Corporate governance statement - Vodacom

1 Vodacom group Limited Integrated report for the year ended 31 March '13. Corporate governance statement 1 statement of compliance 1 Corporate governance structure 2 Legal and regulatory environment 3 Board leadership and committees 8 Stakeholder engagement 8 Technology governance statement of The Board recognises the need to conduct the business in accordance with the A number of these principles are entrenched in the group 's internal controls and policy compliance principles of the King Code of Corporate procedures governing Corporate conduct. Practices and Conduct ( King III'). These principles include discipline, The Board is satisfied that every effort independence, responsibility, fairness, has been made in the financial year to Vodacom is committed to social responsibility, transparency 31 March 2013 to comply in all material aspects with King III. Where we do not the highest standards of and the accountability of directors comply, this is stated and explained. to all stakeholders.

2 Business integrity, ethics and professionalism. Corporate governance structure The following diagram shows the group 's governance structures as at 31 March 2013: Board Board CEO. Board committees Executive Committee Finance CEO: Technology Nomination Remuneration Social and Ethics International Committee Committee Committee Executive Audit, Risk and Enterprise Consumer COO: Corporate Committee Compliance Committee International Affairs Legal and Human Strategy and Regulatory Resources New business 1. Corporate governance statement continued Legal and regulatory environment Legal, regulatory and policy compliance is an important part of our Corporate governance structures given the group 's geographic spread and need to adhere to its various legal, legislative and licence requirements. We have a dedicated legal, regulatory and compliance team headed by our Chief Officer: Legal and Regulatory, Nkateko Nyoka. This team is responsible for: commenting monitoring, providing on communications engaging with developing commercial-level legislation and the various and providing awareness legal support including other laws relevant communications training on policies and drafting commercial to the industry.

3 Administrations and procedures to ensure compliance agreements and and regulatory with laws, regulations, providing legal advice authorities; codes and various standards and guidance from applicable to the group 's time to time;. operating companies. advising and assisting the organisation with managing managing applications formal litigation for new licences and and informal overseeing compliance disputes; with licence conditions and obligations;. Compliance activities during the past financial year included making submissions on: a mendments to sector legislation such numbering plan regulations; p roposed amendments to as the Electronic Communications Act, South Africa's labour laws including the the Independent Communications a pprovals for planned launches of Basic Conditions of Employment Act, Authority of South Africa Act, the M-Pesa in Vodacom markets; the Labour Relations Act and the Electronic Communications and Employment Equity Act;. Transactions Act and changes to sector U.

4 Niversal Service Obligations review legislation and regulations in Lesotho, process; o ngoing implementation of the group 's Tanzania, and the DRC; anti-corruption, money laundering and t enders for Universal Service projects in terrorist financing programme;. regulations on licence fees and taxes; Tanzania, Mozambique and Lesotho;. m aintaining legal and policy standards radio frequency fees regulations; quality of service regulations; compliance programmes and frameworks; and 3G spectrum allocation in the DRC; competition law compliance;. a ligning policies and procedures with i nterconnection regulations in Lesotho, n ational security regulatory Vodafone group Plc. the DRC, Mozambique and Tanzania; requirements;. local loop unbundling process; mobile number portability in Tanzania;. 2. Vodacom group Limited Integrated report for the year ended 31 March '13. Corporate governance statement continued Board leadership and committees Board Directors Vodacom has a unitary board of 12 directors.

5 Five directors, including the Chairman, are Vodacom 's memorandum of incorporation independent non-executive directors. Five are non-executive directors and two are specifies that non-executive directors have executive directors. Although the majority are non-executive directors, half of our no fixed term of appointment. Executive non-executive directors are not independent as recommended by King III as they represent directors are subject to standard terms and Vodafone. However, the Board is satisfied that the balance of power and objectivity on the conditions of employment and a six-month Board is sufficient and does not require additional independent voices. notice period. Directors are subject to retirement by rotation and re-election by Accountability shareholders at least once every three years. The Board takes overall responsibility for Vodacom 's success. Its role is to exercise Any director appointed to fill a temporary leadership and sound judgement in directing Vodacom to achieve sustainable growth and vacancy must retire at the first annual act in the best interests of shareholders.

6 General meeting following their appointment. In line with best practice, the roles of Chairman and Chief Executive Officer are separate. The Chairman is responsible for leading the Board and the Chief Executive Officer for the Chairman operational management of the group . The memorandum of incorporation requires the Board to re-elect the Chairman yearly, in A Board charter has been adopted which details the responsibilities of the Board. line with King III. Peter Moyo was re-elected These include: on the anniversary of his appointment in oversight of the group 's strategic direction; May 2013. approving major capital projects, acquisitions or divestments; Independent advice The Board recognises that there may be e xercising objective judgement on the group 's business affairs independent occasions where directors consider it from management; necessary to take independent professional advice. This is done at the Company's e nsuring that appropriate governance structures, policies and procedures expense according to agreed procedure.

7 Are in place;. Board meetings ensuring the effectiveness of the group 's internal controls;. The Board holds a minimum of four meetings, three teleconferences and a reviewing and evaluating the group 's risks;. strategy session every year. Special Board approving the annual budget and operating plan; meetings are convened when necessary. Four special Board meetings were convened approving the annual and interim financial results and shareholder communications; during the year. a pproving the senior management structure, responsibilities and succession plans; and technology governance . 3. Corporate governance statement continued Board RemCo NomCo SEC ARC. Name of director Meeting Telecon Special Meeting Special Meeting Telecon Special Meeting Meeting Telecon Special MP Moyo PJ Uys1 ^. MS Aziz Joosub2. P Bertoluzzo3. DH Brown IP Dittrich4. SN Maseko5 ^. M Joseph A Kekana TM Mokgosi-Mwantembe PJ Moleketi NJ Read RAW Schellekens K Witts6. JWL Otty7. S Timuray8. Notes: 1. PJ Uys resigned 6 September 2012.

8 4. IP Dittrich appointed 15 June 2012. 7. JWL Otty appointed 6 September 2012. 2. MS Aziz Joosub appointed 6 September 2012. 5. SN Maseko resigned 14 June 2012. 8. S Timuray appointed 6 September 2012. 3. P Bertoluzzo resigned 6 September 2012. 6. K Witts resigned 6 September 2012. ^ Recused from meeting. Attended meeting. Absent from meeting. Board committees The committee is responsible for managing The non-executive directors play a pivotal the group 's operations, developing strategy role on the Board's committees. All and policy proposals for the Board's committees operate under Board-approved consideration and implementing the Board's Audit, Risk and terms of reference, which are updated from directives. It has a properly constituted Compliance Committee ( ARC'). time to time to stay abreast of mandate and terms of reference. developments in Corporate law and Current members: A Kekana (Chairman), The committee's other responsibilities DH Brown, PJ Moleketi. governance best practice.

9 Include: l eading executives, management and employees; Further details of the activities of the Audit, Risk and Compliance Committee Executive Committee can be found in its standalone report in d eveloping the annual budget the audited annual financial statements During the year, the Executive Committee and business plans for the Board's online. included the Chief Executive Officer approval; and (Chairman), Chief Financial Officer, Chief Human Resources Officer, Chief Officer: d eveloping, implementing and Corporate Affairs, Chief Executive Officer: monitoring policies and procedures, International Business, Chief Operating internal controls, governance , risk Remuneration Committee Officer: International Business, Chief management, ethics and authority ( RemCo'). Technology Officer, Chief Officer: Legal levels. Current members: TM Mokgosi-Mwantembe and Regulatory, Chief Officer: Strategy (Chairman), DH Brown, NJ Read, and New Business, Chief Officer: RAW Schellekens. Consumer Business Unit and Chief Officer: Enterprise Business Unit.

10 The membership of the Remuneration Committee does not comply fully with 4. Vodacom group Limited Integrated report for the year ended 31 March '13. Corporate governance statement continued King III, which advocates a majority of The committee's duties include: independent non-executive directors. g ood Corporate citizenship which Of the non-executive directors on the i dentifying and evaluating suitable includes promotion of equality, committee, only half are independent. potential candidates for appointment prevention of unfair discrimination, Thoko Mokgosi-Mwantembe, the Chairman to the Board. The authority to Corporate social responsibility, ethical appoint directors remains a function behaviour and managing of the committee, and David Brown are of the Board; environmental impacts;. independent non-executive directors. The Board is satisfied that Vodafone's i dentifying and evaluating candidates consumer relations;. representation on this committee is appropriate given the valuable contribution for the position of Chief Executive Officer and Chief Financial Officer; l abour and employment including skills of the Vodafone directors.