Transnet Online Integrated Report 2017
Market Demand Strategy (MDS) themes
  • Financial sustainability
  • Capacity creation and maintenance
  • Market segment competitiveness
  • Operational excellence
  • Human capital
  • Organisational readiness
  • Sound governance and ethics
  • Constructive stakeholder relations
  • Sustainable developmental outcomes
Sustainable Developmental Outcomes (SDOs)
  • Employment
  • Skills development
  • Industrial capability building
  • Investment leveraged
  • Regional integration
  • Transformation
  • Health and safety
  • Community development
  • Environmental stewardship
The Capitals
  • Financial Capital
  • Manufactured Capital
  • Intellectual Capital
  • Human Capital
  • Social and Relationship Capital

Abridged Governance

Compliance with laws, codes, rules and standards

The Board of Directors governs, and directs compliance with applicable laws and adopted, non-binding rules, codes and standards. The responsibility for implementing a compliance function is delegated to management. To this end, the Company has an established Compliance function. As is the case with all the Company policies, the Compliance Policy is reviewed every five years in accordance with the Company Policy Framework, or updated as and when required. The Compliance Policy forms the foundation of the compliance framework.

The Board of Directors considers non-compliance with legislative requirements a key risk, as it not only exposes the Company to fines and civil claims, but can also result in loss of operational authorisations and reputational harm. The PFMA requires the Board of Directors to ensure that the Company and its employees comply with the provisions applicable to Schedule 2 Companies, as well as any other legislation applicable to the Company. The Compliance function therefore identifies, assesses and monitors critical controls associated with regulatory requirements, statutory licences, codes and standards applicable to the Company. Compliance issues are reviewed both at the Corporate Centre and within the Operating Divisions and Specialist Units.

The Board of Directors oversees compliance management and has delegated the review and approval of the Company´s Compliance Plan to the Risk Committee. The Compliance Plan details procedures for identifying regulatory risks and monitoring compliance with applicable regulatory requirements. The Compliance Plan is aligned with the MDS to mitigate compliance risk exposures emerging from the execution of the strategy.

PFMA

The PFMA outlines the fiduciary duties and responsibilities of the Board of Directors, and requires that it serves as the Company´s accounting authority. The Company is identified as a major business entity and is listed under Schedule 2 of the PFMA. The Board of Directors ensures that the Company adheres to the requirements for the assessment of risk and annual budget submissions, and the annual conclusion of a Shareholder´s Compact. The Board of Directors also ensures that the Company adheres to all procedures for quarterly reporting to the Executive Authority through submission of quarterly PFMA reports.

Companies Act

The Company reports on the extent of its compliance with the Companies Act in the Directors´ Report.

King III and IV

The Board of Directors is committed to the application of King III governance principles in conjunction with regulatory provisions to achieve the overarching principles of sound governance, namely responsibility, accountability, fairness and transparency.

King IV was launched on 1 November 2016 and early implementation is envisaged. The Board of Directors is committed to this process and will assess and report on implementation for the 2018 financial year. The Company is, however, already complying with the majority of the King IV principles. Application of the King III principles is monitored through the Governance Assessment Instrument (GAI).

The Company maintained its AAA status during the 2017 financial year, and complied with applicable aspects of King III, with the following exceptions:
Main category Sub-category Governance Assessment Instrument – Exceptions and Explanations Register
as at 31 March 2017
Reference No
All ‘Not Applied´ exception(s) sorted by significance
Chapter 2 Principle 2.18

When determining the number of directors to serve on the board, the entity (or the Minister as applicable) does not adequately consider the knowledge, skills and resources that are necessitated by the size and nature of its business.

29-848-5929
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The Corporate Governance and Nominations Committee compiles a Board skills matrix for consideration by the Shareholder Minister as part of non-executive directors´ succession planning activities.
Chapter 2 Principle 2.16

There is no succession planning in place for the chairperson.

29-852-5954
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This is conducted by the Shareholder Minister and not the Company.
Chapter 2 Principle 2.18

Non-executive directors that are classified as ‘independent´ are not subjected to an annual evaluation of their independence by the chairman and the board.

29-848-5933
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Consideration is being made to include this aspect as part of the peer reviews.
Chapter 2 Principle 2.18

The nominations committee does not make recommendations for appointment as director or, if it does, does not base its recommendations on all of the following: knowledge and experience gap on the board; integrity of the candidate; and skills and capacity of the candidate.

29-873-6202
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The Shareholder appoints the Board members.
Chapter 2 Principle 2.19

Procedures for appointments to the board are not all of the following: formally set out in a policy; transparent; a matter for the board as a whole (although the board may be assisted by the nomination committee) or the Minister as applicable.

29-848-5918
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The Board of Directors is appointed by the Shareholder Minister.
Chapter 2 Principle 2.17

The board does not appoint the CEO or, if required by legislation, the Minister does not appoint.

29-853-5955
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The Board of Directors recommends the appointment of the Group Chief Executive and the Shareholder Minister makes the final appointment.
Chapter 2 Principle 2.22

The nomination for re-appointment of a director does not occur only after an evaluation of the performance of the director.

29-877-6219
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Generally, the results of the evaluation are reported to the Shareholder Minister. The appointment of the Board of Directors is at the discretion of the Shareholder Minister.
Chapter 2 Principle 2.25

Non-executive directors´ fees do not comprise both a base fee and an attendance fee per meeting.

29-850-5946
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The Company pays a retainer for the Board and its committees on a quarterly basis.
Chapter 3 Principle 3.3

The chairman of the audit committee is not selected by the board.

29-870-6164
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The Board nominates a potential appointee and the Shareholder Minister elects the nominee by means of a formal resolution.
Chapter 2 Principle 2.16

The chairperson is not appointed by the board every year or, if required by legislation, the Minister does not appoint.

29-852-5951
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In line with the Memorandum of Incorporation, the Chairperson is appointed by the Shareholder Minister and not the Board. The appointment is renewable annually at the AGM.
Chapter 2 Principle 2.19

The nominations committee does not do one or both of the following: establish procedures for appointments to the board; ensure that these procedures are properly carried out.

29-873-6203
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The Shareholder appoints the Board members.
Chapter 3 Principle 3.9

The audit committee has not defined a policy for non-audit services provided by the external auditor.

29-870-6150
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Non-audit Services are approved as part of the Annual Internal Audit Plan.
Chapter 2 Principle 2.19

Before candidates are nominated for board appointments, there are no procedures in place to investigate the candidates´ backgrounds or legal exclusions from membership inspected and applied.

29-848-5919
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The fit and proper test is conducted by the Shareholder Minister.
Chapter 2 Principle 2.19

The nominations committee does not ensure that new directors have not been declared delinquent or are not serving probation in terms of section 162 of the Companies Act, 2008.

29-873-6204
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The fit and proper test of directors is conducted by the Shareholder Minister.
Chapter 2 Principle 2.19

The nominations committee does not identify and participate in selecting board members.

29-873-6200
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The Shareholder Minister appoints the Board members.
Chapter 2 Principle 2.23

The names and details of all external advisers who regularly attend or are invited to attend committee meetings are not disclosed.

29-868-6108
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External advisers are generally not invited to committee meetings.
Chapter 3 Principle 3.2

If vacancies on the audit committee arise, the board will not elect a replacement as and when the need arises.

29-870-6162
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Vacancies on the Audit Committee are filled by the Shareholder. The election is considered at the next AGM or as and when necessary.