Our approach to governance

Introduction

Merafe is committed to high standards of corporate governance and it endorses the four governance outcomes set out in the King IV Report on Corporate Governance for South Africa, 2016 (King IV), namely an ethical culture, good performance, effective control and legitimacy.

King IV register

The register set out below provides an overview of Merafe's application of the principles contained in King IV. The register should be read in conjunction with the 2023 Integrated Annual Report.

Leadership

Principle 1

The governing body should lead ethically and effectively.

 

The Merafe Board (the "Board") leads ethically and effectively. Disclosure of interests is a standard agenda item at Board and committee meetings and there is an annual declaration by all directors. Further, there is a Code of Ethics in place which applies to all directors and all employees. It is displayed on Merafe's website.

There is also a Director Induction and Training Programme, which is reviewed annually. Further, various aspects of Principle 1 are covered in Merafe's Board Charter and other key documents.

The Code of Ethics and the Board Charter are on Merafe's website. The Company has a policy to guide directors on dealing in Company securities and no director or employee may buy or sell the Company's shares during a closed period.

Organisational ethics

Principle 2

The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.

 

The ethical tone at Merafe is set by the Board and applies throughout the organisation. Merafe's Code of Ethics applies to all directors, employees and suppliers. There is a Whistle-Blowing Line and reports are provided to the Social, Ethics and Transformation Committee and the Audit and Risk Committee on a confidential basis. In respect of any ethical breaches discovered by staff and the external auditors, the relevant laws and regulations are applied. More information on Merafe and the Venture's whistle-blowing policy is on our website.

Responsible corporate citizen

Principle 3

The governing body should ensure that the organisation is and is seen to be a responsible corporate citizen.

 

The Board's approach to being a responsible corporate citizen is supported by various policies and the work done by the Social, Ethics and Transformation Committee. Various safety, health, environmental and community aspects are covered by the above committee with inputs from the Venture as set out in this report.

Strategy and performance

Principle 4

The governing body should appreciate that the organisation's core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process.

 

The Board recognises that all these elements are inseparable, and Merafe follows the Six Capitals approach as described in this report. This integrated approach is taken by the Board at its meetings, strategy sessions and committee meetings. All budgets and strategic plans (medium- and longer-term) are approved by the Board. Risks and opportunities are covered in strategy sessions and meetings of the Audit and Risk Committee and the Board in an integrated manner.

Reporting

Principle 5

The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments regarding the organisation's performance, and its short-, medium- and long-term prospects.

 

The Board is responsible for the integrity of the information contained in this report and other reports, including the annual financial statements and interim and year-end results presentations. It is assisted in this regard by the Board committees which review and recommend their respective reports to the Board in accordance with their terms of reference. Reports are provided in printed and online form . The approved reporting framework is set out on the inside front cover of this report. Matters material to Merafe are reflected in this report in material issues . Please further see here for Merafe's approach to the reporting of material matters and quantitative data set out in the report.

Primary role and responsibilities of the Board

Principle 6

The governing body should serve as the focal point and custodian of corporate governance in the organisation.

 

The Board is the focal point and custodian of corporate governance in the Company. Various key policies supporting the Company's strategy are in place. The Board has an annual strategy session and performance is measured against agreed targets. The Board oversees the implementation and execution of the strategy by management. The Board has a Board Charter, a copy of which is on our website www.meraferesources.co.za , and which is reviewed annually against best practices. The Board is satisfied that in respect of the 2023 financial year, it has discharged its duties as set out in the Board Charter.

Composition of the Board

Principle 7

The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.

 

Assisted by the Remuneration and Nomination Committee, the Board reviews its knowledge, skills, experience, diversity and independence annually, or as circumstances change as set out below . The Company has a diversity policy and has set targets in this regard. This policy has been updated to comply with the JSE Listings Requirements, where further diversity criteria, namely race, culture, age, field of knowledge, skills and experience, have been prescribed. The composition of the Board in terms of race and gender is set out in governance structure. The Board comprises a majority of non-executive members, most of whom are independent. The King IV recommendations for director independence, Board composition, chair, induction and training, managing conflicts and nomination and appointments of directors are met. The Chairperson of the Remuneration Committee is the lead independent director of the Company.

Committees of the Board

Principle 8

The governing body should ensure that its arrangements for delegation within its own structures promote independent judgement, and assist with balance of power and the effective discharge of its duties.

 

Merafe has three standing Board committees (as described in this report below), to which specific duties and responsibilities have been delegated. They operate under written terms of reference which are reviewed annually and are on our website. The composition of the Board and committees are in line with King IV, the Companies Act and the JSE Listings Requirements, as applicable.

Board performance evaluation

Principle 9

The governing body should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, support continued improvement in its performance and effectiveness.

 

The performance and effectiveness of the Board and its committees are reviewed at least every two years in line with King IV. This process comprises a self-evaluation questionnaire and is co-ordinated and reported on by the Company Secretary. Areas for improvement are documented and actioned. Performance reviews of individual directors and the Board Chairperson are done every two years. During the first quarter of 2024, an effectiveness evaluation of the committees and the Board had commenced.

Appointment and delegation to management

Principle 10

The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities.

 

The Board Charter sets out matters reserved for the Board and is reviewed annually.
In addition, there is a Corporate Approvals Framework (approved by the Board and reviewed annually) which sets out matters delegated to management and those reserved for the Board. The Board appoints the CEO and the incumbent is accountable to the Board for leading the implementation of strategy, policy and running the day-to-day business of the Company. The King IV recommendations for the CEO in respect of appointment, roles and responsibilities, succession and performance evaluation are complied with. With regards to the Company Secretary, we refer you to our reporting in accordance with 3.84(h) of the JSE Listings Requirements below in this report.

Risk governance

Principle 11

The governing body should govern risk in a way that supports the organisation in setting and achieving strategic objectives.

 

The Board governs and is responsible for risk. It is assisted by the Audit and Risk Committee, which evaluates risk and guides the Board. Merafe has a Risk Management Policy and Framework, a detailed Risk Register and also a Tax Risk Register. Risk matters are a standard agenda item at every Audit and Risk Committee. In this regard we refer you to material issues (Material issues) and approach to risk management (Approach to Risk management) in this report. Opportunities flowing from risk assessments form part of the overall approach to risk governance. Emerging risk trends are identified and monitored regularly.

Technology and information governance

Principle 12

The governing body should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives.

 

IT governance is a standard agenda item at meetings of the Audit and Risk Committee. Merafe has a very small head office but is reliant on technology. Various IT-related policies are in place and due to the small head office, integration of IT and business occurs. Merafe (as opposed to the Venture) has limited investment in technology but is aware of its importance and also the need to protect information. Merafe regularly assesses the vulnerability of its IT environment through expert third parties. All shortcomings arising from these reviews are addressed.

Compliance governance

Principle 13

The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen.

 

The Board governs compliance, which is monitored by a combination of management controls, compliance via the Venture, external audit, sponsors and the Company Secretary. There is no dedicated in-house compliance function nor is one required, given Merafe's size and structure. Merafe relies on processes within the Venture. Compliance is a standard agenda item for the Audit and Risk Committee, which reports to the Board. During the year, the Board and the relevant committees took note of the Companies Amendment Bill and also considered the draft changes to the JSE Listings Requirements.

Remuneration governance

Principle 14

The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short-, medium- and long-term.

 

The Board takes responsibility for remuneration governance. It is assisted by the Remuneration and Nomination Committee, which oversees that the organisation remunerates fairly, responsibly and transparently so as to promote the delivery of strategic objectives and the creation of value in a sustainable manner. It makes recommendations to the Board in this regard. The Remuneration Report is set out in remuneration report to approach to risk management in this report.

Assurance

Principle 15

The governing body should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the organisation's external reports.

 

Merafe follows a combined assurance model, with assurance being provided by management, Merafe's external auditors, the Venture's internal audit function and the external auditors. Oversight on assurance is provided by the Audit and Risk Committee which reports to the Board. For more information, please see below in this report.

During the year, Ligwa Advisory Services (LIGWA) continued to act as Merafe's independent internal auditors, reporting functionally to the Audit and Risk Committee.

Merafe also receives a statement from an Independent Competent Person on the Mineral Resources and Mineral Reserves as well as other assurance as set out in sustainability: Internal and external reviews, audits and processes in this report.

Stakeholders

Principle 16

In the execution of its governance role and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time.

 

The Board has identified its key stakeholders and material issues and risks that could impact the stakeholders of Merafe and the Venture, as set out in stakeholders and material issues in this report. The methods of engaging with stakeholders and issues arising from these engagements are set out in a table referred to in the 2023 Integrated Report.

There is ongoing engagement with shareholders via various mechanisms, including interim and year-end reports, the Integrated Annual Report, presentations, quarterly reports, shareholder meetings and the annual general meeting. A stakeholder framework is in place.


The company complies with King IV principles, save as otherwise noted and explained in this Integrated Annual Report. We recognise that King IV is a journey and the Board will continue to spend time in 2024 analysing our practices to support the various principles and outcomes in terms of King IV as well as assessing and implementing the recommendations of the JSE guidance papers on sustainability and climate change.

The structure and roles and responsibilities of the Merafe Board and committees

Board and Board committees   Roles and responsibilities   Members/invitees   Member and attendance
Board meetings 2023

Merafe Board

 

The Chairperson is responsible for ensuring that:

  • the Board provides effective leadership;
  • the Board maintains ethical standards;
  • Merafe develops and implements strategies aimed at achieving its sustainability; and
  • the Board and its committees are effective.

The Board is responsible for:

  • governance of the Merafe Group on behalf of its shareholders and stakeholders;
  • its own governance;
  • strategy, strategic decision-making and risk tolerance;
  • assessment of performance;
  • engagement with stakeholders;
  • Merafe's approach to its social responsibility, safety, health, the environment, ethics and risk; and
  • IT governance.
 

Abiel Mngomezulu (c)
Matsotso Vuso
Katlego Tlale
David McGluwa
Nonhlanhla Mabusela-Aikhuere
Daniel Green
Jeff Mclaughlan
Zanele Matlala (CEO)
Ditabe Chocho (FD)

 

4/4
3/4
4/4
4/4
4/4
4/4
4/4
4/4
4/4

 

Key issues in 2023 included:

Safety, Merafe strategy, stakeholder engagement, Merafe sustainability, the Venture performance and sustainability, IT governance and risk management, approval of annual financial statements and Integrated Annual Report, approval of interim results and considering the payment of dividends, impairment considerations, review of Board committee composition, composition review and approval of various charters, policies and mandates and committees' terms of reference, King IV analysis, review of effectiveness of internal controls, review of compliance and consideration of investment and diversification opportunities and conducting new transactions, attending and finalising transactions involving PGMs, considering changes to the JSE Listings Requirements and the Companies Amendment Bill.

   
Committee meetings 2023

Audit and Risk Committee

 

All members of this committee are independent non-executive directors (as required by the Companies Act).

The committee:

  • monitors the adequacy of financial controls and reporting; reviews the audit plans of the external auditors and adherence to these plans; considers and determines the principles for approving the use of the external auditors for non-audit services; ensures that financial reporting complies with IFRS, the Companies Act and tax legislation; reviews and makes recommendations on all financial matters;
  • oversees Merafe's integrated reporting as well as the assurance function; and
  • assists the Board in identifying all material risk and sustainability issues to which the Company is exposed. It ensures that the requisite risk management culture, policies, practices, systems and resources are in place and are functioning effectively.
 

Matsotso Vuso (c)
Katlego Tlale
Nonhlanhla Mabusela-Aikhuere
Abiel Mngomezulu*
Zanele Matlala (CEO)*
Ditabe Chocho (FD)*
* Invitees

 

3/4
4/4
4/4
4/4
4/4
4/4

 

Key issues in 2023 included:

Review work of external auditors, assess independence of external auditors, review risk register, monitor compliance with statutory requirements, assess adequacy of internal controls and compliance, monitor and consider all tax returns and matters related to SARS, risk management workshop, oversee forex and interest rate hedging policies, IT governance implementation, assess formal tax strategy and policy document, reviewed and approved Integrated Annual Report and assurance process, recommend annual financial statements and reviewed interim results and impairment considerations, recommended Integrated Annual Report for approval by Board, assessment of Financial Director, review terms of reference, review internal audit function, King IV analysis and compliance as well as the attestation by the CEO/FD in the annual financial statements, review of JSE's pro-active financial statement monitoring report, assessing JSE guidance papers on sustainability and climate change reporting, assessing changes to the JSE Listings Requirements, noting the Companies Amendment Bill and overseeing internal auditors. The committee also reviewed and assessed relevant legislation applicable to Merafe, the Venture and the Committee and assessed the Company's compliance with King IV.

   
Committee meetings 2023

Remuneration and Nomination Committee

 

The committee:

  • makes recommendations to the Board for its consideration and final approval regarding remuneration strategy and policy;
  • assists the Board in ensuring that directors and executives are remunerated fairly and responsibly;
  • ensures the disclosure of directors and other executive remuneration is accurate, complete and transparent;
  • assists the Board with ensuring that remuneration policies are adopted to promote the achievement of strategic business objectives and encourage individual performance, and with monitoring remuneration policies;
  • makes recommendations on non-executive directors' fees; and
  • develops policy around the appointment of directors, investigates potential Board members for necessary skills and competence and makes appropriate recommendations to the Board.
 

Abiel Mngomezulu1
Jeff Mclaughlan2
Daniel Green
Zanele Matlala (CEO)*
Ditabe Chocho (FD)*

* Invitees
1 Chair Nomination Committee
2 Chair Remuneration Committee

 

3/3
3/3
3/3
3/3
3/3

 

Key issues in 2023 included:

Composition of all committees, attending benchmarking exercise of directors' executive remuneration, recommended approval of remuneration policy to Board, approved CEOs (individual) and business performance KPIs, evaluated Executive Committee's individual and business performance against objectives, reviewed executive contracts, reviewed remuneration policy and approval of the Board diversity policy, and noting the Companies Amendment Bill.

   

Social, Ethics and Transformation Committee

 

The roles and responsibilities of the Social, Ethics and Transformation Committee are set out in the Social, Ethics and Transformation Committee report on below .

Key issues in 2023 included:

The key issues are set out in the Social, Ethics and Transformation Committee report.

 

Nonhlanhla Mabusela– Aikhuere (c)
Abiel Mngomezulu
David McGluwa
Zanele Matlala (CEO)
Ditabe Chocho (FD)

 

3/3
3/3
2/3
3/3
3/3


The structure and roles and responsibilities of the Venture's Joint Board

Management structure   Roles and responsibilities   Members

Executive Committee
of the Venture

 

The Executive Committee consists of the heads of all the Venture's divisions and the Managing Director of the Venture. The committee meets at least once a month, recommends policies and strategies and is responsible for the implementation of strategy and carrying out the Board's mandates and directives. It deals with all executive management business and is responsible for all material matters that are not the responsibility of the Board. It also assists with the execution of Merafe's compliance and disclosure obligations.

 

Merafe is represented by Zanele Matlala and Ditabe Chocho.

The Joint Board
of the Venture

 

The Joint Board meets quarterly with the aim of ensuring proper governance of the activities of the Venture. Members of Merafe's management team also attend and participate in the Venture's monthly Executive Committee and sustainable development meetings and quarterly Audit Committee and Treasury meetings.

 

The Joint Board consists of two representatives from Glencore and two representatives from Merafe (Zanele Matlala and Ditabe Chocho). Currently, Glencore appoints the Chairperson of the Joint Board.


See our website for our Board Charter, Code of Ethics and the Board diversity policy. See the annual financial statements, which form part of our online Integrated Annual Report for 2023 for the Audit and Risk Committee's report as well as below in this report. For a more detailed overview of the responsibilities of the Board and the committees, see the terms of reference of the Board and committees on our website, which form part of our online Integrated Annual Report for 2023 .

Reporting in terms of paragraph 3.84 of the JSE Listings Requirements on Board governance processes

Requirement   Principle   Merafe's approach and compliance

3.84(a)

 

There must be a policy evidencing a clear balance of power and authority at Board level to ensure that no one director has unfettered powers.

 

Our Board Charter clearly demonstrates that there is a clear balance of power and authority at Board level and that no one director has unfettered powers. We refer you to governance in this report.

3.84(b)

 

Issuers must have a CEO and a Chairperson and these positions must not be held by the same person.

The Chairperson must either be an independent director or the issuer must appoint a lead independent director as defined in King IV.

 

The CEO and Chairperson positions in Merafe are held by different people and Merafe's Chairperson is an independent non-executive director as defined in King IV. We refer you to governance and chairperson's report in this report.

Mr Mngomezulu is the Chairperson. In accordance with King IV, the Board conducted an in-depth review of both his performance and independence and concluded that his independence was not affected or impaired by his length of service. Mr Mngomezulu is due to retire at the 2024 annual general meeting and has not offered himself for re-election, having served on the Board since September 2010.

3.84(c)

 

All issuers must in accordance with King IV appoint an (i) Audit Committee, (ii) a committee responsible for remuneration, and (iii) a Social and Ethics Committee.

The composition of such committees must comply with the Companies Act and should be considered in accordance with King IV and each committee must consist of three members.

The composition of such committees, a brief description of their mandates, the number of meetings held and any other relevant information must be disclosed in the annual report.

 

Merafe has combined its Audit and Risk Committee. Its membership is set out here in this report. The committee currently has three members, all of whom are independent non-executive directors, as required by the Companies Act and set out in King IV. The Chairperson of the Board, Chief Executive Officer and Financial Director are invited to attend committee meetings.

As previously indicated, Merafe has appointed a combined Remuneration and Nomination Committee. The committee has three members, two of whom are independent non-executive directors. The Chairperson of the Board is a member of the Remuneration Committee and is Chairperson of the Nomination Committee.

Merafe has a Social, Ethics and Transformation Committee. It comprises five members, with the majority being non-executive directors.

The composition of the committees, the mandates, activities and number of meetings held are set out in governance on this report.

Our Chief Executive Officer and Financial Director continued to serve as permanent invitees to the Audit and Risk Committee.

3.84(d)

 

A brief curriculum vitae of each director standing for election or re-election must accompany the relevant notice of meeting.

 

Brief curricula vitae of our directors can be found in governance in this report.

3.84(e)

 

Capacity of directors in relation to executive,
non-executive and independent must be categorised and disclosed in the relevant documentation.

 

The curricula vitae mentioned at 3.84(d) also contain information as to whether a director is independent, non-executive or executive. The composition of the Merafe committees is in accordance with the requirements of the JSE Listings Requirements, the Companies Act and King IV.

3.84(f)

 

Issuers must have a full-time executive financial director.

 

Merafe has a full-time Financial Director who does not hold any other position nor does he have any other commitments that could be considered as full or part-time employment.

3.84(g)

 

The provisions deal with the duties of the Audit Committee which include (i) considering, on an annual basis, and satisfying itself on the appropri-ateness of the expertise and experience of the financial director; (ii) ensuring that the issuer has appropriate financial reporting procedures which are operating, which includes consideration of all entities included in the group IFRS financial statements and en-sure that it has access to all the financial information of the issuer to allow the issuer to effectively prepare and report on its financial statements; (iii) considering the information detailed in paragraph 3.84(g)(iii) and provided by the audit firm and individual auditor in their assessment of the suitability of the appointment or reappointment of the auditor; and (iv) ensuring that the appointment of the auditor is presented and included as a resolution at the annual general meeting of the issuer pursuant to section 61(8) of the Companies Act.

 

Our Audit and Risk Committee annually considers and satisfies itself of the appropriateness of the expertise and experience of the Financial Director, and has reported in its Audit and Risk Committee report that it is satisfied with the appropriateness of the expertise and experience of the Financial Director. The Audit and Risk Committee, as contemplated in paragraphs 3.84(g)(ii) to (iv), also ensured that Merafe has established appropriate financial reporting procedures and that those procedures are operating, which included consideration of all entities included in the consolidated group IFRS financial statements; ensured that it has access to all the financial information of Merafe to allow Merafe to effectively prepare and report on the financial statements of Merafe; requested from the audit firm (and if necessary consults with the audit firm on) the information detailed in paragraph 3.84(g)(iii) read with paragraphs 3.86 to 3.87 in their assessment of the suitability for appointment of their current or a prospective audit firm and designated individual partner both when they are appointed for the first time and thereafter annually for every reappointment and notwithstanding the provisions of section 90(6) of the Companies Act; ensured that the appointment of the auditor is presented and included as a resolution at the annual general meeting of Merafe pursuant to section 61(8) of the Companies Act.

3.84(h)

 

The provision deals with the competence, qualifications and experience of the Company Secretary and the Board responsibility in relation thereto.

 

The Remuneration and Nomination Committee as well as the Board assessed the competence, qualifications and experience of the Company Secretary (CorpStat Governance Services, represented by William Somerville) against various criteria and a rating scale, and they have agreed that the firm is sufficiently qualified, competent and experienced to hold the position of Company Secretary. The Board made their assessment in a closed Board meeting with the Company Secretary being recused from the meeting.

3.84(i)

 

The provision deals with a broader diversity policy.

 

Merafe's diversity policy prescribes that at least 30% of the Board shall be female.

At 31 December 2023, three of the nine directors were female (33%). Merafe's diversity policy prescribes targets for the racial composition of the Company, namely that the majority of the Board should be black. Seven of the nine directors are black (78%). Please see governance depicting the Merafe board of directors and which covers the broader diversity information as contemplated by the JSE Listings Requirements.

Merafe has a Board diversity policy which includes additional diversity criteria, namely culture, age, field of knowledge, skills and experience (in addition to gender and race).

The Remuneration and Nomination Committee undertakes, when nominating and recommending directors to the Board, to take into account the principles and aims of the diversity policy of the Company.

3.84(j)

 

The provision deals with the remuneration policy and implementation report.

 

The remuneration policy and implementation report are set out in the remuneration report in this report.

3.84(k)

 

The provision deals with the Chief Executive Officer and Financial Director's responsibility statements in respect of the annual financial statements.

 

See Chief Executive and Financial Director's responsibility statement in the annual financial statements and in directors' report for the year ended 31 December 2023 in this report.


Compliance with Companies Act and memorandum of incorporation

Merafe is in compliance with the provisions of the Companies Act, No. 71 of 2008, or relevant laws of establishment, specifically relating to its incorporation and is operating in conformity with its memorandum of incorporation.


See our website for our Board Charter, Code of Ethics and the Board diversity policy. See the annual financial statements, which form part of our online Integrated Annual Report for 2023 for the Audit and Risk Committee's report as well as here of this report. For a more detailed overview of the responsibilities of the Board and the committees, see the terms of reference of the Board and committees on our website, which form part of our online Integrated Annual Report for 2023 .