Page 57 - Capricorn IAR 2020

GOVERNANCE REPORT
We are committed to the principles of sound corporate governance and by subscribing to these principles, we believe that all stakeholder’s interests are promoted.
2020 INTEGRATED ANNUAL REPORT
Governance overview and approach
Capricorn Group and its subsidiaries are committed to the principles of sound corporate governance, which are characterised by discipline, transparency, independence, accountability, responsibility, fairness and social responsibility. By subscribing to these principles, the Group believes that all stakeholders’ interests are promoted, including the creation of long-term shareholder value.
The board and its committees are responsible for establishing effective leadership and ethical practices, and for ensuring the application of appropriate governance practices to deliver the desired outcomes. Following a decision by the NSX in 2018 to allow listed entities to select compliance either with the NamCode or King IVTM, Capricorn Group adopted King IVTM.
The board supports the shift to an outcomes-based approach to governance, where the leadership tone is set from the top. The work done in embedding The Capricorn Way signals the emphasis on creating an ethical culture with behaviours based on a common set of values.
Creating an ethical culture is our most pertinent material matter. The board sets the tone for an ethical culture through a Group risk appetite statement, which includes ethics risk-related elements. Operational risk priorities include building an effective Risk Culture to support dynamic risk management.
Board members and employees adhere to an updated Group Code
of Ethics and Conduct Policy. The Procurement Policy was augmented with a Suppliers’ Code of Conduct. Refer to page 19 for the case study on sharing our journey and principles with suppliers. The BSEC is mandated to recommend policies and guidelines for addressing ethics issues with the board and escalate any ethics risks to the BARC.
Dealing in shares is governed by a policy that sets out practices for approval requirements, disclosure principles and closed-period rules, among other things. Board members are required to observe
section 242 of the Companies Act of Namibia, which deals with disclosure of interests. Where appropriate, board members recuse themselves from discussions or decisions on matters of potential conflict of interest unless these matters are resolved otherwise by the Group chairman or by the remaining board members. There were no material potential conflicts to address.
Key board practices and activities focus on:
• Open and rigorous discussion
• Active participation
• Consensus in decision-making
• Independent thinking and alternate views
• Reliable and timely information
The board provides oversight and ensures sustainability by approving a clear strategy linked to performance objectives and targets. To demonstrate this, we describe the AsOne2023 strategy development process on page 53.
The operational risk management infrastructure was enhanced to support the Group’s strategy, which directs the evolution of the internal risk and control frameworks based on anticipated future operating dynamics. To achieve good performance as an outcome, the board evaluates its own performance, which includes the board committees’ performance, and ensures that remuneration throughout the Group is linked to achieving performance targets.
Effective control is embedded in the Group’s governance structures. The board follows a structured approach to meetings, supported by a timely flow of documents to ensure that the oversight responsibilities of the boards of subsidiaries, as well as the board and its committees, are carried out effectively.
The board believes that the Group earns legitimacy through consistent performance over time, a reputation for compliance, customer service, stakeholder-inclusivity and by acting as a Connector of Positive Change.
Governance milestones for 2020
• Ongoing reviews and improvements in line with the King IVTM principles and related recommended practices were actioned. 23 of 27 proposed actions are on track or successfully concluded, and the remaining four are delayed by the pandemic.
• Additional board meetings were held to consider and confirm the Group’s response to the pandemic and the consequences of related regulations. The board expressed its satisfaction with management’s proactive thinking and the successful implementation of business continuity measures.
• The ethics strategy was implemented, and a board- approved, three-year action plan commenced (refer to page 101 for more insight).
• We appointed an independent non-executive director with strong information technology skills to the board effective November 2019.
• Comprehensive internal evaluations of the boards, committees, directors and company secretaries of Capricorn Group, CAM and the three banks were completed to ensure that we operate efficiently, have robust conversations and to address any gaps (refer to page 62 for more insight).
• There was early involvement of non-executive directors in planning and setting the strategy for the next strategy cycle (refer page 53 for more insight).
Our King IVTM journey
King IVTM focuses on outcomes as opposed to inputs in respect of good governance. It defines corporate governance as the exercise of ethical and effective leadership by the board towards the achievement of four corporate governance outcomes, namely ethical culture, good performance (sustainable value creation), effective controls and trust, a good reputation and the legitimacy of the company (its social licence to operate).
The executive leadership and board, with the assistance of a governance expert, reviewed King IVTM with a view to:
• Ensure alignment in the understanding of the King IVTM philosophy, corporate governance outcomes, the 17 principles and how to apply the principles through supporting practices
• Assess the appropriateness of current practices in support of the outcomes required by each of the 17 principles
• Identify proposed changes and enhancements to current practices to ensure the more effective application of the principles
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