AfrAsia Bank Limited (the “Bank” or “AfrAsia Bank” or “ABL” or “AfrAsia”) has, through its Board of Directors, taken the required steps to ensure compliance with the principles set out in the National Code of Corporate Governance and explained how these principles have been applied to with the exceptions of those disclosed in the “Statement of Compliance” on page 73 along with underlying principle behind the non-compliance.

Further to a re-constitution of its Board of Directors post year end, some resignations and appointments were noted post year end for which the details can be found throughout the report.

Disclosures pertaining to the eight principles of the Code have been made in different sections of the Annual Report, as outlined below:

The Board is responsible for the overall stewardship of the Bank and thus plays a vital role in ensuring that the appropriate level of corporate governance is maintained.

The powers of Directors are set out in the Bank’s Constitution and in the Terms of Reference for the Board. The Board is aware of its responsibilities to ensure that the Bank adheres to all relevant legislations such as The Banking Act 2004 (amended August 2020), the Financial Reporting Act 2004 (amended 2018), the Financial Services Act 2007 and The Companies Act 2001 of Mauritius. The Board reassesses its Terms of Reference as and when required.

The Board also follows the principle of good corporate governance as recommended in the “National Code of Corporate Governance 2016” and BOM’s “Guidelines on Corporate Governance 2001” (revised October 2017). It reviews and approves whenever deemed necessary the Bank’s Code of Ethics to warrant that they are in line with the Bank’s objectives and also monitors and evaluates the Bank’s compliance with its Code of Ethics

The Board has mandated the Corporate Governance Committee to select and review candidates of the proposed directorship guided by legal and regulatory requirements. Candidates appointment should be conducted with appointments being made, on merit, against objective criteria in relation to skills, knowledge, experience, independence and gender balance which will add to the benefits of diversity on the Board.

Once the selection process has been completed, the Corporate Governance Committee makes its recommendation to the Board for approval.

For the purpose of filling a casual vacancy, the Board may approve the proposal of the Corporate Governance Committee. As such, the proposed Director shall stay in office until the next annual meeting whereby he/she can be appointed by the shareholders. 

The Board members’ selection and nomination process can be classified into the main steps illustrated below:

The newly appointed Director shall receive a Letter of Appointment which contains the following details:

• Time Commitment;
• Roles and Duties;
• Outside Interests;
• Confidentiality;
• Price Sensitive Information and Dealing in the Bank’s Shares;
• Induction; and
• Insurance.

During the year ended 30 June 2020, the Board did not appoint any new Directors.

In accordance with its Terms of Reference, the Board is responsible for the succession planning of the Board, the Chief Executive Officer and Senior Management of the Bank.

The Board has mandated the Corporate Governance Committee to put in place the succession plans, especially that of the Chairperson and of the CEO. Same has been formalised in the Terms of Reference of the Corporate Governance Committee.

The Corporate Governance Committee shall be responsible for the identification and selection of potential candidates.

The Board regularly undergoes a performance appraisal exercise, in accordance with the National Code on Corporate Governance for Mauritius and BOM’s “Guidelines on Corporate Governance”. The Directors are requested to evaluate the Board on the following main criteria:

• The Board’s size, composition and structure;
• The Board’s roles, duties and responsibilities;
• The effectiveness of the Board and its Committees; and
• The role and function of the Chairperson.

The regular Board appraisal exercise is performed internally through the Company Secretary, under the leadership of the Chairperson. It is generally done via questionnaires and the results are presented to the Corporate Governance Committee and ultimately, to the Board once they are available. The remarks and recommendations received are shared with the Board to enable the Directors to take appropriate steps where necessary and possible.

No Board appraisal exercise has been performed for the year under review. The Board is considering to perform a Board appraisal exercise in the next financial year.

The recommendation of the Code revolving around the use of an external consultant for Board appraisal exercise has been noted for forthcoming assessments.

The Corporate Governance Committee acts as Nomination and Remuneration Committee as and when required and as part of its duties it determines, agrees, develops and reviews the Bank's general policy on executive and senior management remuneration.

The Executive Director who is in full time employment with the Bank is entitled to a fixed salary as per his contract of employment and he does not receive any additional remuneration for attending the Board meetings and Committees.

The table below sets out the fee structure for Non-Executive Directors:

The Non-Executive Directors have not received any remuneration in the form of share options or bonuses associated with organisational performance during the year.

Total remuneration and benefits received and receivable, by the Directors from the Bank and its subsidiary for the year ended 30 June 2020 were as follows:

*The Director was appointed as Executive Director on the 30^th of January 2020.

The detailed fees/remuneration paid to Directors have been provided on page 46 of the Corporate Governance Report.

Sanjiv Bhasin, Executive Director of AfrAsia Bank Limited, has a service contract with the Bank expiring on 30 June 2021.

Thierry Vallet, Director of AfrAsia Investments Limited, has a service contract with the Bank expiring in June 2021

The interests of the Directors in the securities of the Group and the Bank are maintained by the Company Secretary. As part of the appointment of a Director, the latter can choose to notify in way of writing to the Company Secretary their interests as well as their associates’ interests in the securities of the Group and the Bank.

The Directors’ share interest as at 30 June 2020 were:

*Except for the Directors mentioned above*, the remaining Directors do not hold any shares.

The Directors do not hold any shares in the subsidiaries of the Bank whether directly or indirectly.

• BOARD
• BOARD SUB-COMMITTEES AND EXECUTIVE MANAGEMENT
• RISK MANAGEMENT
• CORPORATE INTEGRITY AND WHISTLE BLOWING POLICY

• BOARD

  The Board leads the conduct of affairs and provides sound leadership to the executives of the Bank. It sets clearly defined policies and the Bank’s risk appetite, which are then conveyed to the executives via their delegated authorities to facilitate them to oversee the course of actions of the business. Additionally, the Board ensures that risks are being properly detected, managed and mitigated.

• BOARD SUB-COMMITTEES AND EXECUTIVE MANAGEMENT

  The fundamental responsibility of the Board Risk Committee (BRC) is advising the Board on the Bank’s overall current and future risk appetite, overseeing senior management’s implementation of the Risk Appetite Statement (RAS), reporting on the state of risk culture in the Bank and interacting with and overseeing the Head of Risk.

  The BRC work includes oversight of the strategies for capital and liquidity management as well as for all relevant risks of the Bank, such as credit, market, operational and reputational risks, to ensure they are consistent with the stated risk appetite, all in compliance with BOM’s guidelines and policies approved by the Board. In addition, the BRC is responsible to ensure that the Bank maintains satisfactory liquidity and solvency ratio at all times. The Committee receives regular reporting and communication from the Head of Risk and other relevant functions about the bank’s current risk profile, current state of the risk culture, utilization against the established risk appetite and limits, limit breaches and mitigation plans.

  Internally, the Bank has established an Assets and Liabilities Committee (“ALCO”) and an Impairment Committee (“IMC”) that both report to the BRC on their operations.

• RISK MANAGEMENT

  The independent risk management function is a key component of the Bank’s second line of defense. The risk management function, through its various clusters, monitors risk-taking activities and risk exposures in line with the Board-approved risk appetite, risk limits and corresponding capital or liquidity needs (i.e. capital planning).

  While it is common for risk management division to work closely with the various business units, the risk function remains sufficiently independent of the business units and is not involved in revenue generation. Such autonomy is an essential component of an effective risk management function, as is having access to all business lines that have the potential to generate material risk to the Bank as well as to relevant risk-bearing subsidiaries. It also maintains its objectivity by being independent of operations and the Head of Risk have, without impediment, direct access to the Risk Committee chairperson/members.

  The complete Risk Management Report is set out on pages 116 to 151 of the Annual Report.

• CORPORATE INTEGRITY AND WHISTLE BLOWING POLICY

  The Bank has established a Corporate Integrity and Whistle Blowing Policy to promote an atmosphere of honesty and to encourage employees to conduct themselves in the best interests of the Bank. The applicability of this policy attaches itself to all the employees of the Bank irrespective of their locational, contractual and probational nature.

  A copy of the Corporate Integrity and Whistle Blowing Policy is available on the Bank’s website: (https://www.afrasiabank.com/media/3190/corporate-integrity-and-whistle-blowing-policy.pdf)

ABL’s stakeholders are individuals or groups that have an interest in the Bank or are affected by its actions. The primary stakeholders of the Bank are employees and management, shareholders and investors, and government and regulatory authorities.

AfrAsia Bank has a good mix of local and international private institutional investors of renowned reputation across various continents and had a capital base of MUR 8.4bn as at 30 June 2020. The Bank ensures that there is proper and efficient information dissemination to all its shareholders and that the rights of minority shareholders are not neglected. It is noted that 0.32% of the Bank’s shareholding is held by its staff.