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Efora Energy Limited is a South African based independent African oil and gas company, listed on the JSE.

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King III Compliance

The Board, its committees, and our employees conduct the Group’s business with integrity and transparency through applying sound corporate governance policies and practices.

Application of King III principles

The Board supports the Code of Corporate Practices and Conduct as recommended by the King III Report on Corporate Governance for South Africa 2009 (“King III”). In this report, the application of King III within the Group and Company as required by the JSE Listing Requirements is explained as well as the reasons for not applying certain principles set forth in King III. The Board endorses the fundamental principles of good financial, social, ethical and environmental practice as set out in King III.

The Board continues to consider the recommendations of King III with reference to the Group and Company’s size and stages of development. An analysis of the application of the 75 corporate governance principles as recommended in King III is set out below.

King III principleStatus
Chapter 1 : Ethical leadership and corporate citizenship
1.1The board should provide effective leadership based on an ethical foundationApplied
1.2The board should ensure that the company is and is seen to be a responsible corporate citizenApplied
1.3The board should ensure that the company’s ethics are managed effectivelyApplied
Chapter 2 : Board and directors
2.1The board should act as the focal point for and custodian of corporate governanceApplied
2.2The board should appreciate that strategy, risk, performance and sustainability are inseparableApplied
2.3The board should provide effective leadership based on an ethical foundationApplied
2.4The board should ensure that the company is and is seen to be a responsible corporate citizenApplied
2.5The board should ensure that the company’s ethics are managed effectivelyApplied
2.6The board should ensure that the company has an effective and independent audit committeeApplied
2.7The board should be responsible for the governance of riskApplied
2.8The board should be responsible for information technology (IT) governanceNote 1

2.9The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standardApplied
2.10The board should ensure that there is an effective risk-based internal auditApplied
2.11The board should appreciate that stakeholders’ perceptions affect the company’s reputationApplied
2.12The board should ensure the integrity of the company’s integrated reportApplied
2.13The board should report on the effectiveness of the company’s system of internal controlsApplied
2.14The board and its directors should act in the best interests of the companyApplied
2.15The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the ActNot Applicable

2.16The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfill the role of chairman of the board.Applied
2.17The board should appoint the chief executive officer and establish a framework for the delegation of authorityApplied
2.18The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independentApplied
2.19Directors should be appointed through a formal processApplied
2.20The induction of and ongoing training and development of directors should be conducted through formal processesApplied
2.21The board should be assisted by a competent, suitably qualified and experienced company secretaryApplied
2.22The evaluation of the board, its committees and the individual directors should be performed every yearNote 2
2.23The board should delegate certain functions to well-structured committees but without abdicating its own responsibilitiesApplied
2.24A governance framework should be agreed between the group and its subsidiary boardsApplied
2.25Companies should remunerate directors and executives fairly and responsiblyApplied
2.26Companies should disclose the remuneration of each individual director and certain senior executivesApplied
2.27Shareholders should approve the company’s remuneration policyApplied
Chapter 3: Audit Committee
3.1The board should ensure that the company has an effective and independent audit committeeApplied
3.2Audit committee members should be suitably skilled and experienced independent non-executive directorsApplied
3.3The audit committee should be chaired by an independent non-executive directorApplied
3.4The audit committee should oversee integrated reportingApplied
3.5The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activitiesApplied
3.6The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance functionApplied
3.7The audit committee should be responsible for overseeing of internal auditApplied
3.8The audit committee should be an integral component of the risk management processApplied
3.9The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit processApplied
3.10The audit committee should report to the board and shareholders on how it has discharged its dutiesApplied
Chapter 4: The governance of risk
4.1The board should be responsible for the governance of risk.Applied
4.2The board should determine the levels of risk toleranceApplied
4.3The risk committee or audit committee should assist the board in carrying out its risk responsibilitiesApplied
4.4The board should delegate to management the responsibility to design, implement and monitor the risk management planApplied
4.5The board should ensure that risk assessments are performed on a continual basisApplied
4.6The board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risksApplied
4.7The board should ensure that management considers and implements appropriate risk responsesApplied
4.8The board should ensure continual risk monitoring by managementApplied
4.9The board should receive assurance regarding the effectiveness of the risk management processApplied
4.10The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholdersApplied
Chapter 5: The governance of information technology (IT)
5.1The board should be responsible for information technology (IT) governanceNote 1
5.2IT should be aligned with the performance and sustainability objectives of the companyApplied
5.3The board should delegate to management the responsibility for the implementation of an IT governance frameworkApplied
5.4The board should monitor and evaluate significant IT investments and expenditureApplied
5.5IT should form an integral part of the company’s risk managementApplied
5.6The board should ensure that information assets are managed effectivelyApplied
5.7A risk committee and audit committee should assist the board in carrying out its IT responsibilitiesApplied
Chapter 6: Compliance with laws, codes, rules and standards
6.1The board should ensure that the company complies with applicable laws and considers adherence to nonbinding rules codes and standardsApplied
6.2The 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 businessApplied
6.3Compliance risk should form an integral part of the company’s risk management processApplied
6.4The board should delegate to management the implementation of an effective compliance framework and processesNote 3
Chapter 7: Internal Audit
7.1

The board should ensure that there is an effective risk based internal auditApplied
7.2

Internal audit should follow a risk based approach to its planApplied
7.3Internal audit should provide a written assessment of the effectiveness of the company’s system of internal controls and risk managementApplied
7.4The audit committee should be responsible for overseeing internal auditApplied
7.5Internal audit should be strategically positioned to achieve its objectivesApplied
Chapter 8: Governing stakeholder relationships
8.1The board should appreciate that stakeholders’ perceptions affect a company’s reputationApplied
8.2The board should delegate to management to proactively deal with stakeholder relationshipsApplied
8.3The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the companyApplied
8.4Companies should ensure the equitable treatment of shareholdersApplied
8.5Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidenceApplied
8.6The board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possibleApplied
Chapter 9: Integrated reporting and disclosure
9.1The board should ensure the integrity of the company’s integrated reportApplied
9.2Sustainability reporting and disclosure should be integrated with the company’s financial reportingApplied
9.3Sustainability reporting and disclosure should be independently assuredNote 4

Notes:

  1. Whilst the Board has implemented an IT governance framework, it is completing the remediation of processes identified as requiring improvement by the independent assurance process.
  2. The annual evaluation for the under review was delayed given the changes made to the Board.  The evaluation will be conducted within the next three months.
  3. Compliance with laws and regulations is addressed within the Group risk management framework.  The Board will look into establishing a separate compliance framework following due consideration of the Group’s compliance risk.
  4. The Board will seek to obtain the required assurance for its sustainability reporting for the year ending 28 February 2017.

Compliance Statement

The Board is satisfied with the extent of the Group’s compliance with King III and The JSE Listing Requirements.

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