QUESTION $4$

$(20$ MARKS$)$

Robson $($Pty$)$ Ltd $(\text{'}$Robson$\text{'})$ was formed in $2005$ by two young professionals, Peter Roberts and Reginald Sonny, with the aim of providing advice to companies in Southern Africa on general economic and financial issues. Mr Roberts and Mr Sonny are the joint chief executive officers of Robson.

Over the last $19$ years Robson has grown and changed significantly and now comprises of a head office with a corporate services division, a wholly owned subsidiary company and an $80\%$ held subsidiary. The group offers a broad array of financial products and services.

$50\%$ of the issued shares in Robson are held by the Roberts Family Trust, and $50\%$ by the Sonny Family Trust. For some time now the shareholders of Robson have considered listing the group on the Johannesburg Stock Exchange $($JSE$).$ Although the economic downturn has delayed the potential listing, the directors of Robson have been taking steps to improve the general state of corporate governance within the group and has adopted the King IV Report on Corporate Governance.

Robson has eleven directors in total, of which five are executive directors. The six non$-$executive directors are appointed by the Roberts and Sonny family trusts $($each trust appoints three directors$).$ One of the non$-$executive directors serves as the chairman of Robson's board. Of the eleven directors, five are considered independent.

The board of directors meets twice a year to approve the annual budgets and governance frameworks for the group companies, to consider reports from the audit committee $($which is the only subcommittee of the board$)$ and to decide on strategy.

The current chairman of the board, who is also the chairman of the audit committee, is retiring at the age of $65$ on $31$ December $2024.$ The board is considering paying a gratuity of R$5$ million to the outgoing chairman in recognition for his work in providing superior strategic leadership and day to day involvement at the company during his term of office.

Robson's corporate services division provided information technology, group reporting, internal audit, legal and treasury services to the Robson group, as well as advice on funding, risk management and debt collection.

The internal audit function has a total staff of six and is led by Suresh Naidoo, the former chief executive officer of Learning$-$In$-$Motion $($Pty$)$ Ltd$,$ an unrelated company. Internal audit staff visit each of the Robson subsidiaries at least once a year and conduct compliance$-$based audits to ensure that the system of internal control is operating effectively. To maintain independence $Mr$ Naidoo has direct access to the external group auditors and reports directly to the chairman of Robson's board. Mr Naidoo is the only other member of the Robson audit committee.

YOU ARE REQUIRED TO

$20$ MARKS

With specific reference to the information provided, describe the recommended practices of the King IV Code on Corporate Governance that Robson $($Pty$)$ Ltd has not yet applied.