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Corporate governance - Contents

Corporate governance

By adhering to the guidelines of the King II report, the board has set a corporate governance framework that consolidates our position in Africa and abroad, mitigating economic and political risk

The board, recognising the rapid growth of the MTN Group over the past financial period, is fully committed to ensure that best practice and corporate governance standards are implemented throughout the Group. The MTN Group will continue to benchmark its governance against local and international standards to ensure it keeps abreast of corporate governance trends.

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The Board

MTN Group has become a multinational corporation and it has therefore become necessary to review the constitution of the board and its committees including representation on the boards and committees of subsidiary companies, associated companies and joint ventures.

All boards and committees within the company have access to professional external advice if required, provided that established procedures are followed in obtaining such services.

The board and its committees operate under the guidance of their respective charters which determine the role these entities play in the governance structure of the organisation.

The board is responsible for giving strategic direction to the organisation. To this effect a strategic session is held annually. The board ensures that the necessary delegated authorities to management are reviewed and updated periodically. The board is responsible to evaluate at least annually the Group Chief Executive Officer’s performance.

The board reviews the going concern status of the Group at year end and at the interim period and also reviews non-financial matters at other scheduled board meetings.

A total review of all Group policies has also been undertaken to ensure that policies are relevant and in compliance with most-recent best practice and applicable legislation.

Board members, in terms of the company’s articles of association, retire by rotation and one quarter of the directors are to be re-elected at least every three years.

Further details on the board’s composition are available here.

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Board Evaluation

The board and its committees are evaluated annually.

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Induction Programme

The induction programme is currently being reviewed and a more comprehensive programme is being implemented across all operations.

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Group Secretary

Ms SB Msthali was appointed Group Secretary with effect from 1 August 2005 and the board is aware of her duties in fulfilling her role as both compliance and governance officer of the Group.

New directors are inducted into the organisation via the group secretariat office. The group secretariat office also communicates and monitors compliance with the Group trade embargo policy, among others, ensuring that no employee is allowed to deal in the company’s securities during prohibited periods.

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Remuneration Philosophy

Details on the remuneration philosophy appear on page 82. However, the Nomination, Remuneration and Human Resources Committee is responsible for the remuneration framework of the Group and recommends to the board for approval strategic matters relating to nomination, remuneration and human resource policies. This includes nonexecutive directors’ fees, among others, which ultimately are approved by shareholders. Details of directors’ emoluments appear here.

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Quarterly Board Meetings

The following tables report the various board and committee meetings scheduled during the period under review and details the attendance of members.

Details of attendance by directors at quarterly board meetings for the period under review are set out below:

Names 18/3/2005 9/6/2005 24/8/2005 23/11/2005
MC Ramaphosa*** P P P P
PF Nhleko* P P P P
DDB Band*** P P P P
SL Botha* P P P P
I Charnley* P P P P
ZNA Cindi*** P P P P
RS Dabengwa* P P P P
PL Heinamann*** P P P P
MA Moses** P P P P
RD Nisbet* P P P P
JHN Strydom** P P P P
AF van Biljon*** P P P P

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In-camera meeting

The following quarterly board meeting held after 31 December 2005 was preceded by an in-camera meeting of non-executive directors only:

Names 22/3/2006
MC Ramaphosa*** P
PF Nhleko* P
DDB Band*** P
SL Botha* P
I Charnley* P
ZNA Cindi*** P
RS Dabengwa* P
PL Heinamann*** P
MA Moses** P
RD Nisbet* P
JHN Strydom** P
AF van Biljon*** P

A = Apologies P = Present
*Executive **Non-executive ***Independent non-executive

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Special Board Meetings

Special board meetings (these meetings scheduled outside the normal pre-determined meeting dates are called at short notice to deliberate on special business)

Names 21/4/2005 6/5/2005 10/7/2005 1/8/2005 18/12/2005
MC Ramaphosa*** P P A P P
PF Nhleko* P P P P P
DDB Band*** P P P P P
SL Botha * P P P P P
I Charnley * P P P P P
ZNA Cindi *** P P P P P
RS Dabengwa* P P P P P
PL Heinamann*** P P P P P
MA Moses** P P P P P
RD Nisbet* P P P P P
JHN Strydom** P A P P P
AF van Biljon*** P P P P P

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In-camera meeting

The following special board meeting was preceded by an in-camera meeting of non-executive directors only.

Names 22/3/2006
MC Ramaphosa*** P
PF Nhleko* P
DDB Band*** P
SL Botha* P
I Charnley* P
ZNA Cindi*** P
RS Dabengwa* P
PL Heinamann*** P
MA Moses** P
RD Nisbet* P
JHN Strydom** P
AF van Biljon*** P

A = Apologies P = Present
*Executive **Non-executive ***Independent non-executive

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Special Investment Committee

A special committee of the board was established to review and analyse specific acquisition opportunities and recommend to the board for consideration and approval those acquisitions or opportunities which best complement the MTN Group.

The committee is led by Mr Band and met on 7 August 2005 with all members present. The committee consists of three non-executive directors including the Chairman and two executive directors.

Members

DDB Band (Chairman)
PF Nhleko
RD Nisbet
AF van Biljon
JHN Strydom

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Executive and Steering Committee

The committee is responsible for strategic operational matters including the day-to-day management of the business of the Group. The committee is led by the Group Chief Executive Officer. The committee facilitates the effective control of all the Group’s operational activities, acting as a medium of communication and co-ordination between all the various business units, group subsidiary companies and the board. The committee is also responsible for recommendations to the board on the Groups’ policies and strategies and monitoring implementation according to the board’s mandate. The committee also reviews potential investment opportunities. The committee currently consists of seven members, all executive members of the Group.

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Members

PF Nhleko (Chairman)
SL Botha
I Charnley
RS Dabengwa
MB Manyatshe**
Y Muthien*
RD Nisbet
PD Norman
KW Pienaar
CS Wheeler**

* Withdrawn with effect from 8 November 2005

** Withdrawn from the committee with effect from 1 January 2006

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Board Statutory Committees

Specific responsibilities have been delegated to several board committees with defined charters approved by the board. The committees’ profiles are detailed as follows:

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Group Audit Committee

The Group audit committee has adopted a formal written charter dealing with membership, structure and levels of authority and its duties and responsibilities. The committee assists the board in discharging its responsibilities to safeguard the Group’s assets and to ensure that proper accounting records are maintained. It also oversees the financial reporting process and ensures compliance with accounting policies, Group policies, legal requirements and reviews internal controls. It interacts with and evaluates the effectiveness of the external and internal audit processes and reviews compliance with the Group’s code of ethics in conjunction with the Group risk management and corporate governance committee.

The committee is led by Mr van Biljon and consists of four non-executive directors. It meets with senior management, including the Group Chief Executive Officer and the Group Financial Director, internal and external audit representatives, at least four times a year. The head of internal audit and the external auditors have unrestricted access to the committee and its chairman. Audit committees exist in each of the Group’s operations and report significant risk and audit matters for their operations to the Group audit committee on a regular basis. The committee also recommends to the board the appointment of external auditors and reviews and approves non-audit work performed by the external auditors.

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Members

AF van Biljon (Chairman)
DDB Band
PL Heinamann
JHN Strydom

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In-camera meeting

Separate in-camera meetings of non-executive directors together with the external and internal auditors are held immediately after each meeting of the Group audit committee.

Names 14/4/2005 16/5/2005 02/6/2005 10/8/2005 7/9/2005 28/10/2005 21/11/2005 2/12/2005
AF van Biljon P P P P P P P P
DDB Band P P P P P P P P
PL Heinamann P P P P P P P P
JHN Strydom P P P P P P P P

Details of attendance by members of the committee at meetings held after 31 December 2005, which were followed by in-camera meetings of non-executive directors are set out below:

Names 16/2/2006 28/2/2006 13/3/2006
AF van Biljon P P P
DDB Band P P P
PL Heinamann P P P
JHN Strydom P P P

A = Apologies P = Present

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Group Risk Management and Corporate Governance Committee

The Group risk management and corporate governance committee’s primary task is to ensure that the risk management framework is implemented and monitored regularly. Significant risk, corporate governance and compliance matters are identified and managed through the committee which provides strategic direction. The committee is also responsible for the sustainability framework and sustainability reporting. The committee consists of three non-executive directors and two executive directors.

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Members

PL Heinamann (Chairman)
ZNA Cindi
RS Dabengwa
PF Nhleko
AF van Biljon

Details of attendance by members of the committee during the period under review are set out below:

Names of members 5/7/2005 7/11/2005
PL Heinamann P P
ZNA Cindi P P
RS Dabengwa A A
PF Nhleko P P
AF van Biljon P P

Details of attendance by members of the committee at a meeting held after 31 December 2005 are set out below:

Names of members 7/3/2006
PL Heinamann P
ZNA Cindi P
RS Dabengwa A
PF Nhleko P
AF van Biljon P

A = Apologies P = Present

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Group Nominations, Remuneration and Human Resources Committee

The mandate of this committee is to:

  • Review the size, structure and composition of the board
  • Conduct an annual assessment of the board’s performance
  • Set criteria for the nomination of directors and committee members of the board
  • Identify, evaluate and nominate candidates for appointment to the board to fill any vacancies
  • Determine the remuneration of executive directors, consider, review and approve the Group’s policy on executive remuneration and communicate this policy to stakeholders
  • Make recommendations to the board on annual salary increases and performance-related bonus awards
  • Review and approve performance-related incentive schemes, performance criteria and measurements, including share option allocations to executive directors and staff
  • Review and approve new remuneration methodologies for the management team
  • Review philosophy regarding fees payable to non-executive directors (as a separate process from executive remuneration reviews) which is for confirmation by the board and ratified by shareholders
  • Monitor and review compliance on employment equity practices.

The committee operates within the parameters of a charter approved by the board. The committee is led by Mr Band and consists of three independent non-executive directors.

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Members

DDB Band (Chairman)
PL Heinamann
MC Ramaphosa

Details of attendance by members of the committee during the period under review are set out below:

Names of members 2/6/2005 28/10/2005
DDB Band P P
PL Heinamann P P
MC Ramaphosa A A

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In-camera meeting

The following committee meeting was preceded by an in-camera meeting of committee members.

Details of attendance by members of the committee at a meeting held after 31 December 2005 is set out below:

Names of members 15/3/2006
DDB Band P
PL Heinamann P
MC Ramaphosa P

A = Apologies P = Present

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Group Tender Committee

The Group tender committee’s primary objective is to promote a sustainable and fair tender culture and to ensure that tender policies are applied consistently; always bearing in mind best business practice to develop all markets and promote economic development. Similar tender committees exist in all operations throughout Africa. The committee’s charter approved by the board, aims to promote effective and transparent procurement and tender evaluation processes. The committee only reviews highlevel tenders when the need arises. Various lower-level tender committees are in place to ensure that all other tenders are reviewed with the same level of efficiency. The committee consists of one independent non-executive Chairman and four Group executives.

Members Alternate members
D Marole (Chairman)**
I Charnley
RS Dabengwa A Githiari
I Hassen* A Hussain
RD Nisbet R Madzonga
CS Wheeler

*I Hassen was withdrawn as a member of the committee

**D Marole is an independent non-executive Chairman.

Details of attendance by members of the committee during the period under review are set out below:

Names of members 8/4/2005 1/7/2005
D Marole P P
I Charnley A A
RS Dabengwa P A
I Hassen R P
RD Nisbet A P
CS Wheeler A A
A Githiari (alt) P A
A Hussain (alt) A A
R Madzonga (alt) P P

A = Apologies P = Present R = Recused

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Code of Ethics

The Group is committed to promoting the highest standards of ethical behaviour among its directors, management and employees. Accordingly, the code of ethics is reviewed annually.

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Shareholder Communication

Material information is timeously and accurately disseminated. The Group encourages shareholders to attend its annual general meetings and to raise questions. Regular presentations by executive directors and senior management are made to institutional investors, analysts and the media to communicate strategy and performance. A corporate website (www.mtn.co.za) contains the latest Group financial and operational data, as well as relevant historical information.

The Group is currently investigating various initiatives to improve services to shareholders especially on effective communication for the annual general meeting.

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Market Review of Non-executive Directors' Fees

With the assistance of independent remuneration surveys, directors’ fees were benchmarked to the market during the last quarter of the period by executive management. This resulted in an increase in amounts paid to non-executive directors as set fees were last adjusted in 2004.

An ordinary resolution to this effect is proposed to adjust fees paid to non-executive directors with effect from 1 April 2006. Details are contained in the notice to shareholders here .

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Corporate Code of Conduct

To comply with the company’s code of conduct and in the interest of good corporate governance, the code of conduct is continually reviewed and enhanced. The company has also implemented other policies which complement the code of conduct, such as the gift policy and trade embargo policy on MTN Group shares. A whistle-blowing policy enables employees to report any misconduct.

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Environmental Code

The Group is committed to and endeavours to comply in all respects with applicable environmental legislation. The Group also ensures that all legislation and compliance matters are adhered to. The code of conduct prescribes strict policies on environmental matters.

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Internal Audit and Forensic Services

The Group internal audit function is supported by similar audit functions in each operation. The internal audit function is mainly responsible for providing assurance on the adequacy and effectiveness of internal controls within the Group. It reports to the Group Chief Executive Officer and the Chairman of the Group audit committee.

Subsidiary audit committees are similarly structured and have access to the chairman of the Group audit committee. Key issues falling under the scope of the audit committee or internal audit are also reviewed at Group level if required.

Internal audits are performed on a risk-based audit approach to ensure that assurances can be given on inherently high risks.

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External Audit

The joint external auditors express an independent opinion on the annual financial statements. The auditors are appointed by the board on the recommendation of the audit committee. The external auditors’ performance and independence are regularly monitored by the audit committee. Non-audit work performed is pre-approved to ensure that no conflict of interest exists.

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Sustainability Reporting

A comprehensive sustainability section is integrated into the business report.

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Sponsor

The corporate sponsor is Merrill Lynch, appointed in compliance with the listings requirements of the JSE Limited.

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Going Concern

The board has considered and recorded the facts and assumptions on which it relies to conclude that the Group will continue to operate as a going concern. This status is reviewed regularly by the Group audit committee.

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