the year under review the BR&SC provided oversight over the monitoring of the quality of the IDC book and it ensured that the Corporation, through its Risk Management and Post Investment Management departments, had an action plan in place with regards to the management of its top 20 high risk exposures. Care was also taken to ensure that appropriate and effective impairments interventions were implemented. A revised Political Risk Insurance policy, which deals with exposures outside the Republic of South Africa, was approved and the Committee was satisfied that IT Risks and the implementation of IT projects planned for the year were being adequately managed.

SOCIAL AND ETHICS COMMITTEE (SEC)

The Social and Ethics Committee was established to replace the Governance and Ethics Committee (GEC). The SEC’s terms of reference were approved by the Board during February 2016.

The SEC has taken over from the GEC the responsibility to advise the Board generally on corporate governance and ethics matters, in addition to social and ethics matters as provided for in the Committee’s terms of reference. The aim of the SEC continues to be to promote the ideals of corporate fairness, transparency and accountability as well as to assist the Board in vetting funding applications, projects and any matter in which a director of the IDC has an interest. The SEC is accordingly mandated by the Board to ensure that no special or unusual treatment is accorded to any application, project and or any matters in which a director of the IDC has an interest, and to make appropriate recommendations to the Board.

SEC members have attended the following meetings during the reporting period:

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√ Present      •  Apology      M  Male      F  Femle      A  African      W  White      C  Coloured

During the year under review the SEC considered 2 matters in which IDC directors had potential conflicts of interest. The matters in question related to Kai Garib Solar SPV, in which HCI is an investor and Ms Bethlehem a senior manager at HCI, and Le-Sel Research (Pty) Ltd, where Ms Orleyn is a shareholder in Peotena Group Holdings via the Mamaswa Family Trust. Peotena Private Equity is a subsidiary of Peotena Group Holdings. Indirect shareholder in Le-Sel via Trinitas Fund General Partner. Trinitas has a 37.5% equity interest in Le-Sel Research. Note 43 to the Annual Financial Statements, which appear in Section 4 of this report, provide particulars of present and past directors’ financial interests in IDC transactions.

EXECUTIVE MANAGEMENT COMMITTEE (EXCO)

EXCO is responsible for amongst others, the implementation of strategies and policies of the IDC as developed by the Board; managing the business and affairs of the IDC on a day-to-day basis; developing the annual budget and business plan for the Board’s approval; implementing the Board’s directives and prioritising the allocation of capital, technical and human resources.

EXCO assists the CEO by guiding the overall direction of the Corporation and exercising executive control in the management of its day-to-day operations. The CEO is an executive director appointed by the shareholder through a recommendation by the Board and other EXCO members are appointed by the Board.

EXCO has a properly constituted mandate and Terms of Reference. The current composition of EXCO is reflected on pages 16 to 19 in Section 1 of this report. Ms K Schumann and Ms KC Morolo left the Corporation at the end of April 2016, Ms PZ Luthuli was appointed as the Divisional Executive: Corporate Affairs with effect from 1 July 2015, Ms N Veleti was appointed as the Corporation’s Chief Financial Officer with effect from 1 September 2015 and with effect from 1 May 2016, Ms L Matshekga and Mr WH Smith were respectively appointed as the Divisional Executive: Agro, Infrastructure and New Industries, and the Divisional Executive: High Impact and Regions.

A summary of the significant activities and actions undertaken by EXCO can be found in the CEO’s report, which appears on pages 9 to 11 in Section 1 of this report.

Ethics and managing directors’ conflicts of interest

A Code of Ethics and Business Conduct is in place which guides the Corporation’s business conduct in all matters, requiring honesty and integrity in dealings with suppliers, customers, business partners, stakeholders, government and society at large.

The Board, subsidiary directors and executive management are required to disclose any potential conflicts at regular meetings and as and when necessary, to the Company Secretary. This is done in line with the guidance provided by Section 75(4) of the Companies Act and in accordance with IDC Guidelines on Conflict of Interest. Such declarations occur at each Board meeting, including meetings of the Board Committees whose responsibility it is to consider transactions. Transactions that place a Board member in a potential conflict of interest are submitted to the Social and Ethics Committee for deliberation and thereafter to the Board for final decision.

As part of promoting ethical behaviour, employees are encouraged to report any suspected fraudulent, unethical or corrupt practices to the Fraud Tip-Offs hotline which is managed by an independent external service provider. Particulars of incidents reported during the past financial year are provided on page 58 to 59 in Section 2 of this report.

The IDC has a Gifts Policy that requires all employees to declare gifts received from clients. Gifts with a value of R500 and above can only be retained by a recipient with the permission of his/her departmental head. Departmental heads need permission from the relevant divisional executive and divisional executives must, on the same basis, obtain permission from the Chief Executive Officer. The figure below provides a breakdown of the gifts declared.

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Governance training and assessment of clients/investee companies

Corporate governance training was provided to more than 130 employees and nominee directors, and corporate governance assessments of at least 50 clients and investee companies were undertaken during the year under review. Where required, focused corporate governance training sessions involving IDC clients were held.