QUESTION 3 35 marks

PART A (24 Marks)

Noluthando established a manufacturing company, called Amabala Limited. The company is a public company registered in terms of the Companies Act 71 of 2008. The company specialises in manufacturing energy drinks. In the past 5 years the company grew significantly. In the prior year, the company partnered with a local college to establish a learnership programme that will focus on youth development in the manufacturing sector. The Chairperson of the audit committee approached the chief audit executive (CAE) and requested her to explain the requirements of King IV Report on Corporate Governance and integrated sustainability reporting to the audit committee and to indicate their role and responsibilities in this regard. The company wants to ensure that the company follows good corporate governance practices across all its operations. The company is looking to appoint additional members to serve in the audit committee. The company secretary is unsure about whether the following persons would qualify to be appointed as members of the audit committee:

• Ntando, an executive director of Amabala Limited.
• Steve, a non-executive director of Amabala Limited.
• Brutus, a material supplier of plastic bottles to Amabala Limited; and
• Nhlakanipho, a qualified auditor who is married to Ntando.

With reference to the relevant provisions of the Companies Act 71 of 2008 and the King IV Report on Corporate Governance, advise the board of directors and the audit committee of Amabala Limited on the following issues:

REQUIRED Marks

3.1	With reference to the provisions of Companies Act 71 of 2008, explain whether the persons listed above qualify to be appointed to the audit committee of Amabala Limited. Provide reasons for your answer	8
3.2	Advice the board of directors of Amabala Limited on how its audit committee composition should be with reference to the King IV Report on Corporate Governance.	3
3.3	Describe five (5) responsibilities that the audit committee of Amabala Limited will be faced with in reference to the King IV Report on Corporate Governance.	5
3.4	Present to the board of directors of Amabala Limited the concept of Corporate Social Responsibility. In your presentation explain why it is important and what is their responsibility as the board of directors.	8