Governance

The governance structures of Prosus and Naspers substantially mirror each other. Prosus and Naspers have an identical one-tier board structure of executive and non-executive directors. Executive directors are responsible for the Group’s day-to-day management, which includes formulating its strategies and policies and setting and achieving its objectives. Non-executive directors supervise and advise executive directors. Each director has a duty to the company to perform their responsibilities and act properly in its corporate interest. Under Dutch law, Prosus’s corporate interest extends to the interests of all its stakeholders, including its shareholders, creditors and employees

The audit and risk committees of the board monitor compliance with the Financial Supervision Act, Dutch Civil Code and the Dutch Corporate Governance Code, and the Euronext Dublin requirements applicable to the Prosus bonds listed on that exchange.

The board’s projects, audit, risk, human resources and remuneration, nominations and sustainability committees ensure good corporate governance.

The Group uses independent external advisors to monitor regulatory developments, locally and internationally, to enable management to make recommendations to the board on corporate governance matters.

The board ensures that a culture of business ethics and conduct aimed at long-term value creation is promoted to underpin the Group’s activities as a responsible corporate citizen. This includes adopting values and a code of business ethics and conduct, leading by example, and monitoring implementation to make the required disclosures on incorporation, compliance and effectiveness.

In this regard, the board is responsible for group performance by steering and providing strategic direction to the company, taking responsibility for adopting a view on long-term value creation and aligned strategy and plans (such strategies and plans originate in the first instance from management). In addition, the board must approve the annual business plan and budget compiled by management for implementation, considering sustainability aspects in long-term planning.

We recognise the value of an integrated approach to assurance and compliance. The adopted governance, risk and compliance framework is the basis for managing governance.

This framework illustrates how we achieve a sustainable business integrated with governance, assurance, risk management and compliance, in line with legislative requirements and Dutch Corporate Governance Code recommendations and reported through the relevant structures.

Our subsidiaries, associates and investees must comply with applicable laws and regulations. Accordingly, a risk-based legal compliance programme (including anti-bribery and anti-corruption) has been implemented per this framework in all subsidiaries.

In applying our capital allocation strategy, we carefully examine the risks of the countries and sectors we invest in. We review potential investees and their founders and major shareholders; we need to know with whom we are doing business. Our traditional due diligence looks at the commercial and financial position of the investee but also covers legal (including IP, privacy and litigation) and tax aspects of their business. This is supplemented by contact between our team, the founders, and their management teams that help us understand the investee's culture. More recently, for acquisitions of majority ownership stakes in larger businesses, we formally assess the investee’s ethics and legal compliance framework and HR policies against our framework and policies to see what actions (if any) will need to be taken for the investee to meet our minimum requirements if we require them to do so.

The governance frameworks of investees differ depending on their scale and maturity: some are too small or too early to have a fully built and mature governance and compliance framework. In each case, however, our contact with the founders and management team and our additional due diligence helps us understand the company's purpose and culture.

Our largest associates, many of whom are of significant size, have adopted their appropriate governance standards. A number of these companies have listings on leading stock exchanges and, therefore, need to comply with local law and the requirements of the relevant exchange, which is reflected in the standards they adopt.

If our team members serve on the boards of investees, they can sometimes help shape the investee’s governance standards. They do this by sharing the governance standards we have adopted on relevant topics, offering support to the associates through training or workshops, and generally sharing our knowledge and expertise.

Periodically, teams of employees of the company and associates meet to discuss governance standards and share their experiences.

The board is the focal point for and custodian of the Group’s corporate governance systems. It conducts the Group’s business with integrity and applies appropriate corporate governance policies and practices.

The board, its committees, and the boards and committees of subsidiaries are responsible for ensuring the appropriate principles and practices of the Dutch Corporate Governance Code are applied and embedded in the governance practices of group companies.

A disciplined reporting structure ensures the board is fully apprised of subsidiary activities, risks and opportunities. All subsidiaries in the Group must subscribe to the Dutch Corporate Governance Code principles. In addition, business and governance structures have clear approval frameworks.

The Group has a governance committee comprising the segment chief executive officers, chief financial officers of Naspers and Prosus, as well as the group company secretary, group general counsel, group head of risk and audit, global head of sustainability, global head of governance and global ethics and compliance lead.

The committee is tasked with ensuring that the Group’s governance structures and framework are employed across the consolidated entities in the Group during the financial year.

Governance and progress are monitored by the audit and risk committees and reported to the board.

As the companies in the group are diverse and at different maturity stages, a one-size-fits-all approach cannot be followed in implementing governance practices. All sound governance principles apply to all types and sizes of companies, but the practices implemented by companies to achieve the principles may differ. Therefore, practices must be implemented appropriately for each company, in line with the principles of good governance.

We recognise the value of an integrated approach to assurance and compliance. The adopted governance, risk and compliance framework is the basis for managing governance.

As part of this framework, we recently strengthened our CEO/CFO certification to ensure that business practices and procedures are aligned with what the Group expects of its subsidiaries. This revised process ensures that assurance can be obtained from the businesses and segments in the Group regarding the manner and extent to which they comply with the Group’s governance standards.

The CEO/CFO certification broadly covers areas such as financial, tax, culture of ethics and compliance, sustainability, risk management, health and safety, technology and information governance, assurance, internal audit, internal controls, stakeholders and remuneration – each of these being key areas of focus for the Group.

Prosus is required to report its application of the principles of the Dutch Corporate Governance Code. To the best of its knowledge, the board believes the Group has satisfactorily applied the Dutch Corporate Governance Code principles.

The Group considers proportionality when we apply corporate governance. This means we apply the practices needed to demonstrate the Group’s governance as appropriate.

As required, Prosus regularly assesses the independence of the non-executive directors for purposes of the Dutch Corporate Governance Code, considering all the relevant facts (including whether or not the protection structure has been activated). Accordingly, a director’s independence for purposes of the Dutch Corporate Governance Code may not necessarily correspond with their independence for the South African King Code, which provides different criteria for determining independence.

As of 31 March 2023, Prosus does not comply with best practice provisions 1.3.1, 1.3.2, 2.1.9, 5.1.3, 2.2.1, 2.2.2 and 4.1.3. Our Corporate Governance Statement and explanation of the deviations from the Dutch Corporate Governance Code, 2016, can be found at www.prosus.com/news/investors-annual-reports.

For reference purposes, the full text of the Dutch Corporate Governance Code is available on their website at www.mccg.nl/dutch-corporate-governance-code.

According to the Decree Article 10 EU Takeover Directive, we are required to report on, among other things, our capital structure; restrictions on voting rights and the transfer of securities; significant shareholdings in Prosus; the rules governing the appointment and dismissal of members of the board of directors and the amendment of the articles of association and the powers of the board of directors.

The information the Decree Article 10 EU Takeover Directive requires is included in this corporate governance section and remuneration report.

Our system of internal controls aims to prevent or detect material risks and mitigate material adverse consequences. The system provides reasonable assurance of achieving company objectives. This includes the integrity and reliability of the financial statements; safeguarding and maintaining accountability of its assets; and detecting fraud, potential liability, loss and material misstatements while complying with regulations. The directors representing Prosus on boards of entities where the company does not have a controlling interest seek assurance that significant risks are managed, and internal control systems are effective.

With assistance from risk and audit, management regularly reviews risks and internal controls' design and operating effectiveness, seeking improvement opportunities.

The board reviewed the effectiveness of controls on key risks for the year ended 31 March 2022. This assurance was obtained principally through management self-assessment, including formal confirmation via representation letters by executive management. Consideration was also given to other input, including reports from risk and audit, compliance and the risk management process. Where necessary, programmes for corrective actions have been initiated and progress is monitored.

While we work towards continuous improvement of our processes and procedures regarding financial reporting, no major failings have occurred to the directors' knowledge. Therefore, directors believe these systems reasonably ensure that the financial reporting does not contain material inaccuracies.

A central risk and audit function is in place for the Group and provides independent, objective assurance and risk support services about the risk management system and internal control to help management preserve and create sustainable value. The head of risk and audit reports to the audit committee chair, with administrative reporting to the financial director.

The function’s core competency lies in risk-based technology and business process assurance work. Through its specialised cybersecurity team, risk and audit also support our businesses to continuously enhance their technology and cyber-capabilities to ensure resilient and secure platforms in response to evolving cyber risks.

The risk and audit function operates in conformance with the International Professional Practice Framework of the Institute of Internal Auditors and, in line with these, submits itself regularly to an external quality review.

Among other aspects, risk and audit are responsible for providing a statement annually on the effectiveness of the Group’s governance, risk management and control processes to the board of directors and, to the audit committee specifically, of the results of its review of financial controls.

The Group’s policy on non-audit services provides guidelines on dealing with audit, audit-related, tax and other non-audit services that the independent auditor may provide to group entities. It also sets out services that the independent auditor may not perform.

The audit committee preapproves audit and non-audit services to ensure these do not impair the auditor’s independence and comply with legislation. Under our guiding principles, the auditor’s independence will be deemed impaired if the auditor provides a service where they:

• function in the role of management of the company, or
• audit their work, or
• provide services that are prohibited under applicable independence standards, or
• serve in an advocacy role for the company.

Prosus‘s investor relations policy (refer to www.prosus.com) describes the principles and practices of interacting with shareholders and investors. Prosus is committed to providing timely and transparent information on corporate strategies and financial data to the investing public. In addition, we consider the demand for transparency and accountability in our non-financial (or sustainability) performance. However, we recognise that this performance is based on the Group’s risk profile and strategy, which includes non-financial risks and opportunities.

The company manages communications with its key financial audiences through a dedicated investor relations unit, including institutional shareholders and financial (debt and equity) analysts. In addition, presentations and conference calls occur after publishing interim and full-year results.

A broad range of public communication channels (including stock exchange news services, corporate websites, press agencies, news wires and news distribution service providers) are used to disseminate news releases. Email, conference calls, group presentations and one-on-one meetings supplement these channels. Our policy is not to provide forward-looking information. Prosus also complies with legislation and stock exchange rules on forward-looking statements.

Prosus would typically be closed on the day after the end of a reporting period (30 September or 31 March) until results are released.

General investor interaction during this time is limited to discussions on strategy and historical, publicly available information.

To enhance the quantity and quality of research, Prosus maintains working relationships with stockbrokers, investment banks and credit-rating agencies – irrespective of their views or recommendations on the Group.

Prosus may review an analyst’s report or earnings model for the factual accuracy of the information in the public domain. Still, we do not provide guidance or forecasts in line with regulations and group policy.

The board encourages shareholders to attend the general meeting, where shareholders can put questions to the board, management and chairs of the various committees.

The Investors section on our website provides the latest and historical financial and other information, including financial reports.

The board retains oversight of the sustainability agenda for the group, including our climate action strategy and plan. In addition, the review and approval of business and financial goals, including sustainability targets and resource allocations, are steered by relevant board committees.

A regular cadence of meetings enables the board, supported by multiple board committees, including the risk committee, the sustainability committee and the governance committee, to retain oversight on the progress made on the implementation of the sustainability strategy for the group and the management of sustainability risks and opportunities across the portfolio.

The risk and sustainability committees must meet at least twice yearly. In addition, every board meeting includes sustainability as a standard agenda item, demonstrating the topic's prominence and ensuring the board is informed on ESG and climate-related risks frequently to steer on actions where needed.

Click here to view sustainability governance structure