Corporate governance

Approach to corporate governance

Our approach to corporate governance is based on the values and principles that underpin our day-to-day activities, including responsiveness, collaboration, transparency, integrity and accountability. This approach encompasses a commitment to excellence in corporate governance standards that we regard as fundamental to the sustainability of our business.

Applying governance principles

The board of directors is committed to applying the recommendations of King III, complying with the JSE Listings Requirements and Companies Act, as well as incorporating relevant standards of best practice. The board ensures that it acts in the best interest of the company.

In line with King III’s “apply or explain” approach, the directors disclose the extent to which Hyprop applies these principles to create and sustain value for stakeholders over the short, medium and long term, and explain any instances of non-compliance.

Hyprop has elected to participate in the Institute of Directors Southern Africa’s (IoDSA) governance assessment instrument, achieving the highest application score of AAA.

Hyprop Investments Limited – 1987/005284/06   IoDSA FAI
score
  Applied/partially not applied/not applied
+ Chapter 1: Ethical leadership and corporate citizenship   AAA   Applied
+ Chapter 2: Boards and directors   AAA   Applied
+ Chapter 3: Audit committees   AAA   Applied
+ Chapter 4: The governance of risk   AAA   Partially not applied
+ Chapter 5: The governance of information technology   AAA   Applied
+ Chapter 6: Compliance with laws, rules, codes and standards   AAA   Applied
+ Chapter 7: Internal audit   AAA   Applied
+ Chapter 8: Governing stakeholder relationships   AAA   Applied
+ Chapter 9: Integrated reporting and disclosure   AA   Applied
Overall score   AAA   Powered by IoDSA GAI

Please view the full report on compliance with each of the King III principles online (www.hyprop.co.za).

 

See King III Application (Chapter 2).

 

Ethical leadership and corporate citizenship

Hyprop’s board and management team provide effective leadership and supervision based on ethical imperatives. They understand that ethical conduct and good corporate citizenship underpin the King III code, where leadership is expected to direct business strategy and operations to ensure long-term sustainability.

The board is guided in all matters by the board charter, which sets out its responsibilities. Please view the board charter online. In line with its charter, the board is the guardian of the group’s values and ethics. This is achieved by effectively managing corporate ethics and aligning business strategy to corporate values, while considering our impact on the economy, society, stakeholders and the environment.

The board leads by example and embodies the values set out in our code of conduct and ethics, published online. Its social and ethics committee monitors compliance with Hyprop’s code of conduct and ethics and other relevant social, ethical and legal requirements, as well as best practice. It reports to shareholders on matters in its mandate at the annual general meeting and via this integrated report.

Ethical behaviour is monitored through the Hyprop whistleblower’s line (0800 555 317), an independent hotline operated by an external provider that includes regular call analysis to enable Hyprop to investigate all allegations promptly. Formal reports on matters that may affect financial performance are submitted to the audit committee. One report was received during the period, which was appropriately addressed.

Composition of the board

Hyprop’s board comprises 10 directors: five independent non-executives, three non-executives, and two executive directors.

Our non-executive directors’ diverse experience in commerce and industry enables them to make informed and independent decisions. Strategy is evaluated and approved, group performance scrutinised and executive management monitored against key performance indicators. Their guidance and outlook on the group’s financial, audit, corporate governance and risk management systems and controls are especially valuable. Transformation, succession planning and the remuneration process (at senior level) is reviewed to ensure sustainable leadership. Non-executive directors are not involved in Hyprop’s daily operations.

Hyprop has processes in place to ensure directors have no conflicts of interest in fulfilling their duties. If conflicts do exist, they are properly declared and dealt with in line with regulations. Constructive debate at meetings contributes to informed decisions.

The chairman, Gavin Tipper, is an independent non-executive director. His role is clearly defined and separated from that of the chief executive officer, Pieter Prinsloo. Similarly, the responsibilities of chief executive officer and financial director are strictly separated from those of non-executive directors to ensure no single director can make unilateral decisions. The chairman provides leadership and guidance to the board and encourages proper deliberation on all matters requiring directors’ attention, with input from other directors. The chief executive officer and financial director are responsible for implementing strategy and operational decisions and operate within a delegation of authority.

COMMITTEE STRUCTURE
AUDIT   RISK   SOCIAL AND ETHICS   INVESTMENT   REMUNERATION AND
NOMINATION
MEMBERS   MEMBERS   MEMBERS   MEMBERS   MEMBERS

Lindie Engelbrecht (chair*)
Gavin Tipper
Thabo Mokgatlha

 

Stewart Shaw-Taylor (chair*) Lindie Engelbrecht
Pieter Prinsloo
Laurence Cohen

 

Mike Lewin (chair*)
Pieter Prinsloo
Vasti Booysen
Karin Eichhorn
Desirée Nafte
Steven Riley

 

Pieter Prinsloo (chair)
Stewart Shaw-Taylor
Laurence Cohen
Louis Norval
Kevin Ellerine
Gavin Tipper

 

Ethan Dube (chair*, remco matters)
Gavin Tipper (chair*, nomco matters) Lindie Engelbrecht
Stewart Shaw-Taylor

RESPONSIBILITIES   RESPONSIBILITIES   RESPONSIBILITIES   RESPONSIBILITIES   RESPONSIBILITIES

Reviewing accounting, auditing, internal audit and financial reporting matters

 

Implementation and monitoring of an appropriate risk policy

 

Monitoring Hyprop’s activities in terms of social and economic development, good corporate citizenship, health and public safety, consumer relationships, and labour and employment

 

Assisting the board in considering opportunities for acquisitions, disposals and other corporate activity. Approving acquisitions, disposals and capital expenditure in line with its limits of authority and the strategy determined by the boa

 

Ensuring that Hyprop’s remuneration policies and practices support the group’s strategic objectives and encourage individual performance; to build long-term value through fair and balanced remuneration

* The chairs of key committees — audit, remuneration and nomination, social and ethics – are all independent non-executive directors.

Please view committee charters online.

 

Board changes

Louis van der Watt resigned from the board effective on 4 May 2016.

Board appointment process

With support from the remuneration and nomination committee, the board is responsible for new appointments, using a formal and transparent process to identify and select candidates. The board and committee consider the mix of skills and experience required to drive Hyprop’s operational progress and sustainable transformation, as well as other relevant factors, including diversity and regulatory compliance.

Induction for new directors includes a briefing by the chairman, chief executive officer, financial director and sponsor, Java Capital. They are also introduced to key senior management at company and shopping centre levels, with site visits to shopping centres; and given unrestricted access to company information.

In terms of the Memorandum of Incorporation (MoI), the appointment of new directors is confirmed by shareholders at the next annual general meeting.

Rotation of directors

Hyprop’s moi stipulates that one-third of directors retire by rotation after a three-year term. If eligible, these directors will offer themselves for re-election.

Directors standing for re-election by rotation at the upcoming annual general meeting are Pieter Prinsloo, Lindie Engelbrecht and Mike Lewin.

Director development

Directors have access to experts and other parties required to assist them to carry out their duties. In addition, they are encouraged to continue their professional development in their personal capacity.

Succession planning

The remuneration and nomination committee is responsible for ensuring adequate succession planning for directors and management, and that all committees are appropriately constituted and chaired. The board is satisfied that the depth of skills of current directors meets succession requirements.

Company secretary

CIS Company Secretaries Proprietary Limited is an independent practice providing services to numerous JSE-listed companies. The board is satisfied that the company secretary and its representative, Neville Toerien, are sufficiently qualified and skilled to act in accordance with, and update directors on, the recommendations of King III, the Companies Act and other relevant regulations and legislation.

The board reviews the relationship between the company secretary and the board and its committees annually. It has determined that the company secretary is independent from management and does not take on any management or executive duties on behalf of the board or any subsidiary companies. The company secretary is not a director of Hyprop or a material shareholder of the company or any of its subsidiaries and has not entered into any major contractual relationships with the company or any director. Accordingly, the board is satisfied that the company secretary maintained an arm’s-length relationship with the board of directors.

The functions of the company secretary include:

  • Guiding directors, collectively and individually, on their duties, responsibilities and powers
  • Providing information on legislation, regulations and relevant matters of ethics and good corporate governance
  • Recording the minutes of meetings, including attendance registers, resolutions, directors’ declarations of personal and financial interests and all notices and circulars issued by the company
  • Preparing the notice of annual general meeting
  • Assuming responsibility for filing annual and other returns with Companies and Intellectual Property Commission (CIPC) in terms of the Companies Act.

The company secretary updates the board on developments relating to ethics, corporate governance, legislation and regulation. The board then reviews any changes and appropriate measures are implemented to comply with best practice and support sustainable performance.

Performance self-assessment

The board is satisfied that all independent non-executive directors meet the independent criteria of King III. The board was evaluated in February 2016.

The board and its committees formally evaluate their performance on an annual basis and any issues which are identified through the evaluation process are appropriately addressed.

Access to information

Directors have unrestricted access to the advice and services of the company secretary and to company records, information, documents and property. Non-executive directors have full access to the external and internal auditors, and to management. All directors are entitled, at Hyprop’s expense, to take independent professional advice on any matters concerning the affairs of the company.

Access to the board

Shareholders can provide recommendations or direction to the board at the annual general meeting, one-on-one meetings, investor presentations and through investor polls.

Dealing in securities

The board complies with the JSE Listings Requirements that restrict trading in Hyprop’s shares by directors, the company secretary and employees in defined closed periods. In conjunction with the financial director and sponsor, the board ensures the required disclosure of trades in Hyprop shares is published on SENS. Directors and senior employees with access to the company’s financial results and other price-sensitive information are barred from dealing in Hyprop shares for specified periods before relevant announcements. A notification to all directors and affected staff alerts them that the company is entering a closed period.

Conflicts of interest

As per the code of ethics and conduct, directors must declare to the chairman and company secretary their shareholdings, additional directorships and any potential conflicts of interest.

Board committees

Please see the outline of board committees.

 


The board is satisfied that all committees have fulfilled their responsibilities during the year, in terms of their approved charters. Each committee’s performance is reviewed annually.

The need for additional committees is evaluated regularly. Hyprop’s remuneration and nomination committees are combined. Discussions on nomination committee matters are chaired by the board chairman.

There is full disclosure from committees to the board, including verbal reports on recent activities by committee chairmen to the board. Minutes of committee meetings are provided to all board members. In addition, the board chairman and chairman of each committee attend Hyprop’s annual general meeting to answer questions from stakeholders.

Board and committee meetings

The board meets at least four times a year, with ad hoc meetings when necessary. Relevant notice, and information are supplied in advance, ensuring directors can make well-researched and reasoned decisions. The investment committee meets periodically as required.

Attendance at board and committee meetings for the review period (1 July 2015 to 30 June 2016) is reflected below.

      BOARD     AUDIT     RISK     REMUNERATION AND NOMINATION     SOCIAL AND ETHICS     INVESTMENT  
 

Independent non-executive directors

                                   
 

GR Tipper (chairman of the board)

 

5/5

   

3/3

   

2/2e

   

2/2

   

2/2e

   

5/5

 
 

EG Dube(c)

 

4/5

               

2/2

             
 

L Engelbrecht(a)

 

5/5

   

3/3

   

2/2

   

2/2

             
 

TV Mokgatlha

 

4/5

   

3/3

                         
 

MJ Lewin(d)

 

5/5

                     

2/2

       
 

LLS van der Watt(f)

 

3/4

                           

1/5

 
 

Non-executive directors

                                   
 

KM Ellerine

 

5/5

                           

5/5

 
 

L Norval

 

5/5

                           

4/5

 
 

S Shaw-Taylor(b)

 

5/5

         

2/2

   

2/2

         

4/5

 
 

Executive directors

                                   
 

PG Prinsloo (CEO)

 

5/5

   

3/3e

   

2/2

   

2/2e

   

2/2

   

5/5

 
 

LR Cohen (FD)

 

5/5

   

3/3e

   

2/2

   

2/2e

   

2/2e

   

5/5

 

(a) Chair audit committee
(b) Chair risk committee
(c) Chair remuneration and nomination committee
(d) Chair social and ethics committee
(e) By invitation
(f) Resigned 4 May 2016


Compliance with laws, rules, codes and standards

The national legal executive and executive management ensure that Hyprop complies with all current regulations and legislation, liaising closely with the company’s sponsor. If there are areas of non-compliance, these will be formally tabled through the risk management process under the supervision of the risk committee.

There were no material compliance issues during the year. The Hyprop board meets periodically and includes on its agenda for discussion the property sector charter, with particular focus on transformation and related issues.

Legislation/regulations with which the company is required to comply include:

  • Property sector charter
  • Basic Conditions of Employment Act 75 of 1997
  • Companies Act 71 of 2008
  • Compensation for Occupational Injuries and Disease Act 130 of 1993
  • Competition Act 89 of 1998
  • Employment Equity Act 55 of 1998
  • Labour Relations Act 66 of 1995
  • Occupational Health and Safety Act 85 of 1993
  • Value Added Tax Act 89 of 1991
  • Financial Intelligence Centre Act 38 of 2001
  • Consumer Protection Act 68 of 2008
  • Financial Markets Act 19 of 2012
  • Income Tax Act 58 1962
  • Promotion of Access to Information Act 2 2000
  • Protection of Personal Information Act 4 2013
  • Protected Disclosures Act 2000
  • Securities Services Act 36 of 2004

As Hyprop is a listed REIT, it is required to comply with the JSE Listings Requirements and rules specific to REITs in South Africa.

Anti-competitive behaviour

Hyprop has not been party to any legal actions for anti-competitive behaviour or monopoly practices in the period.

Policy documents available online

  • Board charter
  • Audit committee charter
  • Investment committee charter
  • Remuneration and nomination committee charter
  • Risk committee charter
  • Social and ethics committee charter
  • Code of conduct and company policy
  • Employment equity policy and plan
  • Memorandum of incorporation