Sasfin prides itself on being a good corporate citizen, recognising that effective corporate governance practices are essential to achieving and maintaining trust and confidence in both the organisation and the banking system as a whole. Sasfin actively manages its corporate governance through the relationships between management, the boards of directors, shareholders and other stakeholders. To this end, Sasfin endorses the principles incorporated in the Code of Corporate Practices and Conduct as set out in the King II Report which forms the basis upon which the Group's commitment to sound corporate governance is pursued. Sasfin also endorses the FSC in order to raise the skills and fully incorporate the enormous talent of the previously disadvantaged members of the South African society. The various committees of the boards of directors are charged with monitoring and evaluating conformity with the provisions of these requirements, as well as the International Financial Reporting Standards, the JSE Listings Requirements, the Banks Act and all the other statutes and regulations to which the Group is bound to ensure integrity, accountability, transparency and equal opportunity in the conduct of the Group's various business enterprises.

REGULATORY ENVIRONMENT

Given the important financial intermediation role of banks in a sophisticated economy, their high degree of sensitivity to potential difficulties arising from ineffective corporate governance and the need to safeguard depositors' funds, corporate governance for banking organisations is of great importance to both local and international financial systems and merits targeted supervisory guidance. This is particularly so in the wake of the international liquidity crisis which vividly exposed the effects of poor governance in other jurisdictions.

The SARB, through its Bank Supervision Department, carries the responsibility for ensuring that a sound and well-regulated banking system exists in South Africa and that prudent risk management practices are embedded within the banking environment. The directors of a bank are required in terms of the Banks Act to report annually to the Registrar of Banks on the efficacy of the systems of internal control and to provide reasonable assurance as to the integrity and reliability of the financial statements, as well as on Corporate Governance. Additionally, the directors are required to safeguard, verify and maintain accountability for the Bank's assets.

• Sasfin is committed to adherence to and application of high standards of corporate governance. The senior management and boards of directors of Sasfin take their responsibilities to ensuring effective corporate governance seriously.
  
• Sasfin, from time to time reviews its corporate governance to ensure compliance with accepted corporate-governance principles.
• Sasfin is mindful that it operates on the basis of continuous improvement, especially given the ever evolving governance standards in South Africa and internationally.
  

Sasfin has a compliance programme, which is under the control of a General Manager who reports to the Chief Executive Officer and who has unrestricted access to the Chairman of the Audit and Compliance committee. The JSE regulates the activities of SasSec. Sasfin Bank and SFAS also fall under the regulatory arm of the Financial Services Board. The Compliance department allocates full time resources to both SasSec and SFAS who ensure that appropriate standards are maintained.

The directors bear responsibility for setting and maintaining the Group's systems of internal controls and protecting its assets and earnings against material financial loss. They are committed to discharging these responsibilities as cost-effectively as possible. Business risks are assessed on an ongoing basis and risk management procedures are modified and implemented as needed. The Group has a comprehensive reporting system, which is monitored and reviewed monthly by management and the directors. The system facilitates budgetary control, provides reasonable assurance as to the accuracy of financial statements and safeguards the Group's assets.

THE KING II CODE OF CORPORATE PRACTICES AND CONDUCT

The boards of directors of companies in the Group are committed to maintaining the standards of integrity and openness detailed in the Code of Corporate Practices and Conduct recommended in the King Report on Corporate Governance. Sasfin adheres both to the specified provisions of the King Code and to its underlying principles of fairness, transparency, accountability, social responsibility and environmental consciousness. The Group is committed to meeting the exacting governance standards which are anticipated in the King III report.

THE BOARDS OF DIRECTORS

The responsibilities of the Group's boards of directors include reviewing and guiding corporate strategy, risk propensity, budgets and business plans. These boards meet regularly to monitor executive management and thereby retain full and effective control over their operations. The Chairpersons of the Company, the Bank and its main subsidiaries, are all non-executive directors. These boards include non-executive directors of sufficient calibre, experience and number for their views to carry significant weight in business decisions. The various boards are responsible for setting policy, monitoring corporate performance and overseeing major capital expenditure. Where necessary, independent professional advice is canvassed. The company secretary ensures that statutory and other procedures are followed.

SASFIN HOLDINGS LIMITED AND SASFIN BANK LIMITED BOARD CHARTER

The boards subscribe to good corporate governance and strive to be effective in lending and controlling the companies. As a bank-controlling company or bank, the boards recognise that they are bound by the Banks Act and as such, consist of both executive and non-executive directors (including independent directors) to the extent appropriate in terms of that Act. The concept of a unitary board, consisting of executive directors, with their intimate knowledge of the business, and non-executive directors who can bring a broader view to the Company's activities, particularly those who have intimate knowledge of banking and financial service industries, remains the favoured board structure. Management of business risk and the exercise of commercial judgement are the essence of this mutual association and exchange of business experience and knowledge. The boards accept they have a collective responsibility to provide effective corporate governance that involves a set of relationships between management, the boards, shareowners and other relevant stakeholders, in a manner whereby the boards:

• determine the entity's purpose and values,
  
• determine the strategies to achieve the entity's purpose (that is, its strategic intent and objectives as a business enterprise) and to implement its values (that is, its organisational behaviour and norms to achieve its purpose) in order to ensure that it survives and thrives,
  
• exercise leadership, enterprise, integrity and judgement in directing the entity so as to achieve its continuing prosperity,
  
• ensure that procedures and practices are in place that protect the entity's assets and reputation,
  
• monitor and evaluate the implementation of strategies, policies, management performance criteria and business plans,
  
• ensure compliance with all relevant laws, regulations and codes of best business practice,
  
• ensure that technology and systems used are adequate to run the business properly and for it to compete through the efficient use of its assets, processes and human resources,
  
• identify key risk areas and key performance indicators in order to generate economic profit, so as to enhance shareowner value in the long term and recognise the wider interests of society,
  
• regularly assess performance and effectiveness as a whole, and that of individual directors, including the Chief Executive Officer, and
  
• ensure that the entity has developed a succession plan for its executive directors and senior management.
  

The boards strive to focus on performance in directing the commercial and economic fortunes of the entity, and not only concentrate on issues of conformance. The boards recognise that enterprise is the disposition to engage in undertakings of risk and are constituted in a manner that provides a balance between enterprise and control. All directors recognise that absolute integrity is necessary to meet their onerous obligations and responsibilities.

The boards comprise a balance of executive and non-executive directors, with a majority of non-executive directors, of whom sufficient are independent of management for minority interests to be protected, and conform to the “four-eyes” principle as required by the South African Reserve Bank. The boards also take cognisance of gender and racial mix.

The boards are selected from individuals of integrity from a broad range of backgrounds, who can bring a blend of knowledge, skills, objectivity, experience and commitment to the board under the firm and objective leadership of a chairperson, who is an independent non-executive director, and who accept the responsibilities and duties that the post entails and who provides the direction necessary for effective boards. Non-executive directors are appointed for a three-year period and are not automatically re-appointed.

The boards strive to exercise objective judgement on the corporate affairs of the business enterprise, independent from management and insist on sufficient management information to enable a proper and objective assessment to be made by the directors collectively. The boards guide and set the pace of the entity's operations and future developments. In so doing, the boards regularly review and evaluate the present and future strengths, weaknesses and opportunities of, and threats to the entity. Comparisons with competitors, locally and internationally, and best practice are major ingredients in this process – especially in the era of the global economy and the rapid transmission of information electronically.

The boards recognise that transactions between the entity and its managers, directors or large or dominant shareowners are rife with potential conflicts of interest. The personal interests of directors or persons closely associated with the director do not take precedence over those of the entity and its shareowners. All directors avoid conflicts of interest, even where these can only be perceived to exist. Full and timely disclosure of any conflict, or potential conflict, is made known to the board. Where an actual or potential conflict does arise, on declaring their interest, a director may participate in the debate and/or vote on the matter, but must give careful consideration to his/her integrity in such circumstances and the potential consequences it may have for the board, the entity and themselves personally, but in any major issue are expected to recuse themselves.

Any director with a substantial interest in the entity, such as a major shareowner, is expected to recognise the potential for a conflict of interest and accept that his/her primary duty and responsibility is to always act in the interests of the entity. The boards, in motivating management and employees effectively and productively, promote a culture that supports enterprise and innovation with appropriate short- and long-term performance related rewards that are fair and achievable. The boards seek to drive the business enterprise proficiently through proper and considered decision-making processes, and recognise entrepreneurial endeavour amongst its management without contravening laws and regulations. However, prudent risk management is the essence of all decision making.

The boards recognise that companies do not act independently from the societies in which they operate. Accordingly, corporate actions are compatible with societal objectives concerning social cohesion, individual welfare and equal opportunities for all. At times, however, a trade-off is considered between short-term social costs and decisions that derive longer term benefits for the entity and thereby those having an interest in it.

The boards determine a policy for the frequency, purpose, conduct and duration of its meetings and those of its formally established committees. It also adopts efficient and timely methods for informing and briefing board members before meetings. The information needs of the board must be well defined and regularly monitored. Each member is allowed to play a full and constructive role in the boards' affairs and has a responsibility to be satisfied that the board has been furnished with all the relevant information before making a decision. The boards meet at least once a quarter and more frequently if necessary, and make use of board-appointed committees to assist the managing of the business on a more frequent basis. Minutes of these meetings are circulated to all board members.

BOARD COMMITTEES

The boards have established the following committees and ensure that each committee (other than Executive Management) is chaired by a non-executive director and has a membership of a majority of non-executive directors, except for the Credit Review committee, as large exposures are agreed by the boards:

• Bank Audit and Compliance
  
• Executive Management
  
• Risk and Capital Management
  
• Directors' Affairs
  
• Human Resources and Remuneration
  
• Directors' Strategy and Review
  
• Asset and Liability
  
• Information Technology Steering
  
• Credit Review
  
• Transformation
  

These committees conform to statutory requirements, where applicable. Further management committees, as required, are approved by the boards.

The boards define their own levels of materiality, reserving specific powers to them and delegating other matters to the committees and management with the necessary written authority. Any such delegations by the boards have due regard for the directors' statutory and fiduciary responsibilities to the Group/Bank, while taking into account strategic and operational effectiveness and efficiencies.

The strategies, policies, mutually agreed management performance criteria and business plans of the the entities are clearly defined and reliable measurements have been put in place. The directors implement a risk framework which ensures comprehensive assessments against accurate and relevant financial and non-financial information, as appropriate, and which are obtainable from the Group's own internal reporting systems as well as from external sources, so that an informed assessment can be made of all issues facing the boards. Accordingly, the boards ensure that internal control procedures provide reliable and valid information for monitoring and evaluation. The internal controls include not only financial matters, but also operational and compliance controls and management of the business risks associated with the entity.

NON-EXECUTIVE DIRECTORS

In addition to two executive directors and a non-executive Chairman, the boards consist of a further five independent non-executive directors. Non-executive directors offer independent judgement to management and, other than their fees, and in some cases shareholdings, there are no extraneous factors that might materially influence their judgement. If there is an actual or potential conflict of interest, the non-executive directors concerned are excused from the related decision-making process. The non-executive directors' fees are market related and reflect their committed time and levels of responsibility. There is a policy for the appointment of directors. Such appointments are transparent and a matter of the board as a whole. Non-executive directors are selected through a formal process and when new non-executive directors are appointed by existing directors, such appointments require confirmation at the next Annual General Meeting. Non-executive directors are appointed for specific terms and their re-appointment is not automatic.

EXECUTIVE DIRECTORS

There are two executive directors on the board of the Company and the Bank, namely, the Chief Executive Officer and the Financial Director, who is also responsible for Sasfin Capital. A clear demarcation exists between the executive functions of these directors and the functions of the non-executive Chairman of the two main boards. The boards' Human Resources and Remuneration committee determines the emoluments and perquisites of executive directors.

THE GROUP AUDIT AND COMPLIANCE COMMITTEE

The Group Audit and Compliance committee is chaired by an independent non-executive director, Mr ETB Blight, and includes a further two independent non-executive directors.

The executive directors, the Group Chief Finance Officer, the Chief Operating Officer and the general managers, Compliance, the Internal Auditor and the External Auditors attend the committee by invitation and have unrestricted access to the committee Chairman.

With the agreement of SARB, the mandate of the committee has been expanded to cover compliance matters over and above the following responsibilities:

• ensuring the effectiveness of the systems of internal control
  
• ensuring that appropriate systems exist to validate the integrity of the accounting and financial systems
  
• assessing the effectiveness of the internal audit, risk and compliance functions, and
  
• reviewing the scope and quality of the external audit.
  

The committee sets principles for recommending the use of external auditors for non-audit services.

This committee also reviews any internal matters raised in the key risk committees mentioned in the Risk Management section of this document. In addition, SasSec, SFAS and Premier also have Audit committees which report into the Group Audit and Compliance committee.

The committee is satisfied that the financial director has the appropriate expertise and experience to fulfil his function.

The record of attendance at board and committee meetings for the Sasfin Group for 2009 is as follows:

INTERNAL AUDIT

The Internal Audit function reports directly to the CEO. The Chairman of the Audit and Compliance committee meets separately with the Internal Auditor on a monthly basis, and with the External Auditors on a quarterly basis. In addition, the Internal Auditor has direct access to the Chairman of the Group Audit and Compliance committee should the need arise.

Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations.

It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

The Sasfin Internal Audit function utilises risk based audit methodologies and standards that are consistent with the Standards for the Professional Practice of Internal Auditing as advocated by the Institute of Internal Auditors.

This department has performed effectively over the past 12 months and we are satisfied that they add significant value to the Group.

GROUP RISK AND CAPITAL MANAGEMENT COMMITTEE

The Group Risk and Capital Management committee is chaired by an independent non-executive director, Mr NA Axten, and also includes a further independent non-executive director and the Chief Executive Officer.

DIRECTORS' AFFAIRS COMMITTEE (CORPORATE GOVERNANCE)

The Directors' Affairs committee is chaired by a non-executive director and includes a further three independent non-executive directors. Boards and board committees all undertake a self-assessment annually in order to ensure high governance standards.

The Group Executive Management committee consists of both executive directors and senior management, and by invitation, the board Chairman and two independent non-executive directors. These meetings enhance transparency and good corporate governance, share information, and significantly enhance good corporate governance and understanding of the business.

In addition to the above, the Company's board has appointed independent non-executive directors to the following boards/ committees, which meet at appropriate intervals:

• Sasfin Financial Services (Pty) Limited
  
• Sasfin Securities (Pty) Limited
  
• Sasfin Financial Advisory Services (Pty) Limited
  
• Subsidiary Audit committees
  
• Sasfin Asset Managers (Pty) Limited
  
• Premier Freight (Pty) Limited
  

HUMAN RESOURCES AND REMUNERATION COMMITTEE

Due to the size of the organisation, the Group has a combined HR and Remuneration committee, which is chaired by Mr MB Glatt, and which includes the functions of a Nomination committee and which functions as a single committee of the Company and the Bank boards respectively:

• The committee assists the board in providing management with guidance on the adequacy and efficiency of remuneration and HR policies, procedures and practices that are applied within the Group.
• These policies, amongst others, cover the following aspects:
  • conditions of and remuneration for the appointment of both executive and non-executive directors (the Directors' Affairs committee attends to appointments, performance and succession plans for positions in this category);
  • conditions of and remuneration for appointment of senior management; and
  • guidelines for the appointment of other management and personnel.
• Comprehensive HR policies, which include those matters dealt with in the FSC related to black empowerment and employment equity.
• Comprehensive procedures which ensure compliance with laws and regulatory requirements and which ensure that structures are in place which enable agreed policies to be carried out effectively in:
  • Empowerment,
  • Staff training and development,
  • Promotions,
  • Identification of key people,
  • Succession planning of key posts below executive director level,
  • Performance reviews, salary and commission payments
  • Disciplinary hearings and employment termination,
  • Recruitment, and
  • Employment equity.

The committee consists of two non-executive directors (one as Chairman, Mr MB Glatt) and an executive director, for a period concurrent with their term of appointment to the board of directors.

Directors' emoluments, interests and share options are shown here.