You have recently been employed as a compliance consultant for de Buys Agri-logistics, an agri-logistics company listed on the AltX of the JSE.

Note:

The AltX is the alternative board for small and medium-sized companies to raise capital on the JSE. Many organisations use the AltX as a means to raise capital, and as a stepping-stone to listing on the JSE Main Board.

De Buys & Sons was established in 1928 and has been run by the family ever since. The parent company owns subsidiary businesses that operate in bulk storage, distribution, and fertilisation investments for large-scale fruit farming in the Western Cape, as well as maize and wheat commodities farming in the North West Province and the Free State. The company has an annual turnover of approximately R150 million, with an annual profit of R67 million in the financial year. The financial results are audited and approved by an independent auditor.

The total number of employees in the holding company is 24 (typically administrative and professional services employees: auditors, financial analysts, and human resources professionals). Each subsidiary organisation has a wide employee and stakeholder footprint. The stakeholders include local communities (i.e. families, small businesses, and schools) as well as employee groups such as logistics personnel (i.e. truck drivers and delivery persons), warehousing staff, farm labourers, fruit pickers, and seasonal staff. There are also employees involved in food sciences and farm management, as well as climatologists and hydrologists.

The company is a family-founded organisation; however, you have discovered that the board of directors of this organisation is predominantly made up of family members. The CEO and chairperson, Frikkie de Buys,and the CFO,John de Buys, are the grandsons of the founder. The board consists of eight people, including the CEO and CFO, the CEO's daughter, and three other members of the family who are also shareholders. There is one independent, non-executive director, Elana Francis, who is a good friend of the CEO, and a representative of the trust. The casting vote of the board lies with Frikkie, as the chairperson.Figure 1 illustrates the composition of the board.

As a compliance practitioner, you are worried about the possibility of conflicts of interests and non-compliance that may occur due to the current structure of the board.

Using the King IV Code and Section 72 of the Companies Act of 2008, explain how I can go about answering this question, report to advise about the restructuring of a board that is more ethically compliant with the KingIV Code. Your answer should pay particular attention to the social and ethics committee and the audit and risk committee.

DE BUYS AGRI-LOGISTICS (Cousins) (Brothers) (Brothers) Frikkie de Buys John de Buys Tinus de Buys Chris de Buys CEO CFO Director Director (Daughter) (Daughters) (Family friend) Kayla de Buys Elana Francis Mia de Buys Charlotte de Buys Director Director Director Director