MVA Fund embraces and subscribes to corporate governance and best practices in its operations. It adopts and applies the principles of good governance in line with the recommendations of the King IV Report. The ethical values of responsibility, accountability, integrity and transparency remain integral and a norm to the Fund. The Board is a custodian of corporate governance and ensures that the Fund maintain sound governance policies and practices.
As a decision-making body, the Board of the MVA Fund fully appreciates the impact of corporate governance on the success of the organization. It therefore strongly supports the reforms that are meant to enhance good governance. The Board plays a vital role as it is ultimately accountable for all the affairs of the Fund. To optimize its oversight role, it is assisted by the integral assurance mechanisms in place and the annual audits undertaken by independent external auditors. The Board is consensus-oriented, responsive and subscribes to an equitable way of handling the affairs of the Fund.
Board Structure and composition
The structure of the MVA Fund Board is regulated by the MVA Fund Act No. 15, 2007. In accordance to Section 6 of the MVA Fund Act 2007, The Board is appointed by Minister of Finance and Economic Development and shall be constituted of eight (8) members of which three (3) shall not be public officers. The Minister shall in accordance to Section 6(2) appoint a Chairperson from amongst the eight (8) members. A member shall in accordance to Section 6(3) be appointed to hold office for a term not exceeding three (3) years. On completion of tenure, members are eligible for reappointment.
The current Board has the diversity, experience and relevant skills necessary for the fulfilment of its roles and responsibilities. For monitoring good governance, the Minister has the power to remove and suspend the membership of any Board member. In this way, instances of abuse of power, criminal acts, bankruptcy, insolvency and corruption are curbed. Since its inception, the Fund has not recorded any instance of removal, suspension or disqualification of a Board member from office.
Functions of the Board
The function of the Board is to provide oversight to the Fund. The key role of the Board is to endorse the organization’s strategy and maintain a sound system of internal controls at an appropriate level to ensure compliance. The members have a general fiduciary duty towards the Fund and their duties include the approval of the financial statements. By approving the financial statements, the Board ensures and assures the integrity and supply of related financial information to all the stakeholders. The Board-approved annual financial statements assist stakeholders to assess the performance of the Fund, its risks and return on investments and its viability.
The Board shall in accordance to Section 15 (2) recommend the appointment of the Chief Executive Officer to the Minister and such a person shall have training, experience and skills relevant to the Fund’s needs and one who has integrity.
In accordance to the principles of corporate governance, the Board has delegated the day-to-day administration of the Fund to the Chief Executive Officer who is assisted by the Executive management. The Chief Executive Officer reports on the performance of the Fund to the Board on a periodic basis.
The Board meetings are held in accordance to Section 12(1) of the Act.
Notice of the schedule of Board meetings for the 2016 fiscal year was communicated at the beginning of the year to aid planning by the members. The Board meets as often as the business of the Fund may require, but has to meet not less than once in each quarter of the year. Matters which require expeditious attention and approval of the Board are dealt with by way of Special Board meetings.
A quorum at any meeting consists of any four members of the Board in accordance to Section 12(8). The Chairperson presides over meetings of the Board and where he is not in attendance, the Vice Chairperson presides. In the absence of both, the quorum may elect any member amongst themselves to chair the meeting. The Chairperson productively manages the meeting and always ensures that all members participate as much as possible.
The decisions of the Board are made by way of consensus, however, in a case where there is no consensus, the decisions are passed by simple majority on open ballot. The Chairperson has a casting vote. All the Board decisions for the year 2016 were unanimously made. The proceedings of the meeting are recorded, minutes and passed as a true record. This record is then kept by the Fund as a permanent record.
To ensure productivity and an increased level of preparedness of the members at the meetings, the meetings are adequately planned. The Board packs are circulated to all members for a minimum of seven (7) days prior to the meetings so that Board members can prepare and participate in the discussions. The agenda for each meeting is also circulated to assist the flow of information and to support creative discussion by the Board in dealing with issues of strategy, performance and compliance. It also helps during the conduct of the meeting as all members will follow up on the progress of the meeting.
Declaration of Interest
To ensure the highest integrity and public confidence in the Board`s activities, all board members are required in accordance to Section 13(1) to disclose in writing at every meeting, any circumstance that could give rise to potential conflict of interest relating to their role as board members.
Where there are no interests, the members equally indicate such by way of writing. At the appropriate time when the Board considers the matter (s), a member who has expressed interest in the subject, recuses himself/herself from the meeting unless the Board otherwise directs.
All the disclosures are recorded in the minutes of the meeting and the declaration forms kept as a permanent record. Contravention or failure to disclose an interest may in accordance to Section 13(4) result in removal from membership and/or penalty of a fine not exceeding P10, 000 or imprisonment for a term not exceeding 10 years.
The Board members’ sitting allowances and travelling expenses incurred during service to the Fund are paid in accordance with the Government rates. For members who are Government officials, payment is made directly to their respective departments.
In recent years the government through the Public Enterprise Evaluation agency (PEEPA) advocated for the adoption of good governance and best practice. In efforts to ensure compliance to high standards of corporate governance, the MVA Fund Board developed the Board Charter. The Board Charter is an instrument that guides the operations and business of the Board by clearly outlining its mandate, composition and authority. It is meant to improve the Board's governance in managing and directing the Fund. The Committee Charters were also developed and approved to guide the Committees in the discharge of their respective duties.
The Fund has signed a Shareholder Compact with Government as a Shareholder, to formalize the relationship. The Compact represents the agreement between Government and the MVA Fund Board of Directors. Its purpose is to reflect the expectations of each party in terms of the outcomes that need to be achieved whilst strengthening corporate governance. It also harmonizes the relationship between Government and the MVA Fund Board.
The Board is empowered to appoint committees and sub-committees to consider such matters or to perform such duties as it may direct. The Board has therefore, delegated some of its powers to the sub-committees to assist it in discharging its duties and responsibilities, particularly in highly-specialized areas. The constituted sub- committees comprise of four suitably skilled and experienced non-executive Board members.
Each sub-committee is chaired by a non-executive member and meetings are convened as often as the business of the Fund may require. The Chairman of the Board in accordance to established practices is not a member of the sub-committees as he has an oversight role and cannot objectively participate in the sub-committees. The Executive management sits on the meetings of sub-committees by invitation. The sub-committees report and make recommendations to the Board.
Finance and Audit Committee
An independent Finance and Audit Committee fulfils a vital role in corporate governance. The Finance and Audit Committee is entrusted with the financial and risk management of the organization, monitoring of the internal financial controls and ensuring the integrity of integrated reporting including financial reporting within the Fund.
The Finance and Audit Committee’s duties and responsibilities are to:
- Consider and recommend approval of the audited annual financial statements of the Fund to the Board;
- Consider and recommend approval of the capital, operating and manpower budgets to the Board;
- Recommend to the Board the appointment of external auditors;
- Consult with the external auditors to ensure resolution of issues raised in the management letter;
- Review the effectiveness of the internal controls;
- Consider and recommend the Internal Audit Plan to the Board;
- Monitor financial reporting against international reporting standards;
- Manage financial risks of the Fund; and
- Monitor compliance with legislation
The Committee also considers the reports from both the internal and external auditors who have unrestricted access to the Committee. The major resolutions passed by the Committee during the year 2016 included;
- Recommendation of approval of the 2015 Audited Financial Statements by the Board;
- Recommendation of the quarterly Management Reports;
- Recommendation of approval the 2017 Operating, Manpower, capital Expenditure and Road safety budgets by the Board;
- Recommendation of approval of the engagement of external auditors to conduct the 2016 statutory audit; and
- Recommendation of the approval of the 2017 Internal Audit Plan.
Board Tender Committee
The Board Tender Committee has an oversight role of the procurement processes of the Fund and ensures that all tenders are evaluated and awarded in a transparent and procedural manner. The Committee ensures adherence to the Tender Regulations and Procurement Procedure Manual and cultivates the practice of high ethical standards. It provides an environment of transparency hence enabling effective management of the procurement process. The principle of disclosure of interests is particularly emphasized in all proceedings of this Committee.
The Committee reports and makes recommendations to the Board on all matters that require ratification and approval by the Board. Its responsibilities include;
- Ensuring compliance to the tender rules and regulations;
- Approval and authorization of award of tenders in accordance with the Tender Regulations and Procurement Procedure Policy, including vetting and approval of a list of potential tenderers to be pre- qualified for selected tenders;
- Ensuring that high ethical standards are upheld in the award of tenders within the applicable limits and authority defined in the rules;
- Considering and approving variations in the scope and conditions of previously approved contracts or service level agreements, including extensions, assignment and subletting; and
- Considering and approving the extension of existing contracts within its set limits.
Board Investment Committee
To ensure the financial sustainability of the Fund, the Act empowers the Fund to invest any monies not immediately required for the conduct of its business, in a beneficial manner. The Fund has invested in several investment vehicles in accordance with the Investment Policy Statement to generate value for the Fund. The investment portfolio is coordinated and governed through the Board Investment Committee. The responsibilities of the Committee include the formulation and review of the investment policy statement, appointment of external asset managers, reporting on the performance of the Fund’s investments and ensuring that the Fund’s investments comply with the Investment Policy Statement.
Human Resources Committee
The Committee has an independent oversight role with accountability to the Board. The committee is constituted in terms of the principles of sound Corporate Governance practices as contained in King III and in terms of the powers of the Board as stipulated in the MVA Fund Act, as well as human resource, remuneration and reward rules established by the Government of Botswana.
The Human Resources Committee assists the Board in discharging its duties as follows:
- Monitoring and reporting to the Board matters relating to the appointment of senior Management positions for the proper discharge of the functions of the Fund. This will include any dispute resolutions and it shall monitor that the Fund implements effective staff retention measures;
- Reviews policies relating to human resourcing, remuneration, selection, retention, performance assessment and related remuneration of employees;
- Monitoring the implementation of the human resources policies, and report to the Board on progress and the necessary action;
- Establishes the procedure of periodic performance reviews, and monitors the effectiveness of staff performance;
- Monitors and reviews employment development and relations such as staff training, personal development, management development, human resources aspects of organisational learning and knowledge, etc;
- Reviews the Fund`s human resource, remuneration and reward policies and practices, to ensure compliance with relevant laws and regulations, as well as any relevant Botswana national government policies, in achieving the Fund`s strategic objectives; and
- Monitors and reviews management`s performance with regard to the development and implementation of succession plans for key positions.
To further ensure its commitment to continuously maintain the Fund`s business in a proper manner, The Fund has an internal Board Secretary. The key roles of the Board Secretary are to:
- Ensure compliance with statutory and regulatory requirements;
- Advise the Board on their fiduciary roles and responsibilities;
- Maintain the Fund`s key corporate documents and records;
- Assisting with Board induction and training;
- Ensuring the Board Charters and Committee Charters are up to date;
- Maintaining a register of Board resolutions;
- Coordinating and attending board and committee meetings; and
- Maintaining Board minutes.
The Board through the Finance and Audit committee oversees the control environment so as to efficiently reduce risk of asset loss and help ensure the reliability of financial statements and compliance with laws and regulations.
The Internal Audit Department provides assurance of the effectiveness of the Fund`s system of internal controls, risk management and corporate governance. Its key responsibility is to the Management, Finance and Audit Committee and the Board in discharging its governance responsibilities
The internal audit performs its evaluations to assess the;
- Efficiency and effectiveness of the Fund`s operations;
- Reliability and integrity of the Fund`s data and records;
- Safeguarding of the Fund`s assets; and
- Compliance with applicable laws and regulations.
The Internal Audit follows a risk based methodology as opposed to a compliance based approach. The risk based audit methodology goes further to assess whether the internal controls are effective in managing the risks identified in the Fund`s risk log.
The Finance and Audit Committee makes recommendations to the Board on the selection, reappointment or removal of the External Auditors. KPMG was appointed by the Board as the External Auditors. The purpose of the external auditors is to provide an independent examination of the financial statements prepared by the Fund and to express an opinion as to whether the financial statements reflect a true and fair view.
Code of Conduct
The Board as directed by the King IV Report ensures that ethical standards guiding the company`s internal and external stakeholders are clearly defined. The general conditions of employment and the supplementary code of conduct provide a framework to guide employees in the conduct of the Fund`s business activities. The Board and employees of the Fund are required to always conduct themselves in the highest ethical standards.
The Board signed the Shareholder Compact with the Government. This document is designed to clearly state the parameters of the relationship between the Shareholder and the MVA Fund, articulating the shareholders’ expectations, setting performance targets, monitoring and evaluation of performance and confirming the MVA Fund performance targets as indicated in the Strategic Plan.