Board of Directors and Executive
The MiX Telematics Board is the focal point and custodian of corporate governance in the MiX Telematics Group. Board members are expected to act in the best interest of the Company and the company secretary maintains a register of directors’ interests as required by law.
Directors are appointed on the basis of skill, experience and their contribution and impact on the Group’s activities. The Board decides on the appointment of directors based on recommendations from the nominations and remuneration committee. The Board appoints the non-executive chairman and chief executive officer. The roles of the chairman and the chief executive officer are distinct.
At least one third of non-executive directors retire by rotation each year and stand for re-election at the annual general meeting in accordance with the memorandum of association. Directors’ appointments during the year are ratified at the annual general meeting.
The Board comprises eight non-executive directors and six executive directors. Four of the non-executive directors, including the chairman, are independent.
An executive committee is in place that is responsible for devising the Group strategy for recommendation to the Board of directors and to implement the strategies and policies approved by the Board. The executive committee is also responsible for the day to day business and affairs of the Group.
The chairman reviews the Board’s performance informally on an ongoing basis; this includes monitoring the contribution of individual directors. This is considered sufficient at this point in time.
In line with its annual meeting plan, the Board meets at least quarterly. The Board has adopted a charter which clearly defines the responsibilities of the Board. The Board’s primary responsibilities are to create sustainable shareholder value and to provide effective governance over the Company’s affairs. The Company’s non-executive directors provide an independent perspective and complement the skills and experience of the executive directors, assessing strategy, budgets, performance, resources, transformation, risk, key performance areas and conduct. A copy of the Board Charter may be obtained from the company secretary.
The Board has developed an approvals framework, which delegates specific powers and delegations of authorities to operating management. This approvals framework is updated annually. At Board level, there is a clear balance of power and authority which ensures that no single director has unfettered powers of decision-making.
The information needs of the Board and committees are regularly assessed and comprehensive and timely information is provided in order that they may discharge their duties effectively. Directors have unrestricted access to all company information, records and documents. All directors may seek the advice of the company secretary or other independent professional advice as necessary, at the Company’s expense. On an annual basis the Company brings in external professionals to update the Board on latest developments in corporate governance and applicable legislation.
In the execution of its duties, the Board is assisted by various committees to which specific responsibilities have been assigned. The committees operate in accordance with approved charters (these are available on request from the company secretary) and report to the Board on their activities. An evaluation of the committees’ performance is done on an annual basis.
Audit and risk committee
MiX has combined the audit and risk committee into one committee. Members consist only of independent non-executive directors, one of whom is appointed chairman. The quorum consists of the majority of members. The representative from the outsourced internal audit function and the external auditors attend meetings. The CFO attends all meetings, with the CEO attending the half year and year end result meetings.
The committee meets at least four times a year, with two meetings a year focused on risk management.
Nominations and remuneration committee
This committee is chaired by the chairman of the Board and includes other non-executive directors as members. The quorum consists of the majority of members. The CEO is invited to attend meetings.
The committee meets at least four times a year.
Social and ethics committee
In line with the new Companies Act, this committee was established in the current financial year. This committee includes two non-executive directors and one executive director as members. The quorum consists of the majority of members. The CEO and CFO are invited to attend meetings.
The committee intends meeting at least four times a year.
The company secretarial function is outsourced to Probity Business Services (Proprietary) Limited (“Probity”), an independent company secretarial practice. Probity provides the Board as a whole, and directors individually, with detailed guidance on discharging their responsibilities. Probity ensures that proceedings and affairs of the Board are properly administered in accordance with pertinent laws and in compliance with the rules and listing requirements of the JSE Limited on which the Company’s securities are listed.
The audit and risk committee considers the facts and assumptions used in the assessment of the going concern status of the Group at financial year end so as to make a statement with regards to the preparation of the financial statements on the going concern basis and the ability of the Group to pay out a dividend to shareholders.
Internal financial controls
The directors acknowledge that they are responsible for instituting internal control systems that provide reasonable assurance on safeguarding assets and preventing their unauthorised use or disposal, as well as maintenance of proper accounting records that give reasonable assurance on the reliability of financial information produced.
MiX has a comprehensive system for reporting financial information to the Board on a monthly basis in the form of management accounts. Each operation is responsible for preparing budgets and three year plans which are approved by the Board. The monthly management accounts are monitored and compared to budget with large variances explained. Regular forecasts are performed during the financial year and circulated to the Board.
Standard group accounting policies are in place, which all operations comply with.
Directors’ dealings in the Company’s shares are strictly controlled in terms of the JSE Listings Requirements. The Board Charter, in compliance with the Securities Services Act and JSE Listing Requirements, prohibits directors, officers and selected employees from dealing in the Company’s shares during designated periods preceding the announcement of the Group’s financial results, any period while the Company is trading under a cautionary announcement and at any other time deemed necessary by the Board. Permitted dealings by directors are reported to the chairman and company secretary and are published on SENS within 48 hours of the dealing.
Compliance with laws and regulations
There has been nothing that has come to our attention where we have not complied with laws and regulations in the jurisdictions within which we operate. During the year under review we have not paid any material fines for non-compliance with laws and regulations.
Business integrity and ethics
The Group aims to comply with laws and regulations in the jurisdiction within which we operate.
The code requires, amongst others:
• Adherence to the strictest standards of ethical conduct, fair dealing and integrity in all business practices;
• Zero tolerance of corruption and behaviour that in any way contravenes any law or regulation;
• Fair and ethical competition in the market place in accordance with the relevant competition laws;
• A work ethic based on non-discrimination and opportunity for all;
• Safeguarding the Group’s assets; and
• Integrity – directors and employees may not directly or indirectly accept or offer any bribe or solicit payment, nor give or receive gifts that may unduly influence independent judgement.
Effective communication of the code of ethics and conduct is an ongoing process.
AUDIT AND RISK COMMITTEE
Audit and Risk Committee Charter
The Committee, to be known as the Audit and Risk Committee (“Committee”), is established in order to assist the Board of Directors (“Board”) in discharging certain of its duties. The Board nevertheless remains primarily responsible for these duties. The duties assigned to the Committee relate to internal control, financial reporting, external audit, internal audit, risk management and regulatory compliance.
The Committee does not perform any management functions or assume any management responsibilities. It provides a decision making forum relative to its duties and responsibilities as set out in the Corporate Laws Amendment Act (“CLAA”) as well as a forum for discussing all other topics where reporting and making recommendations to the Board is necessary.
The membership, resources, responsibilities and authority of the Committee are stipulated in these terms of reference which comply with the CLAA. These terms, with the exception of those prescribed by the CLAA, are approved by the Board and may be amended by the Board as and when required.
The Committee will carry out its function on behalf of the Company and all of its subsidiaries, associates and joint ventures.
The Committee, in carrying out its duties under these terms of reference, will give due regard to the principles of governance and best practice as contained in the King Report on Corporate Governance, the Companies Act and the CLAA.
The Committee may obtain such external or internal professional advice and training as it considers necessary and the Company will incur the cost thereof (CLAA requirement).
2.1 The Committee will be appointed by the Board and should comprise of three members who are non-executive directors. A minimum of two non-executive directors should act independently (CLAA requirement).
2.2 The majority of the committee members should be financially literate and should preferably have skills and experience appropriate to the company’s business.
2.3 The Board shall appoint a chairperson from the members of the Committee and determine the period for which he shall hold office. It is recommended that the chairperson of the Board should not be appointed as chairperson of the Committee.
2.4 The Board shall have the power at any time to remove any members from the Committee and to fill any vacancies created by such removal.
2.5 The company secretary shall be the secretary of the Committee.
3. ROLES AND RESPONSIBILITIES
The Committee’s areas of focus shall cover:
• Internal Control
• Financial Reporting
• External Audit
• Internal Audit
• Risk Management
• Regulatory compliance – Code of Ethics and Conduct
3.1 Internal Control
The Committee will review the process governing internal control and the allocation of appropriate skills and resources to the implementation and maintenance of sound internal control systems.
The Committee will:
• Communicate the importance of a sound internal control culture to management.
• Develop an understanding of the internal control systems implemented by management. Internal control systems manuals should be developed by management and reviewed by the Committee. The Approvals Framework is an integral part of the internal control process.
• Understand the controls and processes implemented by management which ensure that the financial statements are derived from the underlying financial systems and are subject to appropriate management review.
• Evaluate the effectiveness of the internal control frameworks and review whether valid recommendations made by the external auditors have been implemented.
• Consider the adequacy of and security relating to the computer systems and evaluate the contingency plans in the event of systems breakdowns and disaster.
3.2 Financial Reporting
The Committee has an oversight responsibility for ensuring that accurate financial information is provided by the underlying accounting systems in order to serve management and shareholder financial reporting.
The Committee will:
• Gain an understanding of the areas of greatest financial risk and how these are being managed and review any major implementation of new computerised systems.
• Review recent accounting, reporting and regulatory pronouncements and understand their impact on the Company’s financial reports.
• Oversee the financial reporting process and review the interim financial statements, annual financial statements, preliminary announcements and special documents prior to their release.
• Review with management and the external auditor the financial statements, the key accounting policies, practice and estimates, any changes to accounting policies and estimates and judgements, significant adjustments, unadjusted differences and any disagreements.
• Review all other sections of the annual report and interim announcements before release and consider whether the information is consistent.
• Ensure that all taxation and litigation matters have been discussed and dealt with appropriately in the annual financial statements
• Review the basis on which the Company has been determined a Going Concern, review the Capital Adequacy, Debt Facilities and compliance with any loan covenants.
• Review the Company’s statement on internal control prior to endorsement by the board.
• Report in the financial statements how the Committee carried out its functions (CLAA requirement).
• Review managements process for ensuring that information contained in analyst briefings and press reports is consistent with published financial information.
• Understand and review the monthly financial reporting processes which generate financial information to the Board and ensure that this has been derived from the underlying financial records and applies the accounting policies and practices applied by the Company in its annual reporting processes.
3.3 External audit
The Committee has a responsibility for processes relating to the appointment and independence of, and fees paid to, the external auditor and will review processes relating to the completion of the annual audit.
The Committee will:
• Review annually the performance of the external auditor and nominate for appointment a registered auditor who in the opinion of the Committee is independent of the Company (CLAA requirement).
• Ensure that the appointment of the auditor complies with the CLAA and any other legislation relating to the appointment of external auditors (CLAA requirement).
• Determine the fees to be paid to the external auditor and the external auditors’ terms of engagement (CLAA requirement).
• Include a report in the annual financial statements stating that the Committee is satisfied that the external auditor was independent of the Company (CLAA requirement).
• Review with the external auditor, before the audit commences, the audit engagement letter, the terms, nature and scope of the audit, the procedure and engagement, the audit fee budget and the co-ordination procedures where more than one audit firm is involved.
• Discuss with the external auditor the appropriateness of the accounting policies and whether they are considered aggressive, balanced or conservative.
• Discuss any audit problems encountered during the course of the audit, including any restriction on the audit scope or access to information.
• Review the nature and timing of any reports and review with the external auditor and management all significant findings and recommendations. Valid recommendations are to be appropriately and timeously acted upon by management.
• Obtain specific reports from the external auditor on the state of the accounting records, the state of balance sheet reconciliations, the general state of internal controls, any shortfall in internal controls, any unusual transactions, any contentious accounting treatments and adherence to the Company’s Approvals Framework.
• Determine the nature and extent of any non-audit services to be rendered by the external auditor and assess whether such services are likely to substantively impair their independence (CLAA requirement).
• Pre-approve any proposed contract with the external auditor for the provision of non-audit services to the Company (CLAA requirement).
• Ensure that the external auditor has access to the audit committee chairperson.
• Ensure that the external auditor attends the Annual General Meeting (CLAA requirement).
3.4 Internal audit
Normally internal audit would provide the Committee with insight, advice and assurances that systems and controls are in place and are functioning effectively. An effective internal audit department would complement the external audit process and would provide the Committee with an objective overview of the effectiveness and adequacy of the internal control systems and reporting, and the risk identification and risk management processes. The Board has appointed an external firm to provide this function.
3.5 Risk Management
The Committee will review processes to ensure that reliable and efficient risk management strategies, policies and risk insurance programmes are in place.
• Risk management commences with the identification of the key risks inherent to the business. Management has the task of identifying key risks.
• Appropriate risk management strategies, policies and procedures are to be developed for each of the key identified risks. These risk management strategies, policies and procedures should be communicated throughout the company with the overall aim of managing material risks. Management should develop and implement risk management strategies, policies and procedures throughout the Company.
• The Company should create well documented policy and procedure manuals for its businesses and operations. These manuals are to be circulated throughout the Company, are to be regularly updated (having regard to legislative changes) and are to cover all aspects of the business. These manuals should include (but should not be limited to):
o Investment related activities;
o Asset management activities;
o Funding and liquidity related activities
o Commercial and operational related activities
o Market, revenue and credit related activities;
o Expense related activities;
o Capital expenditure;
o Human resources.
• The Committee will review the adequacy of the risk insurance programme on an annual basis.
3.6 Regulatory compliance – Code of Ethics and Conduct
The Committee will review the Company’s process for monitoring compliance with laws and regulations that have a financial impact. The Committee should review reports from management on the Company’s compliance with laws and regulations.
A Code of Ethics and Conduct, which sets out the Board’s guideline for acceptable business practices, has been adopted and is attached to this Charter.
The Committee will:
• Obtain regular updates from management regarding compliance.
• Assess whether all legal and regulatory compliance matters have been considered in the preparation of the financial statements.
• Review the programme for monitoring compliance with the code of ethics and conduct.
• Ensure that the Company has appropriate mechanisms and whistle blowing procedures for dealing with commercial and accounting issues.
• Receive and deal appropriately with any complaints relating to:
o accounting practices.
o the content of Company’s financial statements,
o the audit of the Company’s financial statements,
o any related matter.
4. REPORTING AND ACCOUNTABILITY
The chairperson of the Committee shall account to the board for its activities and make recommendations to the board concerning all matters arising from the above responsibilities.
The chairperson (or, in his/her absence, an alternate member) of the Committee shall attend the Annual General Meeting to answer questions concerning matters falling within the ambit of the Committee.
Meetings of the Committee will be held as frequently as the Committee considers appropriate, but it will normally meet not less than four times a year.
The board or any member thereof, any member of the Committee or the external auditors may request further meetings.
Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee and all attendees. An agenda and supporting documentation should be circulated to the members and attendees a reasonable period in advance of each meeting.
A quorum for any meeting will be two members.
Decisions of the Committee will require at least 2 votes in favour. No attendee shall have a vote at meetings of the Committee.
The chief executive officer, the chief financial officer and the external auditor shall attend meetings as required. The chairperson may invite other executives to attend and to be heard at meetings of the Committee.
The minutes of all meetings of the Committee shall be submitted to the Board at the immediate following board meeting. The chairperson of the Committee shall report to the Board following each Committee meeting.
The Committee may also convene “update meetings” with the chief financial officer, the purpose of which is to remain in touch with financial matters.
Unless varied by these terms of reference, meetings and proceedings of the Committee will be governed by the company’s memorandum of association regulating the meetings and proceedings of directors and committees.
SOCIAL AND ETHICS COMMITTEE
Social and Ethics Committee Charter
1.1 The Social and Ethics Committee (the Committee) is, in terms of the Companies Act 71 of 2008 (Companies Act”), constituted as a committee of the Board of Directors (the Board) of MiX Telematics Limited (the Company or the Group).
1.2 The duties and responsibilities of the members of the Committee are in addition to those as members of the Board or as prescribed officers of the company.
1.3 These terms of reference, which comply with the Companies Act, are subject to approval and periodic review by the Board.
2.1 The Committee shall be appointed by the Board and shall consist of no fewer than three members who are directors or prescribed officers of the company. At least one of the members must be a director who is not involved in the day-to-day management of the company's business, and must not have been so involved within the previous three financial years.
2.2 The Board shall appoint the Committee chairperson and determine the period for which he or she shall hold office.
2.3 The membership ofthe Committee and its chairmanship will be subject to annual review by the Board.
2.4 The members of the Committee as a whole must have sufficient qualifications and experience to fulfil their duties.
2.5 The Committee shall nominate a committee secretary.
The role of the Committee is to assist the Board in meeting its obligations in terms of the Companies Act, for both the Company and its subsidiaries.
It must be specifically noted that whilst the name given to the Committee is “Social and Ethics”, ethics as such does not fall within the Committee’s mandate (as defined by the Companies Act). Ethics is dealt with by the Audit Committee. In addition, Fraud is dealt with by the Audit Committee. Further, Risk and Sustainability is dealt with by the Audit Committee. These matters will continue to be dealt with by the Audit Committee which will report to the Committee on these matters. Accordingly, the chairman of the Social and Ethics Committee will be invited to all Audit Committee meetings.
The Committee’s task as defined by the Companies Act is to “monitor” and not to “perform”. It will perform its work for the Group, which includes the Company and all its subsidiary companies. In order to meet its monitoring obligations, the Committee will develop work plans and questionnaires. The questionnaires will be completed on an annual basis by the group’s operating subsidiary management teams. These questionnaires will form the basis of the report back by the Committee to the Board and the shareholders. In addition specific information may be requested from the relevant Company officials.
The Committee has the following rights and responsibilities:
4.1 Require from any director or officer or employee of the company any information or explanation necessary for the performance of the committee’s functions.
4.2 Require any other committee of the company, currently tasked with managing tasks which fall within the Committee’s mandate i.e. Governance, Human Resources, Transformation, Social Responsibility, Environmental, Sustainability etc to provide reports to the Committee on such matters. Where necessary, there will be a liaison with the Audit Committee on matters of Sustainability as these relate to risk identification.
4.3 Report in the Company’s annual Integrated Report on the matters within its mandate.
4.4 Incur reasonable expenditure in the performance of its functions including, if appropriate, the costs of any consultant or specialist engaged, and such expenditure must be paid by the company.
4.5 Receive all notices and communications relating to any general shareholders meeting and to be heard at any general shareholders meeting on matters within its mandate.
4.6 Report to the shareholders at the company’s annual general meeting on matters within its mandate.
5.1 Meetings of the Committee will be held as the Committee deems to be appropriate. However the Committee should meet at least three times per year.
5.2 The notice of each meeting of the Committee, confirming the venue, time and date and enclosing an agenda shall be forwarded to each member of the Committee prior to the meeting.
5.3 The quorum for decisions of the Committee shall a majority of current members.
5.4 The Committee shall invite the CEO and CFO (if he or she is not a member of the Committee) and whenever is necessary any other company official to attend meetings.
5.5 The Chairperson (or in his / her absence, an alternative member) of the Committee shall attend the annual general meeting to report to stakeholders.
6.1 The Committee must establish an annual work plan for each year to ensure that all relevant matters are covered by the agendas of the meetings planned for the year.
6.2 The annual plan must ensure adequate coverage of the matters laid out in these terms of reference: the more critical matters will be dealt with annually while other matters will be dealt with on a rotational basis.
6.3 The Committee secretary shall take minutes of meetings.
6.4 The minutes must be formally approved by the Chairman at the next scheduled meeting and circulated to members of the Committee and to the Board.
Having regard to the functions performed by the members of the Committee in addition to their normal functions, members of the Committee may be paid such additional remuneration as determined by the board.
These terms of reference were approved the Committee and were approved by the Board on 8 March 2012 board meeting.