AFRICAN COMPASS INTERNATIONAL

(“ACI/the company”)

CONFLICT OF INTEREST POLICY

1 Why we have this Policy

Directors have both a common law duty to avoid any conflict of interest and to act in the best interest of the company at all times, as well as the statutory duty of disclosure as laid down in the Companies Act, 1973.

Conflicts of interest may arise where an individual’s personal or family interests and/or loyalties conflict with those of the company. Such conflicts may create serious problems for both the company and the relevant individual.

No conflict between the personal interests of directors and the interests of the company should therefore be allowed. This basic duty gives rise to a number of particular duties, which include the following:

  • the duty to act bona fide in the interests of the company;
  • the duty to account for profits;
  • the duty not to misappropriate opportunities proposed to or pursued by the company;
  • the duty not to compete improperly with the company;
  • the duty to disclose interests in contracts with the company; and
  • the duty to only exercise powers for the purpose for which they were conferred.

The duty to disclose interests in contracts with the company is also dealt with both in the Companies Act and in the company’s Articles of Incorporation.

The aim of this policy is therefore to protect both the company and the individuals involved from any appearance of impropriety and to ensure compliance to statutory and best practice requirements. The policy also serves to fulfill the board’s responsibility in terms of paragraph 2.1.8 of the Code of Corporate Practices and Conduct as contained in the King Report on Corporate Governance 2002.

2 The Declaration of Interests

2.1 In Contracts

In terms of sections 234 to 237 of the Companies Act, disclosure must be made of any contract or proposed contract in which a director may be, directly or indirectly, materially interested, which has been or is to be entered into by the company and that is of significance in relation to the company’s business. This requirement is additional to the common law duty of directors always to act in good faith.

The company’s articles of incorporation confirms that the company and the directors shall comply with the provisions of the statutes with regard to the disclosure of the interests of directors in contracts or proposed contracts.

The following rules will be observed in this regard:

  • as a general rule, directors will be obliged to provide the company chief ethics officer annually with a declaration of interest form that will be provided by the company secretary’s office, listing the nature and extent of interests, as well as the types of interests, that could possibly be relevant, such as directorships, direct and indirect shareholding in other companies, membership of specific entities, family connections, etc.;
  • in addition to the general notice, should the company be entering into a contract, which is of significance in relation to the business, with a third party in which a director has a material interest, albeit directly or indirectly, such an interest has to be disclosed, verbally or in writing, at or before the meeting of directors at which the question of confirming or entering into the contract is first taken into consideration;
  • an interested director shall not be allowed to vote in respect of the relevant contract and if he does vote, his vote shall not be counted. Nor shall he be counted for the purpose of any resolution regarding the same in the quorum present at the meeting; and
  • in addition to the above, an interested director will recuse himself from the meeting for the duration of the debate and/or discussion of the relevant contract, unless otherwise directed by the board.

To be effective, the general declaration of interests should not only be updated annually, but also when changes occur. Note that the interest could also be indirect via a family member or another entity such as a company, a close corporation or a trust.

Albeit not a requirement of the Act, all of the above principles and guidelines apply also to senior management in the company.

2.2 General

In addition to the specific disclosures referred to above, directors and senior management have to declare gifts or hospitality received in connection with their role in the company. These disclosures must be made in writing and addressed to the company chief ethics officer as and when the relevant incidents occur.

If you are not sure what to declare, or whether/when your general declaration needs to be updated, please err on the side of caution. If you would like to discuss this issue, please contact the company chief ethics officer for confidential guidance.

Interests will be recorded on the company’s register of interests, which will be maintained by the company chief ethics officer.

3 What to do if you face a Conflict of Interest

If a director or member of senior management faces a conflict of interest, for whatever reason, he/she should follow the rules spelled out above and not be involved in decisions that could affect the relevant area of interest. He should declare his interest as required and withdraw from any subsequent discussion.

Such a person may, however, participate in discussions from which he may indirectly benefit, for example, where the benefits are universal to all, or where his benefit is minimal.

If he/she fails to declare an interest that is known to the company chief ethics officer and/or the chair of the board, the chief ethics officer or chair will declare that interest.

4 Decisions taken where a director or senior staff member has an Interest

All disclosures of a conflict of interest and all decisions under a conflict of interest will be recorded by the chief ethics officer and reported in the minutes of the meeting. The report will record:

  • the nature and extent of the conflict;
  • an outline of the discussion; and
  • the actions taken to manage the conflict.

Independent external arbitration will be used where conflicts cannot be resolved through the usual procedures.

5 Managing Contracts

If a conflict of interest exists, the relevant director or member of senior management must not be involved in managing or monitoring a contract in which he has an interest.

6  Additional Guidelines

This policy is in addition to, and must be read with, the Board Charter.

INITIAL ADOPTION: November 2008

AMENDED: November 2009

REVISED: June 2015

READOPTED: January 2017