INGENUITY PROPERTY INVESTMENTS LIMITED
CORPORATE GOVERNANCE COMPLIANCE – KING III REGISTER
Ingenuity has in its Integrated Report for 2012 disclosed its level of compliance with the
King Code of Corporate Governance as required by the JSE Listings Requirements.
The following table discloses the status of the Group’s compliance with King III and
reasons for non-compliance, if applicable.
KING PRINCIPLE
No
1.1
Ethical leadership and
corporate citizenship
The
board
should
provide
effective leadership based on an
ethical foundation
Applied
or
explained

1.2
The board should ensure that the
company is and is seen to be a
responsible corporate citizen

1.3
The board should ensure that the
company’s ethics are managed
effectively

2.1
2.2
2.3
2.4
2.5
Board and directors
The board should act as the focal
point for and custodian of
corporate governance
The board should appreciate that
strategy, risk, performance and
sustainability are inseparable
The
board
should
provide
effective leadership based on an
ethical foundation
The board should ensure that the
company is and is seen to be a
responsible corporate citizen
The board should ensure that the
company’s ethics are managed
effectively

Notes
The Board operates within the powers
conferred on it in the Memorandum of
Incorporation and Board Charter. The
Board bases decisions and actions on
ethical values and considers the
interests of the stakeholders of the
company.
The Board acknowledges that it has a
responsibility for determining policy and
strategic
direction
on
corporate
responsibility issues. The company is
pro-active in developing Green-rated
properties. Its core business does not
have a significant impact on the
environment. The company focuses its
socio-economic initiatives in the areas
in which it operates.
The composition of the Board ensures
the necessary skills and experience to
objectively judge matters of a strategic
nature and to guide and lead the
company in its business effectively, and
ethically. Ethical matters are considered
by the Social and Ethics Committee and
at Board level.

The Board is responsible for ensuring
that the Company adheres to sound
corporate governance principles.
The Board reviews the strategy, risk,
performance and sustainability on an
annual basis.
Refer to point 1.1 above.

Refer to point 1.2 above.

Refer to point 1.3 above.

The board should ensure that it
has an effective and independent
audit committee.
The board should be responsible
for the governance of risk

2.8
The board should be responsible
for information technology (IT)
governance

2.9
The board should ensure that the
company complies with applicable
laws and considers adherence to
non-binding rules, codes and
standards

2.10
The board should ensure that
there is an effective risk-based
internal audit

2.11
The board should appreciate that
stakeholders’ perceptions affect a
company’s reputation

2.12
The board and its directors should
act in the best interests of the
company
The board should consider
business rescue proceedings or
other turnaround mechanisms as
soon as the company is
financially distressed as defined
in the Act
The board should elect a
chairman of the board who is an
independent
non-executive
director. The CEO of the
company should not also fulfil the
role of chairman of the board
The board should appoint the
chief executive officer and
establish a framework for the
delegation of authority

2.6
2.7
2.13
2.14
2.15

The Audit and Risk Committee
comprises three independent nonexecutive directors.
The Board is responsible for the
governance of risk which is delegated
to the Audit and Risk Committee
without
abdicating
the
Board’s
responsibility.
The Board is responsible for the
governance of IT which is delegated to
the Audit and Risk Committee without
abdicating responsibility.
The Board is responsible for ensuring
that the Company adheres to sound
corporate governance principles, laws
and regulations, codes and standards.
Certain responsibilities are delegated to
sub-committees without abdicating
responsibility.
Due to the size of the executive
management structure it is not
considered necessary to have an
internal audit function. The Board has
outsourced the management of the
company’s property portfolio to Rabie
Property Administrators which has
extensive
experience
and
has
developed the necessary IT systems to
ensure accurate and timely reporting
and the Board has satisfied itself that
adequate controls exist over the
collection of rental and payment of preauthorised expenditure.
Stakeholder relationships are an
important aspect of the Company’s
responsibilities and the Board ensures
disputes are resolved timeously and
effectively,
should
disputes
with
stakeholders arise.
See 1.1 above.

The Board does not consider it
necessary to consider business rescue
proceedings as the Company is not
financially distressed as defined in the
Act.

The position of the chairman is held by
an independent non-executive director.
The CEO of the company is not the
chairman.

The CEO is appointed by the Board and
his roles and responsibilities are set out
in the Board Charter.
2.16
2.17
The board should comprise a
balance of power, with a majority
of non-executive directors.
The majority of non-executive
directors should be independent
Directors should be appointed
through a formal process

The Board comprises a majority of nonexecutive directors. The majority of
non-executive directors are
independent.

The directors are appointed through a
formal process defined by the Board
Charter, with the assistance of the
Remuneration
and
Nominations
committee.
The Company has not implemented
formal training and development
programs for directors or a formal
evaluation procedure, but has ensured
that each individual director has a
working understanding of the effect of
the applicable laws, rules, codes and
standards as applicable to the
Company.
The Board considered, based on a
formal assessment by the Audit and
Risk Committee, and is of the opinion
that the company secretary, who is a
CA (SA), has the requisite competence,
knowledge and experience to carry out
the duties of a company secretary of a
public company and in the performance
of his duties as company secretary, is
able to maintain an arms-length
relationship with other members of the
Board to effectively perform the role as
gatekeeper of good governance. The
Board has ensured that the company
secretary
has
adequately
and
effectively carried out his role and
where necessary have consulted with
external experts to ensure compliance
with relevant legislation and rules
pertaining to business operations.
The Board fulfils its responsibilities
relating to the safeguarding of assets,
operation of adequate systems and
control processes and the preparation
of accurate financial reporting and
statements in compliance with all
statutory requirements, accounting
standards and the requirements of the
King Code with the assistance of the
Audit and Risk Committee.
The Board is responsible for integrated
financial reporting including the integrity
of the report.
2.18
The induction and on-going
training and development of
directors should be conducted
through formal processes
X
2.19
The board should be assisted by
a competent, suitably qualified
and
experienced
company
secretary

2.20
The board should report on the
effectiveness of the company’s
system of internal controls

2.21
The board should ensure the
integrity
of
the
company’s
integrated report

2.22
The evaluation of the board, its
committees and the individual
directors should be performed
every year

2.23
The board should delegate
certain
functions
to
wellstructured committees but without
abdicating its own responsibilities

2.24
A governance framework should
be agreed between the group and
its subsidiary boards
Companies should remunerate
directors and executives fairly and
responsibly

2.26
Companies should disclose the
remuneration of each individual
director and prescribed officer

2.27
Shareholders should approve the
company’s remuneration policy

2.25
3.1
3.2
3.3
3.4
Audit committees
The board should ensure that the
company has an effective and
independent audit committee
The audit committee members
should be suitably skilled and
experienced independent nonexecutive directors
The audit committee should be
chaired by an independent nonexecutive director
The audit committee should
oversee integrated reporting


Refer to point 2.6 above.

The members of the committee are
financially literate and possess the
required level of skill and experience.

The Committee is chaired by an
independent non-executive director.

Refer to the 2012 Integrated Annual
Report, the preparation of which was
overseen by the committee.
The external auditor reports to the
committee which reviews the external
audit findings. The Committee monitors
the independence of the external
auditor and is of the view that the
external auditor is independent of the
Company.
The
Committee
has
reviewed,
assessed, evaluated and satisfied itself
of the appropriateness of the expertise
and experience of the financial director.
Refer to point 2.10 above.
3.5
The audit committee should
ensure
that
a
combined
assurance model is applied to
provide a co-ordinated approach
to all assurance activities

3.6
The audit committee should
satisfy itself of the expertise,
resources and experience of the
company’s finance function
The audit committee should be
responsible for overseeing of
internal audit

3.7
The Remuneration and Nominations
committee assesses the competence
and expertise of the directors on a
regular basis. The CEO assesses
competence and expertise by invitation.
The Board is responsible for the proper
management and ultimate control of the
Company
and
for
monitoring
performance,
risk
areas
and
performance indicators of the business.
The Board has delegated certain
functions to sub-committees.
Not applicable to the company as there
are no operating subsidiary companies
and Boards.
The Remuneration and Nominations
Committee advises the Board on the
structure and development of the
Company’s
policy
on
executive
directors’
remuneration
including
advising on policy regarding and
recommending non-executive directors’
remuneration.
The Company’s remuneration of each
individual director and prescribed officer
is disclosed in the Integrated Annual
Report.
The remuneration policy is endorsed by
shareholders annually in advance.
X
3.8
3.9
3.10
4.1
4.2
The audit committee should be an
integral component of the risk
management process
The
audit
committee
is
responsible for recommending the
appointment of the external
auditor and overseeing the
external audit process
The audit committee should
report
to the
board
and
shareholders on how it has
discharged its duties
The governance of risk
The board should be responsible
for the governance of risk
The board should determine the
levels of risk tolerance


The committee monitors and reports to
the Board on the risks faced by the
Company.
The
Committee
nominates
the
appointment of the external auditor to
the shareholders of the Company.

The Committee meets quarterly prior to
the quarterly Board meetings and to
shareholders at the AGM on the
discharge of its duties, and in the 2012
Integrated Annual Report on page 21.

Refer to point 2.7 above.

4.3
The risk committee or audit
committee should assist the
board in carrying out its risk
responsibilities

4.4
The board should delegate to
management the responsibility to
design, implement and monitor
the risk management plan

4.5
The board should ensure that risk
assessments are performed on a
continual basis

4.6
The board should ensure that
frameworks and methodologies
are implemented to increase the
probability
of
anticipating
unpredictable risks
The board should ensure that
management
considers
and
implements
appropriate
risk
responses
The
board
should
ensure
continual risk monitoring by
management

Risks are reviewed and considered by
the Board on a regular basis as part of
the normal management processes of
the business.
The Audit and Risk Committee assists
the Board in carrying out certain
responsibilities, including review of ongoing effectiveness of the internal
financial and operating controls and
frameworks on behalf of the Board.
Design, implementation and monitoring
of the risk management plan are
performed by the executive members of
the Board, with the assistance of the
Audit and Risk Committee.
The Board has taken all necessary
steps to ensure that business specific
operational
and
strategic
risks,
emerging risks, and risks posed by the
external environment are adequately
and timeously identified and mitigated
on a continual basis. Adequate disaster
recovery processes are in place and all
insurable risks have been adequately
covered.
Refer to point 4.5 above.

Refer to point 4.5 and 4.6 above.

Refer to point 4.5 and 4.6 above.
4.7
4.8
4.9
4.10
5.1
5.2
5.3
5.4
5.5
5.6
5.7
6.1
6.2
6.3
6.4
The
board
should
receive
assurance
regarding
the
effectiveness
of
the
risk
management process
The board should ensure that
there are processes in place
enabling
complete,
timely,
relevant, accurate and accessible
risk disclosure to stakeholders
The governance of information
technology
The board should be responsible
for information technology (IT)
governance
IT should be aligned with the
performance and sustainability
objectives of the company
The board should delegate to
management the responsibility for
the implementation of an IT
governance framework
The board should monitor and
evaluate
significant
IT
investments and expenditure
IT should form an integral part of
the company’s risk management
The board should ensure that
information assets are managed
effectively
A risk committee and audit
committee should assist the
board in carrying out its IT
responsibilities
Compliance with laws, rules,
codes and standards
The board should ensure that the
company complies with applicable
laws and considers adherence to
non-binding rules, codes and
standards
The board and each individual
director should have a working
understanding of the effect of the
applicable laws, rules, codes and
standards on the company and its
business
Compliance risk should form an
integral part of the company’s risk
management process
The board should delegate to
management the implementation
of an effective compliance
framework and processes

Refer to point 4.5 and 4.6 above.

The Board is committed to timeously
and effectively communicating to
shareholders. Communication with
shareholders is based on the principles
of timely, balanced, complete, clear and
transparent information. All matters are
communicated in a transparent fashion.
The Board is responsible for ensuring
disputes are resolved timeously and
effectively,
should
disputes
with
shareholders arise.

Refer to point 2.8 above.

The Board has aligned IT with the
performance
and
sustainability
objectives of the Company.
The
property
management
is
outsourced
to
Rabie
Property
Administrators and IT support is
outsourced to Rabie Property Group.
The Board monitors and evaluates
significant
IT
investments
and
expenditures.
IT does form an integral part of the
company’s risk management.
The management of IT assets is
managed through the Company’s risk
management process.
The Audit and Risk Committee monitors
IT risks and reports to the Board on the
risks faced by the Company.






Refer to point 2.9 above.

Refer to point 2.18 above.

Compliance risk forms part of the
Company’s risk management process.

Refer to point 4.4 above. Performed by
the executive directors.
7.1
7.2
7.3
7.4
7.5
8.1
8.2
8.3
8.4
8.5
8.6
9.1
9.2
9.3
Internal audit
The board should ensure that
there is an effective risk-based
internal audit
Internal audit should follow a riskbased approach to its plan
Internal audit should provide a
written
assessment
of
the
effectiveness of the company’s
system of internal
controls and risk management
The audit committees should be
responsible
for
overseeing
internal audit
Internal
audit
should
be
strategically positioned to achieve
its objectives
Governing
stakeholder
relationships
The board should appreciate that
stakeholders’ perceptions affect a
company’s reputation
The board should delegate to
management to proactively deal
with stakeholder relationships
The board should strive to
achieve the appropriate balance
between its various stakeholder
groupings, in the best interests of
the company
Companies should ensure the
equitable
treatment
of
shareholders
Transparent
and
effective
communication with stakeholders
is essential for building and
maintaining their trust and
confidence
The board should ensure that
disputes
are
resolved
as
effectively,
efficiently
and
expeditiously as possible
Integrated
reporting
and
disclosure
The board should ensure the
integrity
of
the
company’s
integrated report
Sustainability
reporting
and
disclosure should be integrated
with the company’s financial
reporting
Sustainability
reporting
and
disclosures
should
be
independently assured
X
Refer to point 2.10 above.
X
Refer to point 2.10 above.
X
Refer to point 2.10 above.
X
Refer to point 2.10 above.
X
Refer to point 2.10 above.

Refer to point 2.11 above.


Refer to point 4.4 above. Performed by
the executive directors.
The Company recognises material
stakeholders which whom it engages on
relevant issues.

All holders of the same class of shares
are treated equitably.

Refer to point 4.10 above.

Refer to point 4.10 above.

Refer to point 2.21 above.

Sustainability reporting and disclosure
form part of the 2012 Integrated Annual
Report.

External assurance will be considered if
the sustainable report is more
developed. This is not considered
necessary at this stage due to the
nature of the business.