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Question 2.7 Solution (a) Composition of the board of directors: Marks

(a) Composition of the board of directors: Marks 2.4.2 (A): Mrs. Natalie Haines was a former executive director of Bonga Jekwa
1.1 King IV recommends that the majority of the governing body should be who retired 3½ years ago before re-joining the the board as a non-
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1 executive director. She can, therefore, be considered as an
non-executive members. (P7RP8)
independent non-executive director.
1.2 (A): The majority of the board is not non-executive directors, as half
of the directors are non-executive, and the other half are executive 2.5 Conclusion:
1 (A): The majority of the non-executive directors are not independent, as 1
directors. The non-executive directors do not constitute a majority as
recommended by King IV. only half (2/4) can be considered independent.
N If students stated that the majority of the board should be independent Diversity considerations:
non-executive directors = no mark 3.1 King IV recommends that the composition of the board should include a
If students stated that the majority of the board should be non-executive suitable diversity of academic qualifications, technical expertise, industry
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and the majority should be independent = no mark knowledge, experience, nationality, age, race, culture, and gender.
If students stated that the majority of the board should be non-executive (P7RP10)
and the majority of the non-executives should be independent = 1 mark 3.2 (A): Based on the names provided, the board seems to be dominated by
Consideration for Independence: males, and therefore, females are not sufficiently representative of the 1
2.1 King IV recommends that the majority of the non-executive members board – only two (2) females.
1 3.3 (A): Mr Moeketsi’s skills (Graphics and Fashion) and inexperience bring
should be independent. (P7RP8)
into question the “collective skills, knowledge, experience” needed for 1
Evaluation of the independence of each of the non-executive directors:
the board to meet its responsibilities, as recommended by King IV.
2.1.1 King IV recommends that a director who has been employed as an
3.4 King IV recommends that the board should consider the need for a
executive manager during the preceding three financial years or is a
1 sufficient number of directors who qualify to serve on the board 1
related party to such an executive manager cannot be seen as
committees. (P7RP7c)
independent. (P7RP28d)
3.5 Only two non-executive directors (not enough) can be considered
2.1.2 (A): Mr Ben Ngudu cannot be seen as Independent as he is married
(related) to Mrs Thamsanqa Ngudu, the CEO and Executive Director of 1 independent. Thus, the board cannot appoint sufficient directors to
serve as independent non-executive directors on its sub-committees, 1
Bonga Jekwa.
which is particularly concerning for the Audit Committee and other
2.2.1 King IV recommends that a non-executive member who is part of the
committees.
executive management of another organisation, a related party, cannot 1
Chairman of the board:
be seen as independent. (Principle 7.28g)
2.2.2 (A): Mr John Smit is an executive director at Riverwalk Mall. Bonga 4.1 King IV recommends that the Chairperson of the board should be an
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independent non-executive director. (P7RP31)
Jekwa owns 70% of the shares of Riverwalk Mall. Therefore, Bonga
2 4.2 (A): The Chairperson is not an independent non-executive director, as
Jekwa and Riverwalk Mall are related parties (1). Mr John Smit can 1
therefore cannot be considered to be independent. (1) recommended by King IV, due to his close relationship (wife) to the CEO.
2.3.1 King IV recommends that a non-executive director who owns shares in 4.3 King IV recommends that the board should appoint an independent non-
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the organisation and considers those shares as material to his/her 1 executive director as the Lead Independent Director. (P7RP32e)
personal wealth cannot be seen as independent. (P7RP28c) 4.4 (A): No Lead independent director was appointed to the board. 1
2.3.2 (A): Peter Makandiwa owns shares in Bonga Jekwa but does not Other concerns:
consider these shares as material to his personal wealth and can 1 5.1 King IV recommends that the Chairperson, together with the board
therefore be seen as an independent non-executive director. (1) should determine the number of outside professional positions that the 1
2.4.1 King IV recommends that a director who has been employed as an chair is allowed to have. (P7RP35)
executive manager during the preceding three financial years or is a 5.2 (A): Mr. Ben Ngudu hold positions in 7 other portfolios (listed and
related party to such an executive manager cannot be seen as 1 unlisted). Therefore, he should disclose this to the board if he might not 1
independent. (P7RP28d) have spent sufficient time on Bonga Jekwa Holdings.

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(a) Composition of the board of directors: Marks (a) Composition of the board of directors: Marks
5.3 King IV recommends that members of the board with no or limited 8.3 King IV recommends that the social and ethics committee members
governance experience should be provided with mentorship and 1 comprise executive and non-executive directors, majority of which 1
encouraged to undergo training. (P7RP23) should be non-executive directors. (P8RP70)
5.4 (A): Mr Moeketsi Wonga-Mothapo, who is inexperienced as a new 8.4 (A): The Social & Ethics committees do not meet this recommendation
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director, has not received any training or guidance. as it comprises 50%/50% between executive and non-executive 1
Available Marks 26 directors.
Maximum Marks 20 Available Marks 14
II. Composition, competence and adequacy of the board committees Maximum Marks 10
6.1 King IV recommends that the governing body consider allocating
remuneration oversight to a dedicated committee or adding it to the
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responsibility of another committee as appropriate for the organisation.
(P8RP65)
6.2 (A): Bonga Jekwa Holdings Ltd does not have a Remuneration
Committee, and there is no indication that the duties typically associated
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with this committee have been delegated to other committees or
individuals.
6.3 (A): The CEO’s concern that having many board committees wastes
time contradicts King IV’s recommended five (5) committees. Her lack of 1
commitment to the principles and recommended practices is concerning.
Audit committee: (Composition, competence & Adequacy)
7.1 King IV recommends that all members of the Audit Committee be
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Independent Non-executive members of the governing body. (P8RP56)
7.2 (A): Not all the members of the Audit Committee are independent non-
executive directors, and only Mr Peter Makandiwa can be seen as an 1
independent non-executive director.
7.3 (A): Not all members of the Audit Committee are board members, as Mr
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David Brown is on the Audit Committee but not on the board.
7.4 King IV recommends that the board should appoint an Independent Non-
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executive director as Chairperson of the Audit Committee. (P8RP57)
7.5 (A): Mr Ben Ngudu’s appointment as the Chairperson of the Audit
Committee is concerning as he cannot be considered an Independent 1
Non-executive director.
7.6 King IV recommends that the Chairperson of the board should not be a
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member of the Audit Committee. (P7RP36a)
7.7 (A): Mr Ben Ngudu, who has been appointed as the Chairperson of the
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board is also a member (and the Chairperson) of the audit committee.
Social & Ethics committee: (Composition, competence & Adequacy)
8.1 King IV recommends that each governing body committee have at least
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three members. (P8RP46)
8.2 (A): The Social and Ethics Committee only has two (2) members who
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serve on the committee.

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