Board Governance Guidelines

Leadership and Integrity

The Board shall exercise leadership, enterprise, integrity, and sagacious judgment in directing the Company and will always act in the best interest of the Company so as to achieve continuing prosperity.

The Board is responsible for considering the legitimate interests and expectations of its Stakeholders in its deliberations, decisions, and actions. 1.2 The Board is responsible for ensuring that Senior Management and the subsidiaries actively cultivates a culture of ethical conduct and ensuring that integrity permeates all aspects of the Company’s operations.

The Board shall align its conduct and the conduct of Senior Management with the values that drive the Company’s business and ensure that these values are adhered to in all aspects of its business. The Board shall ensure that the Company’s ethical standards as stated in this Code are integrated into all the Company’s strategies, policies, and operations.

Good Governance

a) Responsibility: the Board shall assume responsibility for the assets and actions of the Company and be willing to take corrective actions to keep the Company on a strategic path that is ethical and sustainable;

b) Accountability: the Board shall be able to justify its decisions and actions to Shareholders and other Stakeholders;

c) Fairness: the Board shall ensure that it gives fair consideration to the legitimate interests and expectations of all Stakeholders; and

d) Transparency: the Board shall disclose information in a manner that enables Stakeholders to make an informed analysis of the Company’s performance and sustainability.

As a Director of the Company, each Director owes strict fiduciary duties to the Company and not the nominating authority and must act in the best interests of the Company. Each Director should promote the image of the Company.

Director owes the following fiduciary duties:

a) Duty to act within its powers: a Director is required to only exercise its powers for purposes which they were conferred;

b) Duty to promote the success of the Company: a Director is required to act in a way in which the Director considers, is in good faith, would promote the success of the Company for the benefit of its members as a whole, and in so doing the Director is required to have regard to:

i. the long term consequences of any decision of the Directors;

ii. the interests of the Stakeholders of the Company;

iii. the need to foster the Company’s business relationships with customers and others;

iv. the impact of the operations of the Company on the community and the environment;

v. the desirability of the Company to maintain a reputation for high standards of business conduct; and

vi. the need to act fairly as between the directors and the Shareholders;

c) Duty to exercise independent judgement: a Director must not fetter its discretion when exercising its powers;

d) Duty to exercise reasonable care, skill and diligence: a Director shall exercise the same care, skill and diligence that would be exercisable by a reasonably diligent person with:

i. the general knowledge, skill and experience that may be reasonably expected of a person carrying out the functions performed by the Director in relation to the Company; and

ii. the general knowledge, skill and experience that the Director has;

e) Duty to avoid conflicts of interest: a Director should identify and disclose the nature of a conflict and procure authorisation for the same if permitted. Conflicts of interest include situational conflicts, transactional conflicts and third party benefits;

f) Duty not to accept benefits from third parties: a Director is prohibited from accepting a benefit from a third party if the benefit is attributable to the fact that the person is a Director of the Company or to any act or omission of the person as a Director. Benefits received by a Director from a person by whom his or her services (as a Director or otherwise) are provided to the Company are not regarded as conferred by a third party; and

g) Duty to declare interests in proposed or existing transactions or arrangements: if a Director is in any way directly or indirectly interested in a proposed transaction or arrangement with the Company, or in a transaction or arrangement with the Company, or in a transaction or arrangement that the Company has already entered into, the Director shall declare the nature and extent of the interest:

i. to the other Directors; and

ii. to the Shareholders of the Company.

A Director must not put himself in a position where his interests conflict with his duty of loyalty to the Company and shall uphold the following qualities:

a) Conscience: a Director shall act with intellectual honesty and independence of mind in the best interests of the Company and all its Stakeholders, in accordance with the inclusive Stakeholder approach to corporate governance. Conflicts of interest shall be avoided;

b) Inclusivity: of the Company’s Stakeholders is essential to achieving sustainability and the legitimate interests and expectations of the Company’s Stakeholders must be taken into account in decision-making and strategy;

c) Competence: a Director shall have the knowledge and skills required for governing the Company effectively. This competence shall be continually developed;

d) Commitment: a Director shall be diligent in performing his duties and devote sufficient time to the Company’s affairs. Ensuring the Company’s performance and compliance requires unwavering dedication and appropriate effort; and

e) Courage: a Director shall have the courage to take the risks associated with directing and controlling a successful, sustainable Company, and also the courage to act with integrity in all Board decisions and activities.

Policies and Procedures

The Board shall establish formal and transparent procedures for:

a) remuneration;

b) effective communication with Stakeholders;

c) corporate disclosure policies and procedures;

d) dispute resolution for internal and external disputes; and

e) policies and procedures to attract and retain Board members.

The Board and the boards of the subsidiaries shall adhere to the same corporate governance principles; however, the Board shall have the overall responsibility for adequate corporate governance across the Company and shall ensure that there are governance policies and mechanisms appropriate to the structure, business and risks of the Company.

The Board shall take into consideration in particular material risks and issues that might affect the Company as a whole and the other entities in the Company. The Board shall exercise adequate oversight over each of the subsidiaries while respecting the independent legal and governance responsibilities that might apply to regulated subsidiary boards.

The Board shall establish a governance structure that contributes to the effective oversight of its subsidiaries, taking into account, the nature, scale and complexity of different risks to which the Company and its subsidiaries are exposed to.

The Board shall ensure that sufficient resources are available for each subsidiary to meet both the Company and local governance standards.

The Board shall ensure that structures and policies are in place to ensure compliance by the subsidiaries of the Company and any local governance requirements and shall regularly monitor such compliance by the Company’s subsidiaries.

Oversight of the Board

Overall Responsibility

The Board has overall responsibility of the Company and the subsidiaries, including approving and overseeing the Company’s and the subsidiaries strategic objectives, risk strategy, corporate governance and corporate values. The Board is also responsible for providing oversight of Senior Management.

Objectives and Policies

The Board must provide clear objectives and policies within which Senior Management should operate. These should cover all aspects of operations, including strategic planning, credit administration and control, asset and liability management (encompassing the management of liquidity risk), interest rate risk and market risk, accounting and internal control systems, service quality, automation plan, prevention of money laundering, profit planning, and budget planning, including approval of the Company’s annual budget, capital adequacy, and human resource development. The Company shall set and enforce clear lines of responsibility and accountability throughout the organization which defines the key responsibilities and authorities for the Board itself and for Senior Management.

The Board shall establish clear functions reserved for the Board and those functions delegated to Senior Management. The Board shall regularly review such policies, processes and controls with Senior Management and/or internal control functions (including audit, risk management and compliance) in order to determine the areas that need improvement and to address significant risks and issues.

The Board shall:

a. identify the corporate business opportunities as well as principal risks in the Company’s operating environment, including the implementation of appropriate measures to manage such risks or anticipated changes; and

b. monitor the effectiveness of the corporate governance practices under which the Company operates and propose revisions as may be required from time to time.

Each Director shall be jointly and severally responsible for the effective supervision of the affairs of the Company and shall be informed on a regular basis of the business condition of the Company. Each Director shall exercise independent judgment in evaluating the performance of Senior Management.

Appointment and Removal of Directors

The Board shall ensure that there is a formal and transparent procedure in the appointment of Directors to the Board and all persons offering themselves for appointment as Directors should disclose any potential area of conflict that may undermine their position or service as Director. Through a managed and effective appointment process, appointments to the Board shall provide a mix of proficient Directors, each of whom is able to add value and bring independent judgment to bear on the decision-making process.

Shareholders are ultimately responsible for appointments to the Board. Information shall be availed to Shareholders, 21 days in advance of any decision making so that Shareholders ensure that only credible persons who can add value to the Company are elected to the Board. Board members shall receive formal letters of appointment setting out the main terms and conditions relative to their appointment.

Eligibility

No person shall take up the office of Director:

a) prior to being cleared by the CBK;

b) if such person owns more than 5% of the share capital of the Company;

c) if such person has not reached 18 years of age;

d) if such person is already a Director of 2 institutions licensed under the Banking Act; or

e) if such a person is already a Director in 3 listed companies at any one time.

• The appointment of each Director shall be voted on individually unless there is unanimous agreement to a block resolution. Any appointment of a Director that is not voted on individually is void.
• Where a Director has appointed an alternate Director, the appointment of such alternate shall be restricted to 2 public listed companies at any one time.
• An Executive Director of the Company shall be restricted to one other directorship of another listed company.
• All Directors shall be cleared as directors by the CBK where required.

To ensure objective judgment about the affairs of the Company, the following individuals shall not be eligible to be appointed as Directors:

a. professionals (e.g. lawyers, accountants and valuers) involved in the provision of professional services to the Company; or

b. senior officers and non-executive directors of a government regulatory body where there may be a Conflict of Interest.

Resignation/Removal

The Board may remove a Director by ordinary resolution. Special notice is required to call the meeting where the ordinary resolution to remove a Director or appoint a person to replace the Director so removed is tabled.

The Board shall ensure that the CBK is informed of the resignation and/or removal of any Directors or the Chairperson within 7 days of the time such person vacates that office.

Re-election Process

All Directors shall be required to submit themselves for re-election at regular intervals, in accordance with the Memorandum and Articles of Association, or at least every 3 years. The nomination for re-appointment of a Director at the Annual General Meeting of the Company shall not be an automatic process and shall only occur after the proper evaluation of the performance and attendance of the Director in question.

Any Director who has reached the age of 70 years shall be required to resign from the office of Director at the following annual general meeting. Shareholders shall be informed of such resignation at each Annual General

Meeting. If any Director wishes to continue serving in the office of Director, he/she must seek the approval of the Shareholders at a general meeting. which shall be called by special notice.

Any person ceasing to be a Director is still bound by Conflict of Interest and cannot accept benefits from a third party for things done in their role as a Director.

Alternate Board Directors

The qualification and procedure for nomination and appointment of alternate Directors shall be the same as that required in the appointment of a substantive Board member. A Director, whether a body corporate or a natural person, shall have 1 alternate Director. An alternate Director shall not be appointed as a member of the Audit Committee. A body corporate shall not be nominated as an alternate Director.

An alternate director shall not hold such position in more than 2 public listed companies at any one time. This is to ensure effective participation by such Directors.

Composition of the Board

The Board should be structured in such a way that it:

a) has proper understanding of, and competence to deal with, the current and emerging issues of the business;

b) exercises independent judgment;

c) encourages enhanced performance of the Company;

d) fairly reflects the Company’s shareholding structure; and

e) can effectively review and challenge the performance of the management.

The Board shall have a policy to ensure the achievement of diversity in its composition. Diversity applies to academic qualifications, technical expertise, relevant industry knowledge, experience, nationality, age, race and gender. The appointment shall be sensitive to gender representation and shall not be perceived to represent a single or narrow community interest.

Executive Directors

An Executive Director is involved in the day-to-day operations of the Company and is a full time salaried employee of the Company or of its subsidiaries.

A Non-Executive Director is not involved in the day-to-day administration or management and not a full time salaried employee of the Company or its subsidiaries.

At least three-fifths of the Board shall be comprised of Non-Executive Directors.

Independent Non-Executive Directors

An Independent Non-Executive Director means a Director who:

a) has not been employed by the Company in an executive capacity within the last 5 years;

b) is not associated to an adviser or consultant to the Company or a member of the Company’s Senior Management or a major customer of the Company or with a non-for-profit entity that receives more than 50% of its contributions from the Company; or within the last 5 years, has not had any business relationship with the Company (other than service as a Director) for which the Company has been required to make disclosure;

c) has no personal service contracts with the Company, or a member of the Company’s Senior Management;

d) does not have a material or pecuniary relationship with the Company;

e) is not employed by a public listed company at which an executive officer of the Company serves as a director;

f) is not a member of the family of any person described above;

g) has not had any relationships described above with any affiliate of the Company;

h) does not have a direct or indirect interest in the Company which exceeds 5% of its equity interest or that of its related companies;

i) does not hold cross-directorships or significant links with other directors through involvement in other companies or bodies;

j) has not served for more than 9 years since they were first elected;

k) is free from any business or other relationship which could be seen to interfere materially with the individual’s capacity to act in an independent manner; and

l) is not a direct or indirect representative of a significant Shareholder who has the ability to control or significantly influence management or the Board. (Indirect representation includes a nominee or an associate of a Shareholder of the Company.)

Division of the Board’s Roles

The Board shall be comprised of a balance of Executive and Non-Executive Directors. The Chief Executive Officer shall be a member of the Board, together with its Independent Non-Executive Directors. Furthermore the Board shall establish policies to ensure that the Board members remain independent.

The Board’s composition shall not be biased towards representation by a substantial Shareholder of the Company and must reflect the Company’s broad shareholding structure. The Board’s composition shall provide a mechanism for representation of any minority Shareholders without undermining the collective responsibility of the Directors.

The Board shall have at least 2 Executive Directors who understand every single risk and/or product associated with the Company and they shall ordinarily:

a) be resident in Kenya (to the extent possible);

b) have knowledge of the manner in which the Company’s longer term strategy is pursued in practice and have an ability to influence its policies; and

c) effectively direct the business of the Company.

The Non-Executive Directors shall not be less than three-fifths of the total members of the Board, and the Independent Directors shall not be less than one-third of the total members of the Board. The Company shall make a disclosure in its annual report in relation to the number of Non-Executive and Independent Directors on its Board and whether minority Shareholders have been represented.

The Board shall ensure that the roles of the Chairperson and the Chief Executive Officer are separate and shall not be exercised by the same individual. The Board shall be chaired by a Non-Executive Director to lead and manage the work of the Board and to ensure that it operates effectively and discharges its legal and regulatory responsibilities.

The Chairperson may not act as the chairperson of more than 2 public listed companies at any one time in order to ensure effective participation in the Board.

Where there are controlling Shareholders who have appointed a Board member the Board should exercise caution and such Director shall take note of his/her responsibility to all the Shareholders.

Balance of Power

The Board shall ensure that no one person or a block of persons has unfettered power, and that there is an appropriate balance of power and authority on the Board which is, inter alia, usually reflected by separating the roles of the Chief Executive Officer and that of the Chairperson; and by having a balance between Executive Directors and Non-Executive Directors.

Division of Role of Chairperson and Chief Executive Officer

The Chairperson

The Chairperson of the Board shall be an Independent Non-Executive Director. The Chairperson shall lead and manage the work of the Board and ensure that decisions are taken on a sound and well-informed basis. The Chairperson shall provide leadership to the Board and is responsible for the Board’s effective overall functioning.

The Chairperson shall ensure that Board decisions are taken on a sound and well-informed basis. He or she shall encourage and promote critical discussion and ensure that dissenting views can be expressed and discussed within the decision-making process.

The Chairperson shall not be involved in the day-to-day running of the Company so as to provide effective oversight.

Every person who is a Chairperson of a public listed company shall not hold such position in more than 2 public listed companies at any one time in order to ensure effective participation in the Board.

The Chairperson shall also ensure:

a) the smooth functioning of the Board, the governance structure and shall instil a positive culture in the Board;

b) guidelines and procedures are in place to govern the Board’s operation and conduct;

c) all relevant issues are on the agenda for Board meetings and all Directors are able to participate fully in the Board’s activities;

d) the Board debates strategic and critical issues;

e) the Board receives the necessary information on a timely basis from the management;

f) avenues are provided for all Directors to participate openly in the discussion; and

g) that they provide leadership to the Board and shall be responsible for the developmental needs of the Board.

The Board shall ensure there is a clear succession plan for its Chairperson.

The Company shall notify the CBK when the Chairperson vacates office within 7 days after his/her departure and the reasons for the departure shall be disclosed.

Chief Executive Officer

The Chief Executive Officer shall be wholly responsible to the Board for the day to day running of the Company. The collective responsibility of the Company’s management is vested in the Chief Executive Officer and bears ultimate responsibility for all management functions.

The Chief Executive Officer is expected to undertake the following key responsibilities:

a) ensure that the policies spelt out by the Board in the Company’s overall corporate strategy of the institution are implemented;

b) identify and recommend to the Board competent officers to manage the operations of the Company. In the fulfilment of this duty, the Chief Executive Officer shall ensure that the Company’s human resources policy is adhered to;

c) co-ordinate the operations of the various departments within the Company;

d) establish and maintain efficient and adequate internal control systems;

e) design and implement the necessary management information systems in order to facilitate efficient and effective communication within the Company; and

f) ensure that the Board is frequently and adequately appraised about the operations of the Company through presentation of relevant Board papers.

Ultimate responsibility will reside with the Chief Executive Officer and the Executive Directors shall report to the Chief Executive Officer with regard to the execution of his/her role. The Executive Directors shall be involved in every major management decision of the Company. Where the Executive Director’s opinion differs from the Chief Executive Officer and the Chief Executive Officer has discretion to take the final decision on the course of action on behalf of the Company, however the Executive Director shall have the right to bring the issue to the Board as a matter of urgency. This mechanism shall provide effective oversight on the management of the Company.

There shall be a clear succession plan for the Chief Executive Officer.

Attendance at Board Meetings

The Board shall meet regularly and at least once a quarter. Each Director shall have a duty to attend board meetings regularly and to effectively participate in the conduct of the business of the Board. Every member of the Board shall attend at least 75% of the Board meetings of the Company in any financial year.

Attendance of Board meetings shall be by physical appearance. However, attendance at Board meetings by video conferencing or such other method approved by the CBK and the Telephone and Video Conferencing Policy may be exceptionally allowed with prior approval of the Chairperson. This is to ensure that every Board member discharges his or her responsibility effectively.

Remuneration of the Board

The Company shall establish a formal and transparent procedure for the remuneration of Directors and Senior Management which shall be approved by Shareholders. It is the responsibility of the Board to determine the remuneration of Directors subject to Shareholder’s approval.

Directors’ remuneration shall be sufficient to attract and retain Directors to run the Company effectively and shall be

competitively structured and linked to performance, but shall also be balanced against the need to ensure that the Company’s funds are not used to subsidise an excessive remuneration package. Non-Executive Directors shall not receive any salary.

Key particulars of compensation shall be disclosed to the public in the annual report. The information shall include the decision making process used to determine the compensation policy, criteria used for performance measurement and risk adjustment, the amounts of remuneration for the financial year and other key information on the incentive and compensation systems.

The Executive Directors’ remuneration shall be competitively structured in line with remuneration for other directors in the same industry and should be aligned with the business strategy and long-term objectives of the Company.

The remuneration of the Executive Directors shall include an element that is linked to corporate performance including a share option scheme so as to ensure the maximisation of the Shareholders’ value.

Remuneration of Board members should reflect the Board’s responsibilities, expertise and complexity of the Company’s activities.

Compensation of employees should be structured so that the compensation outcome is sensitive to risk outcomes over a multi-year horizon.

Roles and Responsibilities

The Board shall exercise all the powers of the Company and shall ensure that the Company complies with the Constitution, all applicable laws and regulations in line with accepted national and international standards, as well as its internal policies and the Memorandum and Articles of Association and will also exercise the following functions listed below.

Strategy and Objectives

The Board shall determine the Company’s objectives and determine strategies to deliver these objectives, including the framework within which its Directors, Senior Management and management shall operate. These shall cover all aspects of operations, including strategic planning, credit administration and control, asset and liability management encompassing the management of liquidity risk, interest rate risk and market risk, accounting and internal control systems, service quality, automation plan, prevention of money laundering, profit planning and budgeting, adequacy of capital, and human resource development.

The Board shall also monitor and evaluate the implementation of strategies, policies, management performance criteria and business plans and shall regularly, preferably at least once a quarter, review policies and strategies with Senior Management in order to determine areas needing improvement.

Regulatory Compliance

In all its decision-making, the Board shall ensure that the Company complies with all relevant laws, regulations, guidelines and codes of best business practice. The Board shall ensure that it adequately monitors the Company’s compliance with applicable laws, regulations, codes and standards.

Accordingly, the Board shall implement systems to effectively monitor and control compliance and provide training to the Company’s employees in relation to these matters. Compliance risk shall form part of the Company’s risk management process.

The Board shall organise for a legal and compliance audit to be carried out periodically and shall ensure that:

a) an internal legal and compliance audit is carried out every year save for the year that a comprehensive independent legal is carried out;

b) a comprehensive independent legal audit is carried out at least once every 2 years by a legal professional in good standing with the Law Society of Kenya; and

c) the findings from the audits are acted upon and any non-compliance issues arising are corrected as necessary.

The Board shall, with the assistance of the Company Secretary, ensure that a governance audit is carried out at least annually by a competent and recognised professional, accredited for that purpose by the ICPSK, in order to check on the level of compliance with sound governance practices. After undergoing the governance audit, the Board shall provide an explicit statement on the level of compliance.

The governance audit shall cover governance practices in the following parameters:

a) leadership and strategic management;

b) transparency and disclosure;

c) compliance with laws and regulations;

d) communications with Shareholders;

e) Board independence and governance;

f) Board systems and procedures;

g) consistent Shareholder and Shareholders’ value enhancements; and

h) corporate social responsibility and investment.

The Company shall establish an independent compliance function that provides assistance to the Board and Senior Management in complying with applicable laws, rules, codes and standards.

The compliance officer shall report independently to the Board or to a committee of the Board or through the chief risk officer.

Each Director shall familiarise him/herself with the general content of the relevant laws and guidelines in order to adequately discharge their fiduciary duties in the best interests of the Company and their duty of care, skill and diligence. The Board shall ensure that compliance with such laws and guidelines receives the highest priority.

Annual General Meeting

The Board shall provide to all its Shareholders sufficient and timely information concerning the date, location and agenda of the Annual General Meeting as well as full and timely information regarding issues to be decided during the Annual General Meeting.

The Directors shall provide sufficient time for Shareholders’ questions on matters relating to the Company’s performance and seek to address the Shareholders’ concerns.

The Board shall ensure that Shareholders’ rights of full participation are protected and shall provide Shareholders with:

a) sufficient information on voting rules or procedures;

b) sufficient information on each subject to be discussed at the Annual General Meeting;

c) the opportunity to raise questions before the Directors in relation to the Company’s performance and with the expectation that the Directors will address the Shareholders’ concerns;

d) the opportunity to place items on the agenda of the Annual General Meeting prior to the Annual General Meeting;

e) proxy models with different voting rights;

f) the opportunity to vote by proxy; and

g) sufficient information to enable them to consider the costs and benefits of their votes.

Shareholders’ Interests

The Board’s responsibility is to serve the legitimate interests of the Shareholders and facilitate the effective exercise of their rights in accordance with the Directors’ fiduciary responsibilities and in carrying out its responsibilities the Board shall ensure that there is equitable treatment of all holders of the same class of issued shares as well as minority and foreign Shareholders. The Board shall ensure that the Company communicates with the Shareholders effectively and accounts to them fully.

Stakeholders’ Interests

It shall be the Board’s responsibility to identify the Company’s internal and external Stakeholders and agree with them on a policy or policies and determining how the Company should relate to them. The Board shall develop strategies and suitable policies to manage relations with different Stakeholder Companys and engagement with Stakeholders shall be deliberate and planned.

In discharging its responsibilities, the Board shall take into account the interests and the governance practices of all the Company’s relevant Stakeholders when making decisions and at all times ensuring that there is a system in place for effectively communicating information to the Company’s Stakeholders. The Board shall ensure that the Company maintains an effective relationship with its supervisors and Stakeholders.

The Board shall strive, while acting in the best interests of the Company, to achieve an appropriate balance between the interests of its various Stakeholders in order to achieve the long term objectives of the Company.

The Board, while accountable to the Company, shall take into account the legitimate expectations of Stakeholders in the Board’s decision making.

The Board shall proactively supply relevant information to Stakeholders, and shall have regard for the best interests of the Company in determining what information is to be shared.

Internal Control Systems

The Board shall regularly review processes and procedures to ensure the effectiveness of its internal systems of control, so that its decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times.

The Board shall establish and review on a regular basis the adequacy and integrity of the Company’s internal control systems for acquisitions and divestitures and management of information systems including compliance with applicable laws, regulations, rules and guidelines.

The Board shall recognise and acknowledge that independent, competent and qualified internal and external auditors, as well as other internal control functions, are vital to the corporate governance process.

The Board shall set out its responsibility for internal control in the Board Charter and ensure the effectiveness of the Company’s risk management and internal control practices on an annual basis.

The Board shall delegate to Senior Management the responsibility of designing, implementing and monitoring effectiveness of internal control systems and shall confirm the effectiveness of the Company’s risk management and internal control practices on a regular basis.

Internal and External Dispute

The Board shall establish a formal process to resolve both internal and external disputes.

Risk Management

The Board shall identify key risk areas and key performance indicators of the business and monitor these factors and shall at least once a quarter review processes and controls with Senior Management in order to determine areas needing improvement, as well as to identify and address significant risks and issues, including compliance issues. The Board shall ensure that the control functions are properly positioned, staffed and resourced and are carrying out their responsibilities independently and effectively.

The Company shall have an independent risk management committee with sufficient authority, stature, independence, resources and access to the Board. The oversight of risk management shall be assigned to a senior officer such as a chief risk officer who shall report independently to the Risk Management Committee. The chief risk officer must be sufficiently independent of the business lines to ensure an adequate separation of duties and the avoidance of a Conflict of Interest.

Effective risk management requires robust internal communication within the Company about risk, across the organization and thorough reporting to the Board and Senior Management. The Board and Senior Management shall put in place policies to ensure timely, complete, and accurate information to enable them to make informed decisions.

The Board shall discourage excessive risk taking and shall communicate this in policies and procedures to the Senior Management. The Board shall ensure that ethical risks and opportunities are incorporated in the risk management process.

Financial Reporting

The Board shall develop structures to independently verify and safeguard the integrity of financial reporting and ensure the truthful and factual representation of the Company’s financial position. The Board shall put in place a structure for the review authorization designed to ensure the truthful and factual presentation of the Company’s financial position. This structure should include:

a) review and consideration of the financial statements by the Audit Committee; and

b) a process to ensure the independence and competence of the Company’s external auditors.

The Board shall explain in the Company’s annual report the Board’s responsibility for preparing the annual reports and accounts, with a statement by the auditor about their reporting responsibilities. The Board shall take full responsibility for the accuracy of the financial statements.

The Board shall disclose whether it has complied with the IFRS in preparing its financial statements and shall disclose any deviation from these financial standards.

The Board shall ensure that the Company’s financial statements and the Board’s report is made available on the Company’s website and remains on the website until the financial statements and Board’s report for the next financial year are made available.

The Board shall continually work towards the introduction of integrated reporting.

Corporate Performance, Viability and Sustainability

It shall be the Board’s responsibility to foster the long-term business of the Company and to ensure that the Company will survive, thrive and continue as a viable going concern.

Appointment and Oversight of Senior Management

The Nomination Committee shall recommend an individual to be appointed to the Board or Senior Management. The Board shall then either approve or deny such individual recommended by the Nomination Committee. The Board shall appoint those persons who are competent, qualified and experienced to administer the Company’s affairs and shall replace persons considered undesirable.

Additionally, it shall ensure the motivation and protection of intellectual capital intrinsic to the Company and ensure that there is adequate training in the corporation for management and employees and a succession plan in place for senior management.

Senior Management.

The Board shall regularly assess, individually and as a whole, the performance and effectiveness of the Board, including the Chief Executive Officer.

Information Technology Systems

The Board shall be responsible for ensuring that all technology and systems used in the Company are adequate to properly run the business and to ensure that it remains effectively competitive. The Board shall ensure that an IT governance charter is established and implemented which shall oversee the cultivation and promotion of an ethical IT governance and management culture.

The Board shall ensure that an IT internal framework is adopted and implemented and the Board receives independent assurance on its effectiveness for complete, timely, relevant, and accurate reporting.

The Board shall oversee the proper value delivery of IT so that the expected return on investment on significant IT investments is delivered and the information and intellectual property contained in the information systems are protected.

Reputation of the Company

The Board shall at all times aim to maintain a positive image of the Company, within the banking industry and within the economy as a whole, with the ultimate aim of being a champion of the socio-economic prosperity of the people of Africa.

To this extent, therefore, the Company is expected to provide adequate services and facilities both efficiently and competitively in line with safe and sound banking practices.

Organizational Structure

The Board shall ensure the Company’s organisational structure facilitates effective decision making and good governance and the Board shall propose amendments as may be necessary from time to time. This shall include setting and enforcing lines of responsibility and accountability throughout the Company, which define clearly the key responsibilities and authorities of the Board itself, as well as of Senior Management and the Company’s internal control functions.

Access to/and disclosure of Information

The Board shall establish procedures to allow its members access to information and professional advice. The Board shall have access to all information pertaining to the Company. Senior Management shall supply relevant, accurate and complete information to the Board and in a timely manner to enable the Board to discharge its duties effectively.

The Board shall where necessary seek legal, financial, governance or any other expert advice necessary. The Board shall also be permitted to seek external advice at the Company’s expense through an agreed procedure.

The Company shall ensure that it has appropriate corporate disclosure policies and procedures.

The Media

The Board shall release information to the media proactively on a timely basis to ensure effective reporting on corporate affairs as well as issues of corporate governance.

Personnel Policy

The Board shall develop an appropriate staffing and remuneration policy, participating in the appointment of the Senior Management and such other persons as the Board may determine from time to time. In respect of its Senior Management, the Board shall have in place formal performance standards that are consistent with the Company’s long-term objectives, strategy and the Company’s own risk/tolerance appetite and there shall be formal processes to evaluate the Senior Management’s performance.

Operational Structure

The Board and Senior Management shall understand the structure and the organisation of the Company and the Company subsidiaries, including the aims of its different business units and subsidiaries and the formal and informal links and relationships among the entities and with the Company.

The Board and Senior Management shall understand the legal and operational risks and constraints of the various types of intra-Company exposures and transactions and how they impact upon the Company’s funding, capital and risk profile under normal and adverse circumstances. Sound and effective measures and systems shall be in place to facilitate the generation and exchange of information among and about the various Company entities, to manage the risks of the Company as a whole, and for the effective supervision of the Company.

The Board shall approve policies and clear strategies for the establishment of new structures and shall properly guide and understand the Company’s structure, its evolution and its limitations.

Board Committees

The Board shall establish and appoint chairpersons to relevant committees and delegate specific mandates to such committees as may be necessary including internal audit, risk management, remuneration, Board nominations, finance, investments and governance. However, the Board shall remain accountable for the acts or omissions of such committees. The Board shall also ensure that the committees established are appropriately constituted with members who have the necessary skills and expertise to handle the responsibilities allocated to them and appoint the chairpersons of the committees. The Board shall ensure that there is a formal procedure for certain functions of the Board to be delegated to the Board committees which shall set the extent of delegation required to enable the Board to properly discharge its duties and responsibilities and to effectively execute its decision-making process.

The Board shall determine the procedure and process within which the committees may be allowed to engage independent professional advice at the Company’s expense. The Board shall not delegate any matters to a Board committee or a member of Senior Management to an extent that such delegation would significantly hinder or reduce the ability of the Board as a whole to discharge its functions.

The Board shall not delegate any matters to a Board committee, the Chief Executive Officer, Executive Directors or Senior Management, to an extent that such delegation would significantly hinder or reduce the ability of the Board to discharge its functions.

The Board shall review the effectiveness and performance of the committees annually and review the mandate of the committees periodically (at least annually) to ensure that they remain relevant.

Responsibility to be Adequately Informed

The Board collectively shall have adequate knowledge and experience relevant to each of the material financial activities that the Company intends to pursue in order to enable effective governance and oversight. The Board may seek to have, or have access to, knowledge and experience of fields including finance, accounting, strategic planning, communications, governance, risk management, bank regulation, auditing and compliance.

For the Board to exercise informed, intelligent, objective and independent judgments on the Company’s affairs, they shall have access to accurate, relevant and timely information. The Chairperson, Chief Executive Officer and Company Secretary shall work together to ensure that the Board receives accurate, timely and high-quality supporting information about the Company’s performance at appropriate intervals and in an appropriate manner to enable it to take sound decisions and provide advice to promote the success of the Company.

Induction and Training of Directors

On appointment to the Board and to Board committees, all Directors will receive a comprehensive induction on their individual requirements (where applicable) in order to become as effective as possible in their role within the shortest practicable time. These skills and knowledge shall be updated at regular intervals. The induction will be designed by the Company Secretary in consultation with the Chairperson and will include meetings with Directors.