Guideline on the nominations and voting procedures for non-executive directors
The Institute of Directors in Southern Africa (IODSA) has released a guideline on the nominations and voting procedures for non-executive directors. To assist boards and shareholders, the IoDSA has produced a practice note containing useful practical guidance on the selection, nomination and voting for non-executive directors.
According to the King III, the board of a company is solely decided by the shareholders- understandably so, as these are the individuals elected to protect and control their asset. It is then very important that they posses necessary skills and representivity.
The companies act, requires that directors be elected by members of non-profit companies that are entitled to exercise voting rights or shareholders of the company where profit companies are involved; exceptions have been considered and listed as:
The MOI entitles shareholders to choosing 50% of their directors. The regulation however also places emphasis on the respect of shareholders' rights during the elections procedure.
After a thorough environmental analysis shareholders have light of the needs of the company thus the selection of the new director will be to play a meaningful role in breaching the gap between the needs of the company and the 'roadmap' breaching the gap. The shareholders are then tasked with ensuring that individuals selected are highly skilled, experienced, competent, add value to the company's performance and take decisions that will guarantee sustenance of the company - A good board of directors can greatly enhance a company's chance of success.
In the event of Board vacancies, previous evaluations of the board and individual directors will provide valuable information to assist in selection process. The diverse skills, experience and expertise of the existing board should be evaluated to will enhance board effectiveness.
The IoDSA recommends that boards reconsider and update their existing processes for electing directors as well as any policies dealing with procedures for appointments to the board of directors. The IoDSA further recommends d that shareholders, boards and members of nomination committees reassess the composition of their boards, taking into account the needs of the company in terms of size and complexity, relevant statutory requirements as well as the effective functioning of the board and its respective committees.
