Companies listed on the Johannesburg Stock Exchange (JSE) are established according to the Companies Act 2008. The Companies Act is regarded as one of the regulatory requirements and management practice frameworks in South Africa. Furthermore, corporate governance in South Africa is guided by the King IV Report on Corporate Governance for South Africa 2016 (King IV). King IV also states that the governing body must lead ethically and effectively. These two documents have very specific prescripts regarding the board of directors (governing body) and the board committees.

a) The chief executive officer (CEO) of a listed company called you as the senior internal audit manager to discuss matters of corporate governance and why the company should apply and explain the application of King IV by the company. In the discussion, the CEO stated that being JSE-listed, it is a requirement to meet the principles of King IV. He continued by saying that he regards all the corporate governance codes as a load of rubbish because he has been in business for 30 years and it was never necessary to adhere to codes to profit as a company. He is also not responsible for spending the shareholders money on charities and other good causes.

b) The shareholding of Champo (Pty) Ltd is as follows: Tebogo, the Chief Executive Officer (CEO) and his two sons, Bongani and Alfred hold 45% of the total shares. Tebogo is also the board's chairperson, Bongani is the financial director, and Alfred is the operations director. The other two directors on the board are also executive directors, chosen specifically by Tebogo to keep it a close-knit group of people with no outsiders as part of the board of directors. Tebogo, as chairperson stated that ethical leadership for him means that nobody has access to any of the strategic and operational philosophy of the company.

c) Furthermore, Champo (Pty) Ltd has no board committees because Tebogo, the CEO believes it is an unnecessary use of resources and his management team can handle any of the functions of the board committees on their own.

1.1Briefly discuss the points you would raise to explain why codes of corporate governance should not be regarded as a load of rubbish. 12 POINTS.

1.2 Discuss the instances of non-compliance with the recommended practices in the King IV Code about the existing board of directors. 8 POINTS

1.3 Identify the board committees, other than the remuneration committee, Champo (Pty) Ltd should appoint to satisfy the recommendations of King IV. Provide reasons as to why each committee's appointment would benefit Champo (Pty) Ltd.12 POINTS