Handbook For The Appointment of Persons To Boards of State and State Controlled Institutions - G-RSA January 2009

Handbook for the appointment of persons
to boards of state and state controlled

institutions
Approved by Cabinet on 17 September 2008
January 2009
TABLE OF CONTENTS
DEFINITIONS .......................................................................................................................................... I
CHAPTER ONE – INTRODUCTION ...................................................................................................... 1
BACKGROUND........................................................................................................................................ 1
PURPOSE OF THE HANDBOOK ................................................................................................................. 1
APPLICABILITY OF THE HANDBOOK .......................................................................................................... 2
State institutions............................................................................................................................... 2
State controlled institutions .............................................................................................................. 3
Public interest institutions ................................................................................................................ 4
CHAPTER TWO – FIDUCIARY DUTIES/EXECUTIVE OWNERSHIP AND CONTROL....................... 5
OWNERSHIP AND CONTROL BY EXECUTIVE AUTHORITIES ......................................................................... 5
FIDUCIARY DUTIES ................................................................................................................................. 6
Public Finance Management Act .................................................................................................... 6
Common law .................................................................................................................................... 6
Companies Act, 1973....................................................................................................................... 7
IMPLICATIONS FOR OFFICE BEARERS ....................................................................................................... 8
CHAPTER THREE – QUALIFYING PRINCIPLES............................................................................... 10
MEMBERS OF THE NATIONAL ASSEMBLY AND MEMBERS OF A PROVINCIAL LEGISLATURE .......................... 10
MEMBERS OF THE CABINET, DEPUTY MINISTERS AND MEMBERS OF PROVINCIAL EXECUTIVE COUNCILS .... 10
MEMBERS OF MUNICIPAL COUNCILS ...................................................................................................... 12
SPECIAL ADVISERS............................................................................................................................... 12
HEADS OF DEPARTMENTS ..................................................................................................................... 13
PUBLIC SERVICE OFFICIALS................................................................................................................... 14
Special circumstances ................................................................................................................... 15
Managing a public official appointment.......................................................................................... 16
Relocation or secondment to another department ........................................................................ 16
LIMITING MULTIPLE MEMBERSHIPS OF BOARDS ....................................................................................... 17
REMUNERATION AND REIMBURSEMENT FOR EXPENDITURE ..................................................................... 17
Public service officials.................................................................................................................... 17
State and state controlled institutions ............................................................................................ 18
Municipal councils.......................................................................................................................... 19
CHAPTER FOUR – ROLES AND RESPONSIBILITIES...................................................................... 20
PARLIAMENT ........................................................................................................................................ 20
EXECUTIVE ACTS OF THE PRESIDENT .................................................................................................... 20
CABINET APPROVAL/CONSULTATION...................................................................................................... 21
Criteria to decide on the significance of appointments .................................................................. 21
THE EXECUTIVE AUTHORITY ................................................................................................................. 22
THE PARENT DEPARTMENT ................................................................................................................... 22
THE CHAIRPERSON OF THE BOARD ........................................................................................................ 23
THE CANDIDATE ................................................................................................................................... 24
THE DEPARTMENT OF PUBLIC ENTERPRISES ......................................................................................... 24
THE DEPARTMENT OF PUBLIC SERVICE AND ADMINISTRATION ................................................................ 25
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TABLE OF CONTENTS
CHAPTER FIVE – APPOINTMENT PROCESS................................................................................... 26

APPOINTMENT PRINCIPLES ................................................................................................................... 26
PRE-APPOINTMENT SYSTEMS................................................................................................................ 26
Departmental databases and succession management................................................................ 26
Generic role descriptions and board profile ................................................................................... 27
APPOINTMENT PROCESS ...................................................................................................................... 28
Identifying a vacancy ..................................................................................................................... 28
Developing a time line of the agreed procedure ............................................................................ 28
Developing a tailored role description............................................................................................ 29
Identifying candidates .................................................................................................................... 30
Framework for disclosing interests ................................................................................................ 31
Dealing with conflict of interest ...................................................................................................... 33
Short-listing candidates.................................................................................................................. 33
Interviewing and selection ............................................................................................................. 35
Appointment................................................................................................................................... 37
Induction ........................................................................................................................................ 37
Reappointment............................................................................................................................... 38
Disqualification............................................................................................................................... 38
CHAPTER SIX – IMPLEMENTATION AND CONCLUSION ............................................................... 40
IMPLEMENTATION ................................................................................................................................. 40
CONCLUSION ....................................................................................................................................... 40
ANNEXURES........................................................................................................................................ 40
ANNEXURE 1: BOARD MEMBER INFORMATION SHEET .............................................................................. 41
ANNEXURE 2: BROAD PROCESS FOR APPOINTING PERSONS TO BOARDS ................................................. 44
ANNEXURE 3: FRAMEWORK FOR DISCLOSING INTEREST OF BOARD MEMBERS .......................................... 45
ANNEXURE 4: IDENTIFYING AND DEALING WITH CONFLICTS OF INTEREST ................................................. 52
BIBLIOGRAPHY................................................................................................................................... 57
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DEFINITIONS
In this Handbook, unless the context otherwise indicates –
“board” means –
(a) the governing authority of a state controlled institution;
(b) the advisory board, without executive functions, of a government component listed in Schedule
3 of the Public Service Act, as amended by Act 30 of 2007; and
(c) a statutory council that does not have powers and duties associated with a governing or
accounting authority;
“Cabinet” also means the Executive Council of a province;
“Executive Authority” means the Cabinet member or member of the Executive Council of a province
in whose portfolio a government component, statutory council, public entity or government enterprise
falls;
“MEC” means a member of a provincial Executive Council;
“parent department” means a national or provincial department designated by an Executive

Authority as the department responsible for the institutions falling under the portfolio of the Executive
Authority. A parent department normally supports the Executive Authority in overseeing associated
institutions;
“Parliament” also means a provincial legislature;
“PFMA” means the Public Finance Management Act, 1999;
“PSA” means the Public Service Act, 1994, as amended by Act 30 of 2007;
“state institution” means a national or provincial –

(a) government component listed in Schedule 3 of the PSA; or
(b) a statutory council established by legislation;
“state controlled institution” means a national or provincial public entity or government enterprise
(government business enterprise and major public entity) listed in Schedules 2, 3A, 3B, 3C and 3D of
the PFMA.
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Chapter One – Introduction
CHAPTER ONE – INTRODUCTION
Background
1. This Handbook has been developed in response to the Cabinet’s expectations that clear
guidelines be developed for appointing persons to boards, including an explanation as to how
Executive Authorities can deal with such appointments as well as a specification of the approval
processes to be followed.
2. When government requests experts from the public or private sector or a particular community
of interest to serve on a board, it does so with the expectation that they will use their expertise
and knowledge in a manner that will improve access to services and service delivery to citizens
and also advance the interests of South Africa.
3. Executive Authorities are responsible for making appointments to a wide range of institutions. It
is essential that proper systems and processes be in place to ensure that the interests of
government and the public in these entities are managed effectively. Appointing the right people
to the board is a crucial step in ensuring that an entity has the capability to perform effectively.
Purpose of the Handbook
4. The purpose of the Handbook is to provide best practice guidelines to promote uniformity in the
appointment of persons to boards of state and state controlled institutions. It supports
government initiatives to promote transparency, accountability, sound administration and good
governance practices in all organs of state. It should be understood that the Handbook builds on
the good governance principles and practices provided for in the PFMA. The Handbook
represents a stand-alone practical document which is not in any way prescribed in terms of any
formal framework, regulation or legislation. However, the Handbook also makes reference to
various policies and legislative frameworks and departments should ensure compliance with
these policies and frameworks.
5. The Handbook promotes a set of principles and best practices rather than following a
prescriptive or regulatory approach towards the appointment of members. This approach
provides for an enabling environment in which Executive Authorities and departments may carry
out administrative actions concerning appointment matters by using their discretion that best
takes into consideration local circumstances.
6. The Handbook is not intended to be used as an instrument to promote governance at board

level. Although the Handbook is not a governance instrument, it does support the primary pillars
of fairness, accountability, responsibility and
The following Constitutional principles
transparency, which are fundamental to all are particularly relevant for the
international guidelines of corporate governance. Handbook:
(a) A high standard of professional
ethics must be promoted and
7. The Handbook also supports the basic values and maintained.
principles governing public administration set out in (b) Services must be provided
Chapter 10 of the Constitution. Section 195 of the impartially, fairly, equitably and
Constitution provides that public administration in all without bias.
organs of state and public enterprises must be (c) Public administration must be
governed by the democratic values and principles accountable.
enshrined in the Constitution. (d) Transparency must be fostered.
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8. The specific objectives of the Handbook are to:

(a) Provide guiding principles for appointing persons to boards and explain the fiduciary
duties of board members
(b) Provide qualifying principles for appointing office bearers to boards and limit multiple
memberships of boards
(c) Specify the roles and responsibilities of role players involved in the appointment
process
(d) Integrate the disclosure of interests of board members into the appointment process to
ensure that possible conflict of interest is identified upfront before board members are
appointed
(e) Specify pre-appointment information systems to guide the appointment process and to
develop succession management plans
(f) Provide guidance on each step of the appointment process to assist those running the
appointment process. The appointment process can be customised to accommodate
the unique circumstances in ministries or departments. Various check lists are provided
as an easy reference. Departments are encouraged to include the check lists in work
documents.
(g) Provide guidance on which appointments Executive Authorities can deal with and which
should be submitted to Cabinet for consideration
(h) Provide the basis for aligning legislation to the principles and best practices set out in
the Handbook. The enabling Act of a state or state controlled institution provides the
legal basis in terms of which board members are appointed and not the Handbook. The
Handbook takes no precedence over enabling Acts or any other legislation.
Applicability of the Handbook
9. The Handbook is applicable to the appointment of persons to the board of –

(a) a national or provincial state institution (government component or statutory council);
(b) a national or provincial state controlled institution (public entity or government
enterprise); and
(c) public interest institutions, when the enabling Act for the institution provides for the ex
officio appointment of public service officials to the board of that institution.
10. Although the Handbook is not applicable to public interest institutions, constitutional institutions
and commissions of inquiry, these institutions are encouraged to adopt the principles and best
practices set out in this Handbook. For purposes of the Handbook, state institutions, state
controlled institutions and public interest institutions are defined as listed below.
State institutions
11. In this Handbook the category, state institutions, includes national and provincial government
components and statutory councils.
11.1 A government component is a separate institution within the public service and is listed in
Schedule 3 of the PSA. This organisational form intends to enable service delivery through a
focused and fully ring-fenced entity, but under the direct control of an Executive Authority, with
accountability and responsibility vested in the functionaries directly involved in the performance
of the functions in question. A government component will be a separate institution in the public
service and its head will be the accounting officer in terms of the PFMA. Such a component may
have original statutory powers or assigned or delegated statutory powers and duties. A
government component is linked to a parent department responsible for the relevant
policy/functional area in order to assist the Executive Authority in overseeing the component as
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regards policy implementation, performance, integrated planning, budgeting and service

delivery. A government component may have an advisory board without executive functions.
11.2 A statutory council is established in terms of legislation to perform functions that typically
involve the rendering of advice on policy matters or policy implementation, or to consider and
adjudicate appeals as an independent tribunal. Secretarial and professional support services
are normally rendered and funded by the parent department. A statutory council normally does
not have the powers and duties associated with a governing or accounting authority, or is listed
either as a state controlled institution in the schedules of the PFMA, or as a public interest
institution. An example of a statutory council would be a consultative or advisory body that the
Minister for the Public Service and Administration may establish in terms of the PSA. Another
example would be the independent tribunal that the Minister of Social Development may
establish in terms of the Social Assistance Act, 2004.
State controlled institutions
12. In this Handbook the category, state controlled institutions, includes national and provincial
public entities and government enterprises.
12.1 A public entity is an institution –

(a) established in terms of legislation as a separate juristic person;
(b) which in the ordinary course of performing its functions is fully, or at least to a
substantial extent, funded from –
(i) the National or Provincial Revenue Fund;
(ii) the proceeds of a tax, levy or other compulsory charge imposed in terms of
legislation; or
(iii) fees charged by it for the performance of its functions; and
(c) for whose performance an Executive Authority is accountable to the relevant
legislature; or
(d) which is a subsidiary of a public entity, excluding a subsidiary which is a government
enterprise.
12.2 A government enterprise is an institution –

(a) established in terms of legislation as a separate juristic person, including a public or
private company over which the national government or a national executive organ of
state has effective control;
(b) which performs a public function in accordance with ordinary business principles or
conducts as its main function business, commercial or industrial activities for the
state;
(c) which is not in the ordinary course of its business funded or intended to be funded
from –
(i) the National or Provincial Revenue Fund; or
(ii) the proceeds of a tax, levy or other compulsory charge imposed in terms of
legislation; and
(d) for whose performance an Executive Authority is accountable to the relevant
legislature;
(e) which is a subsidiary of a listed or unlisted government enterprise;
(f) which is a subsidiary of a listed or unlisted public entity and which –
(i) performs a public function in accordance with ordinary business principles or
conducts as its main function business, commercial or industrial activities for
that entity; and
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(iii) is not in the ordinary course of its business funded from –

(aa) the National or Provincial Revenue Fund; or
(bb) the proceeds of a tax, levy or other compulsory charge imposed in
terms of legislation.
Public interest institutions
13. In this Handbook the category, public interest institutions, refers to institutions that perform
functions serving the interest of the public and in which government has an interest to promote
certain minimum norms and standards regarding sound governance, financial management and
reporting arrangements. Public interest institutions have any one or more of the following
characteristics:
(a) They may be established as separate juristic entities in terms of specific enabling
legislation to regulate a specific sector, for example the education sector, or a specific
function, for example the provision of welfare services.
(b) Governance, financial management and reporting arrangements are set out in their
enabling legislation.
(c) They are not regarded or listed as state or state controlled institutions by the PSA or
PFMA.
(d) They may receive payments from contributing membership fees, payments of
financial support, funding for projects or subsidies from government, yet they are not
subject to the normal processes of financial oversight as set out in the PFMA.
(e) They may be governed by a board of trustees with trustees equally represented by
elected members and members appointed by an employer(s) to protect the interests
of all stakeholders/members.
14. In this Handbook, public interest institution includes –

(a) institutions responsible for overseeing, developing, licensing or regulating a particular
industry or profession (for example the South African Association for Consulting
Engineers);
(b) private organisations designated as welfare organisations in terms of welfare
legislation. These organisations often receive government subsidies or grants;
(c) sporting and recreational federations that receive government grants and private
institutions or committees responsible for arranging sporting events of national
importance (for example 2010 FIFA Soccer World Cup and the Olympic games)
where government plays an important role in terms of financing, planning and
providing certain guarantees;
(d) higher education institutions as defined in the Higher Education Act, 1997 (Act No
101 of 1997);
(e) public schools as defined in the South African Schools Act, 1996 (Act No 84 of
1996);
(f) further education and training institutions as defined in the Further Education and
Training Act, 1998 (Act No 98 of 1998);
(g) adult basic education and training centres established in terms of the Adult Basic
Education and Training Act, 2000 (Act No 52 of 2000);
(h) the Government Employees Medical Scheme (GEMS) established and listed in terms
of the Medical Schemes Act, 131 of 1998 as a restricted membership medical
scheme; and
(i) the Government Employees Pension Fund (GEPF) established in terms of the
Government Employees Pension (GEP) Law, Proclamation 21 of 1996.
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Chapter Two – Fiduciary Duties/Executive Ownership and Control
CHAPTER TWO – FIDUCIARY DUTIES/EXECUTIVE OWNERSHIP AND

CONTROL
1. To ensure that the Handbook is comprehensive, this section explains the fiduciary duties of
board members and the role of Executive Authorities as the owners or shareholders of state
controlled institutions. The nature of fiduciary duties set out in the PFMA, common law and the
Companies Act, 1973, are highlighted.
Ownership and control by Executive Authorities
2. The PFMA provides that the Executive Authority responsible for a public entity under the
ownership control of the national or a provincial Executive (ie Cabinet or a provincial Executive
Council) must exercise that Executive’s ownership control powers to ensure that the public
1
entity complies with the PFMA.
2
3. Ownership control means exercising the following powers:
(a) Appoint or remove all, or the majority of, the members of that entity’s board of directors or
equivalent governing body
(b) Cast all, or the majority of, the votes at meetings of that board of directors or equivalent
governing body
(c) Control all, or the majority of, the voting rights at a general meeting of that entity
4. The shareholder’s liability is limited to his/her investment. The shareholder has the right to vote
on a resolution submitted at an annual general meeting or general meeting “in any way he
pleases and with regard, not to the company’s interest, but to what he considers to be in his own
3
interests”.
5. Executive Authorities also exercise ownership and control over state controlled institutions by
utilising the following instruments:
(a) Public entities are required to –
(i) have enabling legislation that specifies amongst others the fiduciary duties,
corporate governance structures and public purpose mandate(s); and
(ii) adopt a code of ethical conduct.
A shareholders compact is an
(b) Government enterprises are required to comply agreement between the Executive
with – Authority and the accounting authority.
It describes the relationship between
(i) fiduciary duties specified in the the signatories and identifies the
Companies Act, 1973; behaviour on both sides to support
effective management and performance
(ii) principles of corporate governance of the enterprise.
contained in the King Code and the
Protocol on Corporate Governance; and A corporate plan is a framework
(iii) a shareholders compact that will further containing information regarding the
specify the public purpose mandate and enterprise’s strategic thinking, direction
and action leading to the achievement
corporate plan. of planned results.
(c) Appointment and termination of board members
in terms of enabling Acts
(d) Issuing of policy or regulations in terms of legislation. In the event that the Executive
Authority responsible for a particular policy area is not the owner/shareholder, close
co-operation between the Executive Authorities is required when shareholder
compacts are finalised.
1
Section 63(2).
2
Section 1.
3
Coronation Syndicate Ltd v Lilienfield 1903 TS 489.
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Fiduciary duties
6. The most important duties of board members are that they must –
(a) act independently at all times with unfettered discretion;
(b) exercise independent judgement; and
(c) take decisions according to the best interest of the institution.
Public Finance Management Act
7. The PFMA expressly describes the fiduciary duties of boards as accounting authorities for public
4
entities. It provides that the board must –
(a) exercise the duty of utmost care to ensure reasonable protection of the assets and
records of the public entity;
(b) act with fidelity, honesty, integrity and in the best interests of the public entity in
managing the financial affairs of the public entity;
(c) on request, disclose to the Executive Authority responsible for that public entity or the
legislature to which the public entity is accountable, all material facts, including those
reasonably discoverable, which in any way may influence the decisions or actions of
the Executive Authority or that legislature; and
(d) seek, within the sphere of influence of that board, to prevent any prejudice to the
financial interests of the state.
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8. A member of a board may not –
(a) act in a way that is inconsistent with the responsibilities assigned to a board in terms
of the PFMA; or
(b) use the position or privileges of, or confidential information obtained as, a member of
the board, for personal gain or to improperly benefit another person.
Common law
9. A fiduciary is a person in a special position of trust. A fiduciary duty of directors originates from
common law, in other words the law or corresponding legal system developed through decisions
of court rather than through legislation. South African common law in respect of companies is
predominantly the English law. Our courts created the law on companies by looking at previous
cases dealing with the same issue; this approach is known as creating law by precedent. This
body of precedent forms common law and is referred to in making future decisions and will bind
future decisions.
10. In terms of common law a director owes a fiduciary duty and a duty of skill and care to the
company:
(a) Fiduciary duties mean that directors must –
(i) be loyal to the company and should avoid inappropriate self-dealing;
(ii) not use their position of trust and confidence to further their private interests;
(iii) act in good faith in their dealings with or on behalf of the company;
(iv) carry out the duties of their position honestly and in the best interest of the
company; and
(v) ensure that there is no conflict of interest between their duties towards the
company and their personal interests.
4
Section 50(1).
5
Section 50(2).
6
(b) Duty to display reasonable skill and care means that a director must exercise the
level of skill required of a person in his/her position or reasonably expected of
someone carrying out the function of a director within a company and must devote
his/her full attention to the business of the company.
Duty to act in the best interest of the institution
11. The duty of board members to discharge their fiduciary duties in the best interest of the
institution (and not vote in the interest of the shareholder) is also confirmed in the Fisheries
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case. The court held that “the director’s duty is to observe utmost good faith towards the
company, and in discharging that duty he is required to exercise an independent judgement and
to take decisions according to the best interests of the company as his principal. He may in fact
be representing the interests of the person nominating him, and he may even be the servant or
agent of that person, but, in carrying out his duties and functions as a director, he is in law
obliged to serve the interests of the company to the exclusion of any such nominator, employer
or principal. He cannot therefore fetter his vote as a director, save in so far as there may be a
contract for the board to vote in that way in the interests of the company, and, as a director, he
cannot be subject to the control of any employer or principal other than the company.”
Duty to act independently
12. A board member has the duty to exercise independent and unfettered discretion. Although
issues will often arise for decisions in which a board member will necessarily have to rely on the
knowledge and experience of others, a board member must exercise independent discretion in
the sense that, having listened to what his/her colleagues have to say, the member must bring
his/her own mind to bear on the issue, using such skill and judgement as he/she may possess.
The King II Report also describes

13. Although a board member may lawfully be elected independence as one of the key
by an Executive Authority to represent that characteristics of good corporate
Executive Authority’s interests, and may even be a governance: “Independence is the extent
to which mechanisms have been put in
servant or agent of that Executive Authority, the place to minimise or avoid potential
member must exercise independent discretion when conflicts of interests that may exist, such
engaging in board affairs. The board member should as dominance by a strong chief executive
not remain inactive when the interests of the or large shareholder. These mechanisms
range from the composition of the board,
institution conflict with the interests of that Executive to appointments in committees of the
Authority. A board member must at all times board, and of external parties such as the
exercise independent judgement and act positively auditors. The decisions made, and internal
to protect the interests of the institution. processes established, should be
objective and not allow for undue
influences.”
14. The independence of board members is similar to
that of external auditors. Board members do not owe a fiduciary duty towards individual
Executive Authorities/shareholders. In addition, termination of board membership does not
necessarily immediately or automatically release a board member from all such fiduciary duties,
nor can a board member avoid personal liability or accountability by resigning from the board.
Companies Act, 1973
15. In the case of government enterprises that are established as companies, the Companies Act
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specifies the fiduciary relationship of board members vis-a-vis the company. From the time of
his/her appointment, the board member (director) stands individually in a fiduciary relationship
with the company. This fiduciary relationship arises from the purpose for which a member is
entrusted with his/her office and for which he/she and co-members are entrusted with their
powers to manage the affairs of the company. It seeks to ensure that office is used and those
6
Fisheries Development Corp of SA v AWJ Investments Pty Ltd 1980 (4) SA 156 (W).
7
LAWSA, Vol 4, Par 116 at 178.
7
powers are exercised for, and only for, the benefit of the company as a whole, and never for
personal advantage; and that members act honestly in their dealings with fellow members and
with shareholders. There are four fundamental fiduciary duties, namely board members may
not –
(a) exceed their powers provided for in law, in legislation or by the articles of association
if the public institution is a company;
(b) exercise their powers for improper or collateral purposes (determined objectively);
(c) fetter their discretion; or
(d) place themselves in a position of conflict as regards their duties to the company. This
last duty includes the duties not to –
(i) act for the company in a matter in which they or any other person or
institution significantly associated with the board members has an interest;
(ii) deal with the company otherwise than openly and in good faith; and
(iii) abuse confidential information.
16. The Companies Act codified the common law position concerning the following duties of
directors:
(a) Directors have a duty to disclose any interest in contracts and must declare such
8
interest to the company. This promotes the fiduciary duty of directors to act in the
best interest of the company and not to appropriate business opportunities of the
company to further their private interest. Directors must refrain from doing anything
that would harm the company and must display unselfish loyalty to the company.
(b) Directors may be disqualified from serving as directors or in the management or any
other position of trust due to theft, fraud, forgery, uttering a forged document,
corruption, whether in terms of common law or not or due to any other act involving
dishonesty. The director will be guilty of an offence and liable on conviction to the
9
penalties prescribed by law for perjury. If the director makes a statement which is
false in any material respect, knowing it to be false, he/she will also be guilty of an
10
offence, namely falsification of books and records in person.
(c) In addition, directors have the duty not to use the controlling power of the holding
company to destroy the subsidiary’s ability to act in its own best interest.
Implications for office bearers
17. Board members’ liability is unlimited and they are jointly and severally liable, both in terms of the
PFMA and the Companies Act.
18. The legal consequences of a breach of a fiduciary duty may include –

(a) that the decision is void or voidable;
(b) personal liability for damages; or
(c) personal criminal liability.
19. The Companies Act states that the fiduciary duties of a director may not be limited or excluded
in the articles, by contract or in any other way. Any provision which indemnifies a board member
11
or exempts him/her from liability for breach of a fiduciary duty will be void.
8
Section 234.
9
Section 249.
10
Section 250.
11
Section 247(1).
8
20. The risk posed to an Executive Authority/shareholder, should the lines of independence
between the Executive Authority/shareholder and the board be compromised, is considerable.
The shareholder may no longer have a limited liability (equal to his/her investment), but may
become severally and jointly liable, the same as the board members. In practice, this means
where a board member takes a decision under the influence or on instruction of someone else
(eg Cabinet or an Executive Authority), that body (Cabinet as represented by the President or
12
the Executive Authority) could be held to be a “deemed” or “shadow” board member and may
be held accountable and liable – jointly, separately and in his/her official and personal
13
capacity.
21. It is a challenge for public service officials appointed as board members to remain independent
in view of their official duties to their employers and Executive Authorities. Although these
officials have been appointed ex officio, they are still fully liable as board members.
22. Another challenge to manage carefully is that the other board members (non-public service
officials) would probably seek “guidance” from the Executive Authority’s representative or
nominee, potentially compromising the independence of that board. In this regard, the Protocol
states that the board should monitor and manage potential conflicts of interests of management,
14
board members and the shareholder.
12
A “shadow” board member means the manipulative or controlling hand behind board members.
13
See S v Shaban 1965 (4) SA 646 (W); S v De Jager 1965 (2) SA 616 (A).
14
See paragraph 5.1.1.7 of the Protocol.
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Chapter Three – Qualifying Principles
CHAPTER THREE – QUALIFYING PRINCIPLES
1. This section specifies principles in terms of which office bearers qualify to serve on the board of
a state or state controlled institution.
Members of the National Assembly and members of a provincial legislature
2. A member of the National Assembly or a member of a provincial legislature may not

serve on the board of any state or state controlled institution (government component,
statutory council, public entity or government enterprise).
3. A member of the National Assembly or a member of a provincial legislature, who is not a

member of the Cabinet, a deputy minister or a member of a provincial Executive Council,
is eligible to serve on the board of a public interest institution provided that –
(a) the enabling Act of the institution or any other Act does not expressly disqualify
the member; and
(b) the appointment of the member to the board does not create a conflict of interest in
fulfilling the National Assembly or provincial legislature's role of overseeing the
institution and/or the powers and functions set out in the Constitution.
4. Parliament ultimately oversees organs of state, and the appointment of members of Parliament
to boards could create a conflict of interest when members are fulfilling their oversight role
(individually and collectively). Board members, on the other hand, have a duty to participate in
and take decisions in the best interest of the institution. Boards are also accountable to the
responsible Executive Authority and ultimately Parliament as regards the execution of their
mandate and performance.
Members of the Cabinet, deputy ministers and members of provincial

Executive Councils
5. A member of the Cabinet or a member of a provincial Executive Council may not serve on
the board of any state or state controlled institution (government component, statutory
council, public entity or government enterprise) or public interest institution.
6. A deputy minister is eligible to serve on the board of a state or state controlled institution
or public interest institution provided that –
(a) the enabling Act of the institution or any other Act expressly provides for the
appointment of the deputy minister; and
(b) the appointment of the deputy minister to the board does not create a conflict of
interest in fulfilling the National Assembly’s role of overseeing the institution,
and/or powers and functions set out in the Constitution.
10
15
7. The Constitution also prohibits members of Cabinet, deputy ministers and members of the
Executive Council (MECs) of a province from –
(a) undertaking any other paid work; and
(b) acting in a way that is inconsistent with their office (eg Cabinet’s decisions), or
expose them to any situation involving the risk of a conflict between their official
responsibilities and private interests.
8. Although deputy ministers are not members of the Cabinet, the rules and principles applicable to
16
Executive Authorities who are members of Parliament also apply to them.
9. Members of Cabinet and MECs of a province are accountable collectively and individually to the
17
relevant legislature for the exercise of their powers and the performance of their functions.
Individual accountability entails a duty to –
(a) explain to the relevant legislature how the powers and duties under his/her control
have been exercised and performed. The Constitution requires that members of
Cabinet and MECs provide the relevant legislature with full and regular reports
18
concerning matters under their control;
(b) acknowledge that a mistake has been made and to promise to rectify the matter; and
(c) resign if personal responsibility has been accepted.
10. Collective accountability means that members of the Cabinet and MECs act in unison as far as
the outside world is concerned and carry joint responsibility before the relevant legislature for
the way in which each member exercises and performs his/her powers and duties. This implies
that individual members of Cabinet or individual MECs who disagree with a particular decision
19
must either support it or resign. Therefore, although the Cabinet member or MEC is
individually responsible for overseeing a state or state controlled institution, the other members
of Cabinet or of the Executive Council, as the case may be, are collectively responsible for the
way in which the said Cabinet member or MEC exercised and performed his/her powers and
duties in respect of the state or state controlled institution. If an Executive Authority serves on a
board, the Executive Authority would also face conflicting interests, as decisions taken at board
level may have to be ratified by Cabinet.
11. In view of the above discussion and the fiduciary and other duties of board members of state or
state controlled institutions discussed in chapter 2, it is advised that the serving of –
(a) an Executive Authority on a board for which he/she is the Executive Authority
appears untenable, not only in view of his/her membership of Cabinet but also
because of his/her functions as Executive Authority in terms of the PFMA;
(b) an Executive Authority on a board for which he/she is not the Executive Authority
appears untenable because of his/her membership of Cabinet; and
(c) a deputy minister on a board also appears untenable because of his/her membership
of the Executive and his/her being bound as such by Cabinet’s decisions unless the
enabling Act for the institution or any other Act expressly provides for the appointment
of the Deputy Minister.
15
Section 96(2).
16
Executive Members’ Ethics Act, 1998 (Act 82 of 1998).
17
Sections 92(2) and 133(2) of the Constitution.
18
Sections 92(3)(b) and 133(3)(b) of the Constitution.
19 rd
Rautenbach & Malherbe Constitutional Law 3 ed p 201-2.
11
Members of municipal councils
12. A member of a municipal council is eligible to serve on the board of a national and
provincial state or state controlled institution provided that –
(a) the enabling Act of the institution or any other Act does not expressly disqualify
the member;
(b) the appointment to the board does not create conflict between the official
responsibilities as a councillor and the board’s interest;
(c) the municipal council concurs with the appointment of the member as a board
member.
13. The Local Government Municipal Systems Act specifies in Schedule 1, Code of Conduct for
20
Councillors, that a full-time councillor may not undertake any other paid work, except with the
consent of the municipal council, which consent may not be unreasonably withheld.
14. The Municipal Systems Amendment Act, 2003, disqualifies a person from being a director of a
21
municipal entity if he/she holds office as a councillor of any municipality.
15. Apart from the requirement for a municipal council to consent to other paid work by councillors
and the disqualification of councillors in some instances as set out in the enabling Acts of state
and state controlled institutions, there are no other legislative provisions that preclude
councillors from serving on the board of a provincial or national state or state controlled
institution.
Special advisers
16. A special adviser to an Executive Authority may not serve on the board of any state or
state controlled institution.
17. Deviation. A deviation from the principle in paragraph 16 may be granted provided that –
(a) the Executive Authority responsible for the institution submits a fully substantiated
request for a deviation to the Minister for the Public Service and Administration;
(b) the Executive Authorities mentioned in (a) after consultation recommend the
appointment to Cabinet; and
22
(c) Cabinet approves the appointment to the board.
18. The PSA provides that special advisers may be appointed to –

(a) advise an Executive Authority on the exercise or performance of the Executive
Authority's powers and duties;
(b) advise an Executive Authority on the development of policy that will promote the
department's objectives; or
(c) perform such other tasks as may be appropriate in respect of the exercise or
23
performance of the Executive Authority's powers and duties.
20
Section 8 of Schedule 1.
21
Section 93F.
22
See paragraph 9 of the Dispensation for the Appointment and Remuneration of Persons (Special
Advisers) appointed to Executive Authorities on Ground of Policy Considerations.
23
Section 12A(1).
12
19. Since a special adviser would act in one of the ways in 18.(a) to (c) above, there is no
relationship of authority between the special adviser and the head of a department. A special
adviser must direct his/her inputs to the Executive Authority and refrain from interfering in the
administration and management of the department, which in law is the function and
responsibility of the head of the department. Therefore, a special adviser may not be tasked to
perform any executive function which vests by law in the head of the department. As regards the
responsibility of the head of the department to assist the Executive Authority in exercising
his/her oversight responsibility over state or state controlled institutions associated with the
Executive Authority’s portfolio, a potential conflict of interest may arise if the special adviser is a
member of a board of such an institution.
20. Special advisers must be impartial and perform their duties objectively without fear, favour or
prejudice. When a member of Cabinet is to participate in decisions of Cabinet regarding a state
or state controlled institution, advice from his/her special adviser who serves on the board of
that institution will raise questions about the objectivity of the advice and/or a possible conflict of
interest.
21. The serving of special advisers on statutory boards or councils (or similar bodies) for which the
Executive Authority is individually or collectively accountable would be inappropriate since it
could give rise to a direct or indirect conflict of interest or advice which could be biased or
perceived to be biased. Therefore, if a person who is to be appointed as a special adviser
serves on a statutory board or council (or similar body) for which the relevant Executive
Authority is individually or collectively accountable, his/her appointment to such board or council
must be terminated with effect from his/her date of appointment as special adviser to the
relevant Executive Authority.
22. A request for deviating from the principle set out in paragraph 17 must be fully substantiated and
should include the nature and period of appointment, the person’s competencies (skills,
expertise, experience, and knowledge), and the benefits and risks (eg potential conflict of
interest) of making such an appointment.
Heads of departments
23. A head of department may not serve on the board of a state or state controlled institution
for which his/her department is the parent department and in respect of which his/her
Executive Authority has an oversight responsibility.
(a) the head of department is appointed in exceptional cases for a specific period,
preferably not more than one year, to promote a government objective, for example
to normalise the governance of a dysfunctional institution and/or to advise on the
management of complex and diverse interests of role players;
(b) the head of department is preferably not the chairperson, in order to provide for
objective decision-making;
(c) the Executive Authority responsible for the institution recommends the
appointment; and
(d) Cabinet approves the appointment to the board.
13
25. A head of a department is eligible to serve on the board of a state or state controlled
institution, except a government enterprise, falling under another department or Ministry,
provided that –
(a) the special circumstances set out in paragraph 38 are fully substantiated and
demonstrate that the appointment is justified;
(b) the Executive Authority to whom the head of department reports and the Executive
Authority responsible for the institution concur with the appointment; and
(c) Cabinet approves the appointment.
26. A head of a department is not eligible to be a board member of a state or state controlled
institution –
(a) for which his/her department is the parent department; and
(b) if the same Executive Authority is both the responsible Executive Authority for the
department and the institution.
27. A potential conflict of interest may occur due to the supporting role of a head of a department
towards his/her Executive Authority in overseeing a state or state controlled institution. In this
regard, decisions taken at board level may have to be ratified by the Executive Authority or
Cabinet.
28. A head of a department as the accounting officer of a department is also responsible for
ensuring compliance with any prescribed conditions if the department gives financial assistance
24
to any entity (departments make transfer payments to state controlled institutions). A head of a
department cannot be accountable for ensuring the effective and efficient utilisation of
transferred funds or financial assistance rendered to a state controlled institution and also be
accountable in terms of his/her membership of the board of the same institution. It would be
inappropriate for a head of a department to be both referee and player.
29. A request for deviating from the principle set out in paragraph 24 must be fully substantiated and
include the nature and period of appointment and indicate the person’s competencies (skills,
expertise, experience, and knowledge), and the benefits and risks (eg potential conflicts of
interest) of making such an appointment.
Public service officials
Government enterprises
30. A public service official, including a head of a department, may not serve on the board of
a government enterprise.
(b) the Executive Authority responsible for the institution recommends the
appointment; and
(c) Cabinet approves the appointment to the board.
24
Sections 38(1)(b), (d), (i) to (l) of the PFMA.
14
32. As an alternative to serving on the board of a government enterprise, public service

officials may participate in key committees (eg the audit committee) of a government
enterprise by agreement between the Executive Authority responsible for the relevant
enterprise and the board of that enterprise.
State and state controlled institutions
33. A public service official is eligible to serve on a board of a state or state controlled
institution, except a government enterprise, provided that –
demonstrate that the appointment is justified; and
(b) the official does not perform dual responsibilities by assisting the Executive
Authority in overseeing that institution.
Public interest institutions
34. A public service official is eligible to serve on a board of a public interest institution,
provided that the enabling Act of the institution or any other Act expressly provides for
the ex officio appointment of the official.
Disclosing interests
35. A public service official appointed as a board member must declare to the state or state
controlled institution his/her financial interests in terms of the Framework for disclosing
interests set out in Annexure 3.
36. Public service officials are discouraged from serving on the boards of government enterprises in
view of the personal risks to the officials in exercising their fiduciary duties as set out in chapter
2.
37. An official's first duty as an employee is towards the Executive Authority and towards the current
government through the head of the department. The principal duty of a board member of a
state or state controlled institution, on the other hand, is to work towards achieving the statutory
interests of the institution. There is a potential conflict of interest when an official serves as a
board member.
Special circumstances
38. Appointing an official to the board of a state or state controlled institution must only be allowed
where special circumstances justify the appointment. The special circumstances are as follows:
(a) Improving board performance – There are circumstances where appointing a particular
official to a board may be critical for board performance. These circumstances could be
described as ones where there is a potential risk of not achieving the board's goals or
properly carrying out the board's basic functions without direct input from a particular
official. This might be where:
(i) There is a confluence of person and role
(ii) An Executive Authority needs a specific task completed
(iii) A particular official has experience in completing these tasks in a public sector
environment
15
(b) Capacity building – Building the capacity of

boards through the participation of historically Note this
disadvantaged individuals (HDI) and achieving In accordance with the policy on
affirmative action in 1998, the Minister
broad representation of the South African people for the Public Service and
according to race, gender, and disability. If it can Administration has set the following
be shown that the public official, in addition to public service-wide targets:
being an HDI, is also appointed based on any one (a) 75% representation of Black people
of the other criteria (improving board performance, (Africans, Coloureds and Indians)
in management
ex officio appointment, or to capitalise on
experience), then the person may be a fully (b) 50% women in management
functioning board member. However, if the sole (c) 2% disabled people in the public
service
reason for appointment is the fact that the official
is an HDI, he/she should be appointed only as an observer.
(c) Serve in private capacity – Officials may serve on boards in their private capacity,
provided the Executive Authority responsible for the institution grants permission in terms
of section 30 of the PSA if remunerated work is involved. Such official has the same
responsibilities and duties as any other board member and does not represent the views
of his/her department or of the current government. These officials are on the board for
their competencies (skills, expertise, experience, and knowledge) and contribute as
private individuals.
(d) Ex officio appointment
An official is appointed in an ex officio capacity by virtue of his/her position/office,
provided that –
(i) the enabling legislation for the institution expressly requires the ex officio appointment
of a public service official to the board of the institution;
(ii) officials that are ex officio members of boards may not be appointed as chairpersons.
(e) Capitalising on experience – As senior officials head towards the end of their public
service careers, they may be considered for appointment to boards.
(f) Observers – Officials may be appointed as observers to boards. Although they have no
official status (eg voting rights) at board meetings, they can explain matters such as
government or departmental policy and direction.
It is best practice that departments
report in their annual reports on the
appointment of officials to the boards of
Managing a public official appointment state or state controlled institutions.
39. The special circumstances set out in paragraph 38 must be outlined in a submission to the
Executive Authority responsible for the institution, indicating the official's competencies (skills,
expertise, experience, and knowledge), nature of appointment, and the benefits and risks of
making such an appointment.
40. Officials are subject to the same rules as any other person nominated for membership of a
board. The appointment should be appropriate to the role and should follow the appointment
process set out in this Handbook.
Relocation or secondment to another department
41. When a public service official who serves on a board of a state or state controlled
institution is transferred/promoted/seconded to another department, the Executive
Authority responsible for the relevant institution may:
(a) Appoint another official to the board to replace the official
(b) After consultation with the Executive Authority of the recipient department and the
official retain the services of the official on the board of the relevant institution.
16
Limiting multiple memberships of boards
42. The ability of candidates to serve on a number of boards depends on the circumstances and
competencies of the candidate. The reason for limiting multiple membership is to ensure that
members are able to pay proper attention to the affairs of the institutions on whose boards they
serve, to broaden participation in public sector governance, to avoid tokenism, to minimise
opportunities for corruption and to minimise conflicts of interest.
43. The following principles are provided to limit multiple memberships of boards:
(a) An individual may not serve on more than three boards, whether private or public.
(b) An individual may not be chairperson of more than one board at any time.
(c) An individual serving on the board of a regulatory entity may not simultaneously
serve on the board of a government enterprise that is regulated by the particular
regulatory entity.
(d) Retirees may not serve on more than five boards.
44. A selection committee must determine the capacity, availability and competencies of
candidates to meaningfully contribute their time to the affairs of the board, particularly
where candidates serve on a number of boards.
45. Deviation. The Executive Authority responsible for the institution may approve a
deviation from the principles set out in paragraph 43 provided that, on the
recommendation of the selection committee, there are justifiable reasons for exceeding
the limit for multiple memberships. The selection committee must record the reasons for
its recommendation.
Remuneration and reimbursement for expenditure
Public service officials
46. A public service official may not receive any remuneration for ex officio board activities
pertaining to the preparation for board meetings, travelling time to and from board
meetings, and participation in board meetings, whether inside or outside normal working
hours.
47. The ex officio board activities that a public service official performs to prepare for board
meetings, travelling time to and from board meetings, and participating in board
meetings, whether inside or outside normal working hours –
(a) are regarded as official duty; and
(b) do not require the official to take leave to attend to such duties.
48. The PSA stipulates that –

(a) every officer and employee must place all his/her time at the disposal of the State;
(b) no officer or employee may perform remunerative work beyond his/her employment in
the public service without permission granted by the Executive Authority responsible for
the institution; and
17
(c) no officer or employee may claim any additional remuneration in respect of any official
duty or work which he/she performs voluntarily or is required by a competent authority
25
to perform.
49. Officials appointed to boards normally belong to the senior management of the public service.
No provision is made in the PSA or Public Service Regulations for overtime for this category of
officials.
50. However, in those cases where officials who do not belong to the senior management are
appointed to boards, the Executive Authority may remunerate such officials for overtime work
with due consideration of the Public Service Regulations, collective agreements and conditions
26
of employment legislation.
51. Any direct cost, such as travel, accommodation and meals, should be recovered from the
state or state controlled institution of which a public service official serves as a board
member.
52. Departments must ensure that –

(a) such claims are submitted to the board under cover of a certificate by the official,
clearly stating that no other claim for that expenditure or part thereof will be claimed
or paid by another person or institution; and
(b) boards submit a regular (monthly or quarterly) statement to the department that
clearly stipulates what payments were made in respect of board member activities by
public service officials.
State and state controlled institutions
53. The relevant Executive Authority determines, after consultation with the Minister for the Public
Service and Administration, the remuneration of advisory boards of government components
listed in Schedule 3 of the PSA.
54. The relevant Executive Authority determines the remuneration of members of statutory councils
in terms of the enabling Acts of these institutions. This could involve consultation with the
Minister of Finance or the Minister for the Public Service if provision is made in the enabling Act
for such consultation.
55. The National Treasury is the custodian of the system of Service Benefit Packages for Office-
Bearers of Certain Statutory and Other Institutions. An interdepartmental evaluation committee,
representing the National Treasury and the Department of Public Service and Administration,
makes recommendations to the Minister of Finance and the relevant Executive Authority on the
remuneration of board members for newly established non-business public entities listed in
Schedule 3A of the PFMA. Further information on the Service Benefit Packages for Office-
Bearers may be obtained from the Public Entities Governance Unit in the National Treasury.
56. Government enterprises conduct business activities and they are expected to compete with the
private sector for market share and scarce competencies (skills, expertise, experience, and
knowledge). The Department of Public Enterprises provides remuneration guidelines for
government enterprises.
25
Section 30.
26
See Part V of Chapter 1, regulation D.2 of the Public Service Regulations; Public Service Co-
ordinating Bargaining Council Resolution 3 of 1999; and Basic Conditions of Employment Act, 1997.
18
Municipal councils
57. The Local Government Municipal Systems Act, 2000 stipulates in Schedule 1, Code of Conduct
27
for Councillors, that full-time councillors may not undertake any other paid work, except with
the consent of the municipal council, which may not be unreasonably withheld.
58. The Public Office-Bearers Act,1998 provides that a member of a municipal council is, in addition
to his/her salary as a member of the municipal council to which he/she has been directly
elected, entitled to an allowance in respect of his/her membership of any other municipal
council. Such allowance must be determined by the other municipal council by resolution, with a
supporting vote of the majority of its members, in consultation with the member of the Executive
28
Council responsible for local government in the province concerned.
59. The Public Office-Bearers Act also provides that the salary and allowances of a member of a
municipal council are determined by that municipal council by resolution, with a supporting vote
of a majority of its members, in consultation with the member of the Executive Council
29
responsible for local government in the province concerned. For this purpose, the upper limit
of salaries and allowances of the different members of municipal councils as determined from
time to time should be taken into account.
60. The principle of payment for other paid work undertaken by councillors is recognised in
legislation. Municipal councillors are not precluded from receiving remuneration for serving on
the board of a provincial or national state or state controlled institution, provided that the
municipal council consents that the relevant councillor undertakes other paid work.
27
Section 8 of Schedule 1.
28
Section 7(2).
29
Section 7(3).
19
Chapter Four – Roles and Responsibilities
CHAPTER FOUR – ROLES AND RESPONSIBILITIES
1. Every role player who is involved in an appointment process should have a clear understanding
of the extent of his/her roles and responsibilities. A brief description of the role players and their
responsibilities follows.
Parliament
2. Parliament or committees of Parliament nominate, recommend, approve, or appoint

board members in terms of applicable legislation.
3. An Executive Authority may request Parliament to make recommendations on the

suitability of candidates to serve on a board. The Executive Authority must refer the
recommended candidates to Cabinet for approval.
4. Parliamentary structures and processes in some instances provide for the appointment of
persons to boards of state or state controlled institutions and constitutional institutions (eg Public
Protector and Public Service Commission). Such appointments normally provide for –
(a) nomination by a committee of the National Assembly that is proportionally composed
of members of all parties represented in the Assembly (a panel sometimes submits a
list of recommended candidates to the committee); and
(b) recommendation or approval by the Assembly by a resolution adopted by a majority
of its members.
5. Apart from the qualifying principles set out in chapter 3, this Handbook does not further
elucidate Parliamentary structures or processes regarding the appointment of persons to
boards. However, departments should consider the principles and best practices in the
Handbook when they draft legislation that requires the appointment of board members through
Parliamentary structures and processes.
Executive acts of the President
6. The President, as Head of State or as Head of the National Executive, approves the
appointment of persons to boards of state or state controlled institutions in terms of
applicable legislation.
7. Chapter 2 of the Handbook on Executive Acts of the President of the Republic of South Africa,
published by the Office of the President, specifies the powers and functions of the President to
make appointments that the Constitution or legislation requires the President to make as Head
of State or as Head of the National Executive. Therefore, the President acts in the following
manner:
(a) As Head of State, the President acts outside the normal executive function as a
symbol of the state. The President is not required to consult with or act together with
his/her Cabinet. This does not mean that the President acts freely in each case, and
the President may choose to act on the advice of an Executive Authority, Cabinet or
of Parliament.
(b) As Head of the National Executive, the President exercises executive authority over
the Republic “together with” the other members of the Cabinet.
20
Cabinet approval/consultation
8. The Executive Authority responsible for the state or state controlled institution must
recommend the following appointments to Cabinet for approval/consultation:
(a) Special advisers
(b) Heads of departments and deputy directors-general
(c) Public service officials, including heads of departments serving on the board of a
government enterprise
(d) If the appointment of persons (officials and private persons) will be so significant
that the collective accountability of the Executive Authority, in terms of the
Constitution, requires some form of approval of or consultation with the Cabinet
Criteria to decide on the significance of appointments
9. The collective interests of government are best served if the whole Cabinet participates in the
making of key appointments of a significant nature. The following criteria specify significant
appointments:
(a) Institutions for which the Constitution expressly requires the approval of or
consultation with Cabinet when board members are appointed
(b) Large institutions with more than 500 employees and/or operational budgets of more
than R200 million
(c) Institutions with responsibilities of a transversal nature in which several departments,
ministries or Cabinet clusters may have an interest (eg State Information Technology
Agency)
(d) Government enterprises with an asset base of more than R1 billion (eg Airports
Company)
(e) Institutions that predominantly perform functions of a regulatory or tribunal nature
(f) Institutions that, at the discretion of the Executive Authority responsible for the
institution, perform functions of a strategic nature, for example prominent or high-
impact government programmes
10. The Cabinet memoranda must outline the candidate’s competencies (skills, expertise,
experience, and knowledge), nature of the appointment, and the benefits and risks of making
such an appointment.
30
11. In addition, the Guide for the Drafting of Cabinet Memoranda under the heading “Memoranda
dealing with the appointment of Members of Boards” requires the following:
When submitting names for consideration for appointment to boards, councils or other relevant
institutions the race and gender of proposed appointees must be indicated and the curricula vitae must
be annexed to the memorandum. The memorandum should also indicate all other boards, councils or
similar institutions the candidates are currently serving on. In the event they are not serving on any, it
must also be indicated.
30
See paragraph 4.20.1 of the Guide for the Drafting of Cabinet Memoranda published by the
Cabinet Secretariat, September 2007.
21
The Executive Authority
12. The Executive Authority responsible for the state or state controlled institution may, on
recommendation of the head of the department, approve the appointment of –
(a) a public service official (who is not the head of a department or a deputy director-
general) to a board, except a government enterprise, provided that any special
circumstances set out in paragraph 38 of chapter 3 are fully substantiated and
(b) private persons if the appointment is not of a significant nature as set out in
paragraph 9, chapter 4; and
(c) persons whom the enabling Act of the institution requires the Executive Authority
to appoint.
13. The Executive Authority responsible for the state or state controlled institution may
approve a deviation to exceed the limit for multiple memberships of boards on the
recommendation of the selection committee if there are justifiable reasons for exceeding
the limit set out in paragraph 43, chapter 3.
14. The Executive Authority formally appoints board members.
15. It has become common practice to refer all appointments of persons to boards to the Cabinet.
This places an unnecessary administrative burden on Cabinet, particularly in those cases where
legislation specifically provides that the responsible Executive Authority may appoint board
members (that is, without the approval of Cabinet).
16. The Executive Authority is ultimately responsible for every appointment, including the extent to
which he/she wishes to be involved. In practice, the Executive Authority delegates the
appointment process to the department. In making the decision, the Executive Authority may
depend on advice and information provided by others, including Cabinet
decisions/recommendations, Executive Authorities, the chairperson of the board, staff,
departmental officials, community organisations and other outside sources. The formal
appointment process is set out in chapter 5.
The parent department
17. For those state or state controlled institutions falling under the portfolio of the Executive
Authority, the parent department is required to –
(a) maintain a consolidated succession management plan for board members;
(b) ensure that the chairperson of the board implements a succession management
plan for board members;
(c) ensure that the chairperson of the board implements an approved induction and
training programme for board members;
(d) maintain a database (Excel spreadsheet) of board member information in the
format provided in Annexure 1;
(e) provide the dpsa with updated board member information on an annual basis by 1
April of each year;
(f) implement the Framework for disclosing interests for existing and newly appointed
board and council members of state and state controlled institutions as set out in
Annexure 3;
(g) subject all short-listed candidates to pre-appointment suitability checks and/or
security clearance, as the case may be;
22
(h) report on the appointment of officials to the boards of state or state controlled
institutions in the annual report of the parent department; and
(i) manage the appointment process.
18. Departments must manage the appointment process. A parent department is responsible for
managing the appointment process on behalf of its Executive Authority. This should ensure that
the appointment practices in this Handbook are appropriately internalised and provide for
continuity and transparency.
19. Departments may use the services of outside companies (selection consultants). A parent
department may, in accordance with the procedures set out in this Handbook and the relevant
procurement policies, make use of an outside company or selection consultant to assist with
part or all of the nomination and selection processes. Expenditure incurred would be for the
account of the relevant department.
20. Regardless of whether officials of the parent department or an outside company arranges an
appointment, the same standards of information gathering and scrutiny are required before an
Executive Authority makes a decision on the appointment. All appointments must be made with
due consideration of the appointment principles set out in paragraph 1, chapter 5.
21. Departments must be clear about the extent of their role. All those involved in a particular
appointment process must be absolutely clear about which parts of the process they are
responsible for and who has overall responsibility for the process. They must also be clear
about the extent to which the Executive Authority wishes to be personally informed and
involved.
The chairperson of the board
22. An Executive Authority or the parent department may consult the chairperson of a board
on the nomination and selection of board members.
Note the following best practice

23. An Executive Authority or the parent
1. The chairperson of a board must actively participate in
department may consult with the the nomination and selection of board members .31
chairperson of a board regarding the 2. The chairperson’s responsibilities should be separate
nomination and selection of board from those of the chief executive officer.
members and for purposes of 3. Where this separation of roles proves to be
succession management. This role of the impracticable, the board must appoint an independent,
chairperson will be influenced by matters non-executive director as a deputy chairperson to
such as requirements specified in the ensure that no individual has unfettered decision-
making powers.32
enabling legislation, size and/or
particular circumstances of the
institution.
24. The chairperson or company secretary oversees a formal succession plan for board
members.
31
See King Code; Section 1; Chapter 2 – Role and functions of the chairperson.
32
See paragraph 5.1.2.1 of the Protocol – Role of the chairperson.
23
25. The chairperson of a board or the company secretary (if one has been appointed) must oversee
33
a formal succession plan for the board and ensure that the succession plan is included in the
overall succession plan for which the parent department is responsible. The chairperson should
be assisted with this task by the company secretary, if one has been appointed, or the chief
executive officer.
26. The chairperson arranges for new members to be properly inducted.
27. The chairperson of a board must arrange for new board members to be properly inducted and
34
orientated. The chairperson should be assisted with this task by the company secretary, if one
35
has been appointed, or the chief executive officer.
The candidate
28. Candidates applying for a position on a board must provide personal information and
disclose their interests.
29. The candidate has the task of providing those involved in the appointment process with all
relevant personal information – competencies (skills, expertise, experience, and knowledge),
qualifications, availability, possible conflicts of interest, et cetera. In addition, the candidate
should be provided with information about the organisation, including its functions and areas of
operation, well before the appointment is finalised.
30. Appointees should be fully aware of the expectations of them before accepting the position. The
appointee must accept the appointment on the basis of an informed appreciation of the
competencies (skills, expertise, experience, and knowledge) and commitment required to be
effective.
The Department of Public Enterprises
31. The Department of Public Enterprises maintains a Directors’ Database for State Owned
Enterprises reporting to the department.
32. Board member information should be integrated but managed on a decentralised basis. The
integrated database will be decentralised to provide that –
(a) the dpe maintains a consolidated Directors’ Database in respect of state owned
enterprises reporting to it;
(b) the dpsa maintains a consolidated database of board member information in respect of all
state and state controlled institutions, excluding state owned enterprises;
33. These information systems will be made available to all role players to assist them with effective
succession management of board members.
33
34
35
See King Code; Section 1; Chapter 5 – Director selection and development.
24
The Department of Public Service and Administration
34. The Department of Public Service and Administration must –

(a) maintain a consolidated database of board member information in respect of all
state and state controlled institutions, excluding state owned enterprises; and
(b) advise the Minister for the Public Service and Administration on the overall
administration and implementation of the Handbook to promote uniformity in the
appointment of board members.
25
Chapter Five – Appointment Process
CHAPTER FIVE – APPOINTMENT PROCESS
Appointment principles
1. The following principles must be applied when appointing persons to boards:

(a) Merit based – Appointments are governed by the overriding principle of selection
based on merit, in other words an objective assessment of the fit between the
competencies (skills, expertise, experience, and knowledge) and qualifications of the
prospective candidate and the needs of the institution.
(b) Transparent – The appointment process and phases are standardised, objective,
clear, understandable, and transparent.
(c) Representative – Appointed board members should broadly reflect the
demographics of South Africa. The appointment process should take into
consideration employment equity legislation and policies to achieve broad
representation of the South African population according to race, gender, and
disability.
(d) Consistent – The appointment process should be applied consistently in all cases.
(e) Probity – Board members must be committed to the values and principles governing
36
public administration and perform their duties with integrity.
Pre-appointment systems
2. Before a specific vacancy arises, it would be sensible to be aware of the various facets of an
appointment process. Practices such as advertising for candidates (in what circumstances, in
which publications, how much lead time is needed), interviewing (determining the composition of
the interview panel, how to short-list), consultation (with whom, what are the protocols, who
should do it) and complying with legislative requirements (both general and institution specific)
can all be daunting when one is faced with the reality of running a board appointment process.
The broad process for appointing persons to boards of state or state controlled institutions is set
out in Annexure 2.
Departmental databases and succession management
3. Departments are required to:

(a) Maintain a database (Excel spreadsheet) of board member information for all
appointments to boards of state or state controlled institutions falling under the
portfolio of their Executive Authorities in the format set out in Annexure 1 of the
Handbook
(b) Provide the dpsa with updated board member information on an annual basis by 1
April of each year
36
The basic values and principles governing public administration are set out in section 195(1),
Chapter 10 of the Constitution, 1996.
26
4. The dpsa will consolidate the information for all state and state controlled institutions in order to
share information with all departments making board appointments. The member information
will provide Executive Authorities and departments with a good base for an effective succession
management plan – for example, who is up for reappointment to or retirement from the board
and when. The department should use the database information to flag impending
appointments, allowing it time to
activate the appointment process. Check list
Is there a database of board member information that
can be consulted?
5. For board member appointments, at Is there a process in place to alert the department to
least three to six months' leeway is upcoming board vacancies three to six months before
recommended between initiating the they are due to arise and nine to 12 months for board
chairs?
appointment process and the
Is there awareness of the relevant legislation
expected date of appointment,
applicable to appointments?
depending on consultation and
Is there a succession management plan in place?
interviewing. Nine to 12 months is
Are those responsible for running the appointment
desirable for a board chair. These are process familiar with the various ways of locating
suggested minimum times and may candidates, including public service databases of
vary from case to case. Succession potential board members and making use of outside
management, particularly for the companies (selection consultants)?
positions of chair and deputy chair, is
crucial to the continuing effective functioning of the board.
Generic role descriptions and board profile
6. Information contained on the department’s database can also be used to produce a generic role
description for board members and a board profile. This information is useful in a number of
respects:
(a) It allows candidates to have a greater understanding of what the job requires before
considering whether to apply for or accept a position.
(b) It provides a benchmark against which the attributes of the candidates can be
assessed.
(c) It allows stakeholders to nominate candidates who are well matched to the description.
(d) It assists in reinforcing the principle of appointment on merit.
Role description
7. The role description contains information of an individual nature, such as competencies (skills,
expertise, experience, and knowledge), qualifications and expectations related to the position
(eg minimum meeting attendance). The competencies that all board members require include
organisational leadership and an understanding of effective governance and strategy. The role
description should also detail the importance of personal integrity and the interest and
enthusiasm needed to contribute effectively to the institution's performance. The role of
chairperson of the board would have a separate and more elaborate description to reflect the
nature of the position.
8. When designing the role description, allow scope for

Check list
tailoring the document each time a vacancy arises.
Each vacancy or policy change that necessitates the Is there a standard role description
for the jobs of board members and
realignment of functions creates the opportunity to board chair?
reassess the needs of the board and the type of Is there a board profile that includes
person best suited to becoming a board member. a description of the role of the board
and the board’s legislative
framework?
9. The department should ensure that its Executive What are the requirements in terms
Authority approves the role description for each of enabling legislation, shareholder
appointment after it has been tailored to the vacancy. agreements and/or articles of
Developing a tailored role description is discussed on association?
27
page 27, chapter 5 of the Handbook.
Board profile
10. Those responsible for conducting the appointment process must be familiar with the statutory
requirements that govern appointments to boards.
11. The board profile would contain information such as the legislative framework in terms of which
37
the board and the institution operate, the role of the board, role of the chairperson, role of
executive and non-executive directors, committees of the board, relationship with the Executive
Authority and the parent department, other stakeholders and the unique nature of working in the
public sector.
Appointment process
12. Departments should customise the appointment processes to suit their specific
functional areas.
Identifying a vacancy Check list

Has the Executive Authority been
notified in writing of the impending
13. If there is an active succession management system vacancy?
in place, then identifying an impending vacancy will Has the department recommended
be a matter of course. It is crucial that the board is at on the appointment process,
'full strength' and is not left without sufficient including legislative and
administrative requirements, and
members for a quorum. Departments are required the nature of the role description?
to –
Have the respective roles of
(a) notify the Executive Authority of the vacancy Executive Authorities, departmental
in writing; officials and the Executive
Authority’s office staff been
(b) suggest a recommended appointment clarified?
process; Has the Executive Authority’s office
(c) provide a generic role description; and been briefed on the legal and
administrative requirements?
(d) advise on the basic legislative requirements At what stage(s) in the process does
associated with the appointment and the the Executive Authority need to be
process the department will follow unless involved?
explicitly directed otherwise by the Executive What are the requirements in terms
Authority. of enabling legislation, shareholder
agreements and/or articles of
association?
14. It may be prudent to give the Executive Authority
preliminary advice on the nature of the candidate required.
Developing a time line of the agreed procedure
15. After the Executive Authority has been consulted on the process for the appointment, a time line
should be developed that reflects events during the appointment process. Sufficient time should
be allowed for all aspects of the process. This is particularly important if seeking expressions of
interest or using outside companies (selection consultants).
16. A sensible way of producing the time line is to work backward from the time the appointee is to
take up office. Project management practices should be followed that allow for possible
contingencies (time).
37
See paragraph 5.1 of the Protocol – Board of Directors.
28
17. The time line should also provide for the Executive Authority’s input. The time needed for
consultation with role players and colleagues also needs to be taken into account.
18. Consider and record the following milestones when drawing up a time line:
(a) When the appointee is to take up the position Check list
(b) When the incumbent is due to step down from Has a time line for the appointment
the position process been produced?
(c) When the appointment particulars must be Does the time line include a closing
date for applications, selection date,
submitted to the relevant Cabinet Committee, date for submission to various role
the Cabinet or the President, if necessary players and appointment
(d) The date by which the Executive Authority commencement date (including the
potential for overlap)?
wishes to have a preferred candidate identified
Does the time line allow sufficient
(e) The closing date for applications time for consultation with caucus
(f) The requirements in terms of enabling and coalition partners?
legislation, shareholder agreements and/or
articles of association
Developing a tailored role description
19. Where a generic role description already exists, it simply needs to be tailored to the specific
requirements of the vacancy.
Legislative requirements
20. Check any legislative requirements for the composition of the board – has the vacancy made
the board deficient in its legal composition? For most boards, their enabling legislation stipulates
certain types of competencies, or a particular mix of people. If the vacancy creates a missing set
of competencies (skills, expertise, experience, and knowledge) or form of representation, the
role description must be drafted to reflect that gap so that the vacancy can be filled as required
by legislation and the board does not act outside its powers.
21. The role description will typically include, but is not limited to:
(a) A description of the roles in terms of the task requirements and the responsibilities
(b) The competencies the person will need to demonstrate for the successful performance
of the role
(c) Educational requirements (qualifications)
(d) Membership of professional bodies
(e) Level of competencies
(f) Reporting relationship
(g) Remuneration
Consultation on the role description
22. The Executive Authority may wish to bring in certain competencies (skills, expertise, experience,
and knowledge) or a new approach, and this should be reflected in the role description. Whether
the Executive Authority wishes to be consulted on the role description should have been
determined at the start of the process. It is desirable for the Executive Authority to have the
opportunity to discuss and endorse the role description.
23. It is good practice to consult the chairperson of the board on the role description. This could
provide a unique perspective on the functioning and competencies of the current board and
29
possible areas of strengthening that could be achieved by the new appointment. The chair is
responsible for the performance of the board as a unit and will have a view on the type of
person required to fill the vacancy.
24. Where appropriate, other stakeholders, such as participants in a particular Cabinet cluster,
industry groups, and voluntary organisations, may be able to offer their perspectives on what
may be missing from the board.
25. In some cases, legislation requires consultation with external stakeholders, although such
consultation usually deals with the person appointed rather than the role description.
Board composition
26. When considering the role description, take into account the current composition of the board,
the principle of appointing on merit and the need for an appropriately balanced board. What is
the balance of competencies (skills, expertise, experience, and knowledge)? How appropriate is
the balance of gender, representivity, disabled and community/industry representation?
27. The role description for board members should reflect the following preferences as set out in the
King Code and the Protocol, unless
enabling Acts state otherwise:
Check list
(a) The chairperson should preferably Does the tailored position description take into
be an independent, non-executive account legislative requirements for the
38
member. composition of the board?
(b) The board could comprise a mix of Was the Executive Authority consulted on the
role description?
executive, non-executive and
Was the board chair consulted to determine the
independent directors. Definitions of board’s perspective?
these portfolios are provided in the Were other stakeholders consulted as and
39
King Code and the Protocol. where appropriate?
(c) The board should comprise a Did the Executive Authority sign off the role
majority of non-executive directors. description?
Confusing the roles and Does the role description take into
responsibilities of board members consideration the guiding principles set out in
section 3, the need for a balance of gender,
and senior management can be ethnicity, and community representation, while
avoided if executive directors are appointing on merit?
not appointed. Was the correct preliminary remuneration level
(d) Member appointments should be in set?
writing and limited to a maximum of What are the requirements in terms of enabling
legislation, shareholder agreements and/or
three to five years. articles of association?
28. Obtain the approval of the Executive Authority to formalise the role description.
Preliminary remuneration
29. The preliminary remuneration to which the board member will be entitled should be determined
at this stage – see chapter 3.
Identifying candidates
30. There are a number of ways to source candidates. They range from consulting departmental
databases (discussed earlier), advertising in the media and head-hunting, to using referrals and
38
See paragraph 5.1.2.1 of the Protocol – Role of the Chairperson.
39
See paragraph 5.1.5 of the Protocol – Role of Executive and Non-executive Directors.
30
recruitment agencies. A preliminary selection of methods should be made when the time line for
the appointment process is being developed. When developing the time line, seek clarification
from the Executive Authority about when the Executive Authority wishes the candidate to be
contacted. It is possible that the Executive Authority may wish to consider the candidate before
he/she is contacted about the position.
31. Sources of identifying candidates include –

(a) seeking declarations of interest via public advertising;
(b) using nominations provided by the public;
(c) consulting with the Directors-General Cluster, the Executive Authority and his/her
Cabinet colleagues;
(d) consulting with the board, in particular with the chair;
(e) consulting with interested parties, sectoral groups and other stakeholders;
(f) consulting with the parent department;
(g) using outside companies or selection consultants;
(h) using departmental databases, the Directors’ Database of the Department of Public
Enterprises and the Department of Public Service and Administration as discussed
earlier;
(i) using a nomination committee as discussed later in the section dealing with “Short-
listing candidates”; and
(j) using a nomination committee that was established as a committee of a board.
Check list
32. An appointment process that seeks candidates from a Have all sources of identifying
number of different sources can identify candidates candidates been explored?
who might not have otherwise been considered. A Have applications been sought by
selective approach to each vacancy would be best – using available databases,
advertising for expressions of
no vacancy will require all of the methods suggested. interest, consulting with Executive
An appointment to the chair of a significant or large Authorities, consulting with the
institution may require an entirely different process board and board chair, consulting
from an appointment to the board of a significantly with sectoral groups, consulting
within the parent department,
smaller organisation. The Executive Authority will have consulting with the nomination
outlined his/her preferences at the beginning of the committee or using outside
process. Board profiles and tailored role descriptions companies and selection
should be used to identify and provide information to consultants?
candidates. Have the board profile and tailored
role descriptions been used to
provide information to prospective
33. Those who conduct the appointment process need to candidates and in advertisements
for potential candidates?
be aware of the legal requirements governing personal
information set out in the Access to Information Act (Act No 2 of 2000) with respect to obtaining,
holding and protecting the privacy of such information.
Framework for disclosing interests
34. Along with information on competencies (skills, expertise, experience, and knowledge) and
qualifications, candidates should be asked to consider whether there is any impediment that
may preclude them from office.
35. Those conducting the appointment process must elicit all relevant information from candidates
regarding any interests or potential conflicts of interest. To assess conflicts effectively, those
involved must understand both the organisation’s functions and the statutory framework in terms
of which it operates.
36. Candidates must consider whether there is anything in their personal histories that may make
their candidacy for the board inappropriate. This could be described to candidates as a test of
31
probity, and is necessary to save the government and the board potential future
embarrassment.
37. In view of the rights to privacy set out in the Constitution, the Framework for disclosing interests
of serving board members and candidates can only be applied if members voluntary declare
their interests. There is currently no legislation in terms of which the framework can be regulated
for private persons as is required in terms of section 36 of the Bill of Rights. This framework is
based on the system that is prescribed for officials in the senior management service of the
public service to disclose their interests.
38. Executive Authorities and their departments are encouraged to implement the
Framework for disclosing interests for existing and newly appointed board and council
members of state and state controlled institutions as set out in Annexure 3 by –
(a) encouraging serving members to voluntarily declare their interests, annually
before the start of the financial year of the institution to which the member is
appointed as a board or council member; and
(b) considering including the disclosure of interests by members as a condition of
appointment in the case of new appointments or when appointments are renewed
to ensure that possible conflict of interest is identified upfront before members are
appointed.
39. Public service officials serving on boards and councils of state and state controlled
institutions must declare their interests by completing the Register of interest
information sheet provided in Annexure 3, Appendix A.
40. The disclosure of interests by public service officials provided for in this Handbook does not
substitute the financial disclosure by members of the senior management service as prescribed
in the Public Service Regulations.
41. Serving board members and candidates are encouraged to indicate whether they have any
financial, professional or personal interests that might create a conflict if they are appointed to
the board. The framework set out in Annexure 3 makes specific reference to the following types
of interest:
(a) Shares and other financial interests Best practice

(b) Directorships and partnerships It is best practice for governing authorities
(c) All remunerated work and employment to adopt a standing item on the agenda of
every board meeting for the disclosure of
(d) Consultancies and retainerships interests of members.
(e) Sponsorships and assistance
(d) Gifts and hospitality
(g) Land and property
32
42. The following practical advice is also provided:

(a) Consider critically the information provided Check list
by the candidate, and seek further Has the candidate been provided with
information about the organisation?
information from the candidate where
information is incomplete or further Has the candidate been asked for specific
information about any financial,
questions arise. professional or personal interests that
(b) Ask the candidate to immediately advise might create a conflict?
of any change to his/her interest that Has the matter been followed up where
occurs in the course of the appointment information is incomplete?
process. Has the candidate been asked to advise of
any changes in their interests which might
(c) Seek advice from a departmental legal create a conflict?
adviser if there is any doubt about whether If a conflict has been identified, has its
an interest creates a conflict. seriousness been fully assessed?
(d) If a conflict of interest is identified, If a conflict appears manageable, have
management mechanisms been proposed?
consider whether it is so fundamental (see
Have any management systems been
Annexure 4) that the candidate is discussed and agreed with the candidate?
unsuitable for appointment, or whether the
Has legal advice been sought where
conflict can be managed with appropriate appropriate?
systems (seek legal advice where Has the Executive Authority been provided
appropriate). with comprehensive information about
conflicts of interest and what was the
(e) Discuss systems for managing the conflict
response?
with the candidate and obtain the
Does the documentation for disclosure of
candidate’s agreement to a proposal for interests include all information relating to
managing the conflict, if possible. conflicts of interest?
(f) Provide the Executive Authority with
comprehensive information about any conflicts of interest, including details of any proposal
for managing the conflict, an indication of the candidate’s position in respect of the conflict,
details of any legal advice obtained in relation to the conflict, and free and frank advice in
respect of the adequacy of any management arrangements proposed.
Dealing with conflict of interest
43. Whenever an appointment is made, the Executive Authority (Cabinet and the President, where
appropriate) should be confident that every actual or potential conflict of interest that can
reasonably be identified has been identified. Where a conflict of interest has been identified, the
relevant authority should be confident that an acceptable system has been proposed or
established to manage the conflict appropriately.
44. Further information on what constitutes a conflict of interest, how to assess the seriousness of a
conflict of interest, and how to avoid or minimise the risk of conflicts of interest is contained in
Annexure 4. This annexure includes hypothetical examples and suggested mechanisms for
managing conflicts.
Short-listing candidates
Nomination committee
45. An Executive Authority:

(a) Must appoint a nomination committee
(b) Must nominate suitable persons to the nomination committee
(c) Is not obliged to appoint a candidate proposed by the nomination committee
(d) May delegate the setting up and administration of the nomination committee to
his/her department
33
46. Consideration should be given to inviting individuals with specialist cluster/functional/sector

knowledge to participate in the nomination committee.
47. The role of the nomination committee is to ensure that the people best qualified for each
institution's board positions are recommended to the Executive Authority. The committee must
provide the Executive Authority with a list of candidates suitable for board membership. The
committee must determine nomination criteria.
48. In looking at the competency mix for a board, there are three dimensions of board effectiveness
requiring consideration. These are:
(a) The knowledge or information required to fill a significant gap on the board
(b) The capacity of an individual to influence preferred outcomes (internally and externally)
through his/her involvement on the board
(c) The extent to which an individual has the opportunity or availability to meaningfully
40
contribute their time and abilities to the affairs of the board
49. A parent department may, in accordance with the relevant procurement policies, make use of an
outside company or selection consultant to assist with part of or the entire nomination and
selection process, provided that the advertising and selection procedures comply with the
requirements set out in this Handbook. Expenditure incurred would be for the account of the
relevant department.
50. Where an outside company or selection consultant has identified a candidate, it is desirable to
confirm whether the candidate is interested in the position (although it may not always be
possible or appropriate to confirm this with the candidate at this stage). This is also a good time
to provide the candidate with some basic information about the nature of the position, if this was
not done during the disclosure and conflict of interest checks. In some cases, it may be
appropriate for contact to be initiated by the Executive Authority. As the situation arises, confirm
this with the Executive Authority.
51. When short-listing candidates, benchmark their CVs against the role description created earlier
in the process. This is also the time to analyse the information provided regarding potential
conflicts of interest. Depending on the nature of the position, suitability and/or credit checks may
also be a useful part of the process.
52. The nomination committee established by an Executive Authority is not the same as the
nomination committee (board committee) that state and state controlled institutions may
establish.
53. The Executive Authority may seek guidance from the nomination committee established by state
controlled institutions when making appointments.
Outcome of board and member evaluation
54. The Executive Authority may consider the outcome of a board and/or board member
evaluation when making reappointments.
55. Chapter 6 of the King Report, 2002, states that the board, through the nomination committee or
a similar committee, should regularly review its required mix of skills and experience and other
qualities, such as demographics and diversity, in order to assess the effectiveness of the board.
This should be done by means of a self-evaluation of the board as a whole, its committees and
40
See Chapter 5, Director selection and development of the King Code.
34
the contribution of each individual member. A typical board self-evaluation is set out in Appendix
IV of the King Report.
Suitability checks
56. All short-listed candidates must be subjected to suitability checks and/or security
clearance, as the case may be.
57. The National Intelligence Agency is implementing a vetting strategy that provides for the
decentralisation of security vetting to departments and the creation of vetting officers on the post
establishment of departments.
Interviewing and selection
Selection committee
58. An Executive Authority:

(a) Must appoint a selection committee separate from the nomination committee to
make recommendations on the suitability of candidates
(b) Must nominate suitable persons to the nomination committee
(c) May for practical reasons nominate members of the nomination committee to serve
on the selection committee
(d) Should serve as chairperson of the selection committee in cases where
chairpersons of boards are considered. For other board members, the Executive
Authority may nominate the chairperson.
(e) Is not obliged to appoint a candidate recommended by the selection committee
(f) Selects the candidate and determines who will be appointed
59. Consideration should be given to inviting individuals with specialist cluster/functional/sector

knowledge to participate in the selection committee. The selection committee must determine
selection criteria with due consideration of the enabling legislation of the institution.
60. After suitable candidates have been identified, interviews must be held. Interviews are an
effective way of sharing information on the particular complexities of working in the wider public
sector and to gauge the depth of the candidate’s understanding of the role of the board in
ensuring sound governance of the institution's interests. In the interests of natural justice, any
concerns around conflicts of interest or issues arising from security checks could be put to
candidates for response in interviews.
61. During the selection process, care should be taken that all candidates are provided equal
opportunities. This implies that they must be evaluated against the same requirements and
criteria.
62. The selection committee must make a recommendation on the suitability of a candidate after
considering –
(a) information based on valid methods, criteria or instruments for selection that are free
from any bias or discrimination (eg using a scoring grid which provides space to rate
each individual according to the weighted inherent requirements of the position);
(b) balancing the training, competencies and knowledge necessary to meet the inherent
requirements of the position with the need to redress the imbalances of the past to
achieve a representative board; and
35
(c) the extent to which an individual has the opportunity or is available to meaningfully
contribute his/her time and abilities to the affairs of the board, particularly where
candidates serve on a number of boards.
63. Multiple membership of boards is limited as set out in paragraphs 42 to 45 of chapter 3. The
ability of candidates to serve on a number of boards depends on the circumstances and
competencies of the candidate. The selection committee must determine the capacity,
availability and competencies of candidates to meaningfully contribute their time to the affairs of
the board, particularly where candidates serve on a number of boards. Where there are
justifiable reasons for exceeding the limit on multiple memberships, the selection committee
must record the reasons for its recommendation.
The Executive Authority may approve deviations
Check list
recommended by the selection committee.
Has the candidate been provided with
information about the organisation?
64. The selection committee must record the reasons Have security checks been carried out
on short-listed candidates?
for its recommendation.
Are there protocols for the holding of
personal information?
65. The Executive Authority is not obliged to appoint a Has the Executive Authority been
candidate recommended by the selection provided with adequate background
information on the candidate(s)?
committee. The Executive Authority may request
the selection committee to recommend another Has the Executive Authority
determined the remuneration for the
suitable candidate. The Executive Authority selects appointment in accordance with the
the candidate and determines who will be National Treasury System for the
appointed. The Executive Authority will have Administration of the Service Benefit
outlined his/her preference for either a single Packages for Office-Bearers of Certain
Statutory and other Institutions or the
candidate or a short list at the start of the relevant legislation? If the proposed
appointment process. The department should remuneration is outside the
provide information that will help the Executive remuneration framework, has the
Authority to make a selection. Minister of Finance been consulted?
provided with a comprehensive
66. Unsuccessful candidates should be asked if they briefing note on the proposed
appointee (covering issues such as
are willing to be included on a database of potential conflict of interest), together with a
board members. draft letter of appointment?
provided with the recommendations of
Consultation the nomination and selection
committees?
67. Once a prospective appointee has been identified, If the appointment is provisional, has
the availability of the candidate been
the Executive Authority may proceed to make the confirmed? Are there any outstanding
appointment, but in most cases would wish to issues (such as conflicts of interest)
discuss it with his/her colleagues first. This reflects that may require a report-back to
Cabinet’s expectation that the relevant Cabinet Cabinet?
Committee and Cabinet will consider appointments
of a significant nature. The proposed remuneration for the appointee should be resolved with the
Executive Authority at this point, if it has not been resolved earlier. If the Executive Authority
proposes a remuneration rate which is outside the remuneration framework, consultation with
the Minister of Finance and the Minister for the Public Service and Administration is required
before the appointment is finalised.
68. On occasion, a candidate’s name may be submitted to Cabinet without the candidate’s
knowledge. Any decision made in these circumstances should be considered provisional until
after the candidate has been informed, his/her availability determined, and examining (for
conflicts of interest, issues of probity, etc) has been completed. The Executive Authority must
report back to Cabinet on the outcome of these enquiries, either confirming that the appointment
has proceeded or, if necessary, referring any outstanding issues back to his/her colleagues for
further discussion. In addition to consulting with their Cabinet colleagues on an appointment,
Executive Authorities may undertake consultation with their caucus or other parties or members
of Parliament.
36
Appointment
Formal action
69. Once all necessary consultation has taken place (eg with Cabinet Committees and Cabinet) and
all outstanding issues have been resolved, the appointment can be made. Those managing the
appointment process are responsible for preparing letters of appointment and formal
appointment documents, and arranging for signatures.
70. Although the Executive Authority decides who will be appointed, the formal appointment action
must be executed by the person authorised to do so in terms of the entity’s legislation or
constitution. The formal action required to effect the appointment could vary in each case
between an Executive Authority and the President. The Executive Authority (or the President
where appropriate) should sign the appointment letter after the required consultation (with
caucus, etc) has been completed and all outstanding matters have been resolved.
71. The Executive Authority must send a letter of appointment to the appointee. A draft letter should
have been provided to the Executive Authority during the selection process. The letter of
appointment should include the following:
Checklist
(a) An indication of the provision of the Act
Is the legally appropriate person making the
according to which the appointment is appointment?
made Has the formal act of appointment been
(b) The term of contract and all-inclusive carried out correctly (e.g., Gazette notices)?
package or remuneration in the case of Has a letter of appointment been sent to the
non-executive members appointee?
(c) That the appointee is required to sign an

employment contract and enter into a performance agreement
(d) Date of assumption of duty (the date of appointment will be a date as agreed to by the
Executive Authority responsible for the institution and the appointee)
(e) Requirement to annually disclose any interests
(f) Relevant information material
(g) Confidentiality agreements
Induction
72. Induction is a vital step in the appointment process and is fundamental to a board member
becoming fully effective as quickly as possible. Induction is often overlooked by those running
the appointment process, who may assume that the board will carry out all necessary induction.
Check list
73. Induction material should be supplied at the Has an induction programme been
time of appointment. This material should be a compiled in conjunction with the board
varied package of information. It could include chair?
supplementary documentation beyond that Does induction material emphasise the role
of the board – devising strategy, appointing
supplied with the letter of appointment, an offer
and monitoring the chief executive and
of a briefing by the department, suggested monitoring organisational performance –
training (eg courses offered by the Institute of compliance with the law and the duty to act
Directors) and information on the role of the in the best interests of the entity?
board and the board’s operating environment. Does the supplementary information
Executive Authorities should convey include offers of training and briefings by
the department?
government's expectations to board members
If the new appointee is the chairperson of
as part of the induction process. the board, is there a six months’ overlap
between the incumbent and the new
appointee, if possible?
74. The induction package should be compiled in
37
consultation with the board chair to eliminate potential overlap with the induction training that the
board will provide. New board members should be familiarised with:
(a) The institution's operations, senior management and business environment
(b) Fiduciary duties and responsibilities
(c) Expectations of the Executive Authority, chairperson and the board
(d) The role of the board and its committees, for example devising strategy, appointing the
chief executive and monitoring the performance of the chief executive and the
organisation
Reappointment
75. Appointees or incumbents should not expect that they will be automatically reappointed. In
terms of the Protocol, the board should
comprise a majority of non-executive members Check list
and each member's appointment should be If the process is a reappointment, have you
limited to a maximum period of three to five considered –
41 altering the role description to take into
years. If a member’s performance and
account changed environment, changed
competencies (skills, expertise, experience, and board composition, changed board needs,
knowledge) remain relevant to the organisation, changed Executive Authority requirements?
42
he/she may be reappointed for a second term. reassessing the remuneration?
Board members are expected to serve not more seeking a performance assessment of the
than two terms of appointment. Enabling board member from the board chair?
legislation should specify the period of
appointment and the number of terms that board members could serve, if required.
Disqualification
76. The enabling Acts of state and state controlled institutions make provision for the disqualification
or removal of board members. The enabling Act normally provides that a member must cease to
be a board member for the reasons mentioned below. Executive Authorities should select the
most appropriate disqualification criteria for inclusion in the enabling Acts of institutions:
(a) The member resigns by written notice to the Executive Authority.
(b) The member becomes an unrehabilitated insolvent.
(c) A competent court has declared the member to be mentally ill.
(d) The member has been convicted of an offence in the Republic, other than an offence
committed prior to 27 April 1994 associated with a political objective.
(e) The member has been convicted in the Republic or elsewhere of fraud, theft, forgery,
bribery, corruption or any other offence involving dishonesty, and was sentenced to
imprisonment without the option of a fine.
(f) The member is absent from two or more meetings in one calendar year without the
leave of the board (or chairperson).
(g) The member is elected as a member of Parliament, a provincial legislature or any
municipal council.
(h) The member ceases to be a citizen of, or to have the right of permanent residence in,
the Republic.
(i) The member has, as a result of improper conduct, been removed from a position of
trust by a competent court of law.
(j) The member has failed to disclose interests.
(k) The member is disqualified in terms of the Companies Act. Any individual who is
disqualified from being a director cannot hold (or continue to hold) the office of
director. Any contravention of this principle may attract criminal liability for the
41
42
38
individual in question and any other director who knows or should have known that
43
the said individual is or was so disqualified).
The Executive Authority may remove a member of the Board from office –
(a) on the grounds of misconduct, incapacity or incompetence; or
(b) for any other sound and compelling reason as referred to in paragraph 76(a) to (k) above.
A decision to remove a member of the board from office must be based on the recommendation
of an independent panel appointed by the Executive Authority.
The Executive Authority may dissolve the Board on reasonable grounds.
77. The enabling Acts for state and state controlled institutions could provide for further
disqualification criteria.
44
78. The following persons may not be appointed or act as a director of a company:
(a) A minor or any other person under legal disability
(b) Any person who is subject to any order under the Companies Act No 61 of 1973 or
the repealed Act, disqualifying him/her from being a director
(c) An unrehabilitated insolvent
(d) A person issued by the Registrar with a sequestration order
(e) A person convicted of an offence
(f) A person removed from an office of trust on account of misconduct
(g) A person who has been convicted at any time (whether in the Republic or elsewhere)
of –
(i) theft, forgery or uttering a forged document, perjury, an offence under the
Prevention of Corruption Act, 1958 (Act No 6 of 1958), the Corruption Act, 1992
(Act No 94 of 1992); or
(ii) an offence involving dishonesty or in connection with the promotion, formation or
management of a company, and who has been sentenced to imprisonment
without the option of a fine or to a fine exceeding R100
(i) A person who has, in terms of an Act of Parliament, been removed from office due to
the fact that he/she is not a fit and proper person to serve as a director or in the
management or any other position of trust of the body in question due to theft, fraud,
forgery, uttering a forged document, corruption, whether in terms of the common law
or not, or any other act involving dishonesty
79. Nothing prevents a company from providing in its articles for any further disqualifications.
43
Paragraph 5.1.10.2 of the Protocol.
44
Section 218 of the Companies Act.
39
Chapter Six – Implementation and Conclusion
CHAPTER SIX – IMPLEMENTATION AND CONCLUSION
Implementation
1. To facilitate implementation of the Handbook it is suggested that –

(a) all proposed new legislation that provides for the appointment of persons to boards of state
or state controlled institutions be aligned to the Handbook;
(b) existing legislation that is under review for amendment incorporate a revision of the
provisions of every board created by the legislation in order to align it to the Handbook;
(c) provincial premiers be requested to adopt the Handbook; and
(d) the overall administration of the Handbook be assigned to the Minister for Public Service
and Administration to promote uniformity in the appointment of board members.
2. The dpsa will monitor implementation of and compliance with the Handbook by –
(a) providing comments on Cabinet memorandums and concomitant legislation dealing with
the appointment of board members;
(b) analysing and reporting on the database of board member information that departments
submit to the dpsa; and
(c) aligning the Handbook with the governance practices set out in the PFMA.
Conclusion
3. This Handbook is intended to be a living document, which should be updated with the best
practice experiences of departments and be shared by all. The Handbook will be accessible
online at http://www.dpsa.gov.za. Departments are invited to share their best practice
experiences with us and are welcome to contact us for further information. Contact particulars
are as follows:
The Chief Directorate: Human Resource Planning

Department of Public Service and Administration
Private Bag X916
PRETORIA
0001
Telephone number: (012) 336 1177 or (012) 336 1159

Fax number: 086 618 8628
Email: [email protected] or [email protected]
ANNEXURES
Attached are Annexures 1-4.
40
Annexure 1
Annexure 1: Board member information sheet

SPECIA-
LITY APPOINT-
PROFILE: SPECIALITY APPOINT-
MENT APPOINT-
NUMBER PROFILE: SPECIALITY MENT
TELEPHO- RACE EMPLOY- SPECIALITY SPECIALITY TIME MENT
GEN- SPECIALITY OF MEMBER- PROFILE: TIME
NE NO AND NAME OF CLASSIFI- PARENT DEPART- ED ITO PROFILE: PROFILE: LINE: TIME
FULL FIRST DER (B) (W) PROFILE: FIELD OF YEARS’ SHIP OF COMMITTEE LINE:
IDENTITY POSTAL ENTITY CATION MENT PSA: QUALIFICA- CAPACITY ON LINE:
NAME/S AND (F)/(M) SPECIALITY EXPE- PROFES- PARTICIPA- TERM OF
NUMBER ADDRESS (C) (I) YES/NO TIONS BOARDS DATE OF
SURNAME RIENCE SIONAL TION APPOINT- EXPIRY
APPOINT-
IN FIELD BODIES MENT DATE
MENT
OF SPE- (YRS)
CIALITY
Note:
1. The information sheet can be obtained in electronic format from [email protected] or [email protected].
2. Instructions for completing the database information sheet follow below.
41
Annexure 1
Instructions for completing the board member information sheet
Column descriptions are as follows:
1. Full first name(s) and surname of member

2. Identity number of member
3. Telephone number and postal address of member
4. Full name of entity on which member serves
5. Classification of entity in terms of listing in appropriate schedule of the PMFA. Choose one of
the following categories:
5.1 Schedule 3A – National public entity
5.2 Schedule 3B – Provincial public entity
5.2.1 Eastern Cape (EC)
5.2.2 Free State (FS)
5.2.3 Gauteng (GP)
5.2.4 KwaZulu-Natal (KZN)
5.2.5 Limpopo (LP)
5.2.6 Mpumalanga (MP)
5.2.7 Northern Cape (NC)
5.2.8 North West (NW)
5.2.9 Western Cape (WC)
5.3 Schedule 4A – National government enterprise
5.4 Schedule 4B – Provincial government enterprise
5.4.1 Eastern Cape (EC)
5.4.2 Free State (FS)
5.4.3 Gauteng (GP)
5.4.4 KwaZulu-Natal (KZN)
5.4.5 Limpopo (LP)
5.4.6 Mpumalanga (MP)
5.4.7 Northern Cape (NC)
5.4.8 North West (NW)
5.4.9 Western Cape (WC)
6. Name of parent department – National departments (National Treasury, Transport, etc) and
provincial departments. For provincial departments add the abbreviation for the province (listed
in 5.2.1 to 5.2.9) before the name of the parent department (eg EC Economic Affairs).
7. Gender – Choose one of the following:
7.1 Male
7.2 Female
8. Race – Choose one of the following:
8.1 African
8.2 Coloured
8.3 Indian
8.4 White
9. Employed in terms of the Public Service Act – Choose between the options of yes or no. This is
relevant to persons who are board members and are still employed in a government
department.
10. Speciality profile:

10.1 Field of speciality – Provide for a choice of one or more than one of the following
categories:
10.1.1 Financial management
10.1.2 Human resource management
42
Annexure 1
10.1.3 Economics
10.1.4 Legal
10.1.5 Risk
10.1.6 Corporate governance
10.1.7 Audit
10.1.8 Procurement
10.1.9 Social sciences (welfare/education/health)
10.1.10 Engineering
10.1.11 Information technology and communication
10.1.12 Stewardship (arts, culture, sport, museums)
10.1.13 List others
10.2. Speciality profile: Number of years’ experience in field of speciality – Choose one of
the following:
10.2.1 Less than 5 years
10.2.2 Between 5 and 10 years
10.2.3 Between 10 and 15 years
10.2.4 More than 15 years
10.3 Speciality profile: Qualifications – List qualifications (eg B Admin Unisa)
10.4 Speciality profile: Membership of professional bodies – Indicate full name of
professional body.
10.5 Speciality profile: Committee participation – Indicate the full name of committees on
which member currently serves.
10.6 Speciality profile: Capacity on board:
10.6.1 Position – Choose one of the following:
10.6.1.1 Chairperson
10.6.1.2 Deputy chairperson (if this is a position specifically provided for)
10.6.1.3 Member
10.6.2 Standing – Choose one of the following:
10.6.2.1 Executive member
10.6.2.2 Non-executive member
11. Appointment time line:
11.1 Term of appointment – Choose one of the following:
11.1.1 3 years
11.1.2 5 years
11.1.3 Other
11.2 Indicate date of appointment to the governing body
11.3 Expiry date – Date on which current appointment expires. This date is calculated by
the system.
End of instruction
43
Annexure 2
Annexure 2: Broad process for appointing persons to boards
Pre-appointment process
Department establishes and

maintains database of board
member information
Compile succession management

plan
Compile generic role description
Compile generic board profile
Conducting appointment
process
Identify a vacancy
Department obtains clarity at what

stage in the process the Executive
Authority wish to be involved
Develop timeline for appointment

process
Develop tailored role description
Executive Authority approves role

description
Department provides information Identify and invite candidates Candidate provides information
to candidates (board profile and and disclose interests
role description)
Executive Authority establishes Short-listing candidates - Candidate subjected to suitability

nomination committee nomination committee checks
Executive Authority establishes Interviewing and selection - Executive Authority consults if

selection committee and selects selection committy required with Cabinet or
candidate Parliamentary committee
Appointment - Approval by relevant

Executive Authority / President
44
Annexure 3
Annexure 3: Framework for disclosing interest of board members
1. Executive Authorities and their departments are encouraged to implement the Framework
for disclosing interests for existing and newly appointed board and council members of
state and state controlled institutions by –
(a) encouraging serving members to voluntarily declare their interests, annually before
the start of the financial year of the institution to which the member is appointed as
a board or council member; and
(b) considering including the disclosure of interests by members as a condition of
appointment in the case of new appointments or when appointments are renewed to
ensure that possible conflict of interest is identified upfront before members are
appointed.
2. Public service officials serving on boards and councils of state and state controlled
institutions must declare their interests by completing the Register of interest information
sheet provided in Appendix A.
3. The disclosure of interest by board members is integrated into the appointment process to
ensure that possible conflict of interest is identified upfront before members are appointed.
4. The disclosure of interests by public service officials provided for in this Handbook does not
substitute the financial disclosure by members of the senior management service as prescribed
in the Public Service Regulations.
5. In view of the rights to privacy set out in the Constitution, the framework for serving board
members and candidates can only be applied if members voluntary declare their interests. There
is currently no legislation in terms of which the framework can be regulated as is required in
terms of section 36 of the Bill of Rights.
Intention of the disclosure framework
6. To support the values and principles governing public administration as set out in Chapter 10 of
the Constitution, 1996 and in the interest of good governance, members appointed to boards of
public sector institutions must maintain the highest standards of professional ethics. The
framework should be seen as a valuable instrument for Ministers to ensure that the integrity of
board members and that of the institutions they serve are beyond question.
Applicability
7. Candidates nominated or members serving on the boards of government components, public

entities, and government enterprises must make full disclosure of their interests.
Confidentiality
8. The Register of interests information sheet (see Appendix A of this Framework) must be kept in
strict confidence. A register detailing directorships and partnerships (non-confidential
information) may be published annually.
45
Annexure 3
Members provide information
9. The Register of interests information sheet (see Appendix A) must be completed in duplicate in
respect of:
New board members who are appointed
Serving members, annually before the start of the financial year of the institution to which
the member is appointed as a board member
10. All candidates (officials and private persons) nominated or selected for appointment, particularly
those short-listed, should be encouraged to voluntary disclose their interest.
Non-disclosure of interests
10. Failure to disclose interests may make a person liable to disqualification as a board member in
terms of the provisions of enabling legislation.
Responsibility of Executive Authorities
11. Executive Authorities must ensure that all items on the forms are completed/signed.
46
Annexure 3
Instructions for completing the Register of interest information sheet for persons
serving on boards
General instructions
The information sheet must be completed in duplicate in the person’s own handwriting and certified by
a Commissioner of Oaths/Justice of the Peace. By completing the information sheets, public service
officials are not exempted from –
obtaining approval for performing remunerated work outside the public service in terms of section
30 of the Public Service Act, 1994; or
also disclosing their interests in terms of the approved Financial Disclosure Framework for
persons in the Senior Management Service. The systems for disclosing interests of board
members and officials in the senior management service are not interchangeable.
Where insufficient space is provided on the information sheet, the required information should be
provided on a separate sheet.
Notes to the Register of interest information sheet
The following notes provide guidance for completing the relevant parts of the information sheet in
Annexure A.
Note 1 – Shares and other financial interests

Disclose shares and other financial interests held in any private or public company or any other
corporate body recognised by law.
A share is any investment that provides a dividend, including unit trusts, equities and government
bonds.
Nature refers to whether the shares are ordinary or preferential shares.
Nominal value refers to the current rand value of the shares.
Note 2 – Directorships and partnerships

Disclose all remunerated and non-remunerated directorships and partnerships.
Remuneration means the receipt of benefits in cash or in kind.
Directorship includes any position occupying the office of director, alternate director, independent
director, and member of a board (executive or non-executive) or by whatever name the position is
designated.
Partnership is a legal relationship arising out of a contract between two or more persons with the
object of making and sharing profits of benefits.
Note 3 – Remunerated work

Disclose all remunerated work and employment.
Remuneration means the receipt of benefits in cash or in kind.
Work means rendering a service for which the person receives remuneration.
A public service official must obtain the approval of his/her Minister for performing remunerated
work outside the public service.
Note 4 – Consultancies and retainerships

Disclose any interests in any consulting firm or company that provides advice or professional services.
Name of client and nature of consultancy or retainership
Type of business activity
Value of benefits derived may refer to benefits in cash or in kind.
47
Annexure 3
Note 5 – Sponsorships and assistance

A sponsorship is received when another person or organisation assumes the financial responsibility or
provides assistance, for example scholarships for a member’s child.
Note 6 – Gifts and hospitality (from a source other than a family member)
Disclose gifts and hospitality.
Specify all gifts from any source with a value in excess of R350 received in the past calendar
year.
Any hospitality intended as a gift must be disclosed.
Personal gifts within the family and hospitality of a traditional or cultural nature need not be
disclosed.
Include a description and value of gifts from a single source which exceeds the value of R350 in
the relevant 12-month period.
Note 7 – Land and property

Disclose all land and property (residential or otherwise) both inside and outside the Republic.
48
Annexure 3
Appendix A
REGISTER OF INTEREST INFORMATION SHEET – BOARDS AND COUNCILS
I, the undersigned (surname and full names) _________________________________________
_____________________________________________________________________________
Postal address ________________________________________________________________

_____________________________________________________________________________
Residential address ____________________________________________________________
_____________________________________________________________________________
Name of employer _____________________________________________________________
Position held ______________________________________________________________
Tel No _________________ Cell No __________________ Fax No ____________
Email __________________
Hereby certify that the following information is complete and correct to the best of my knowledge:
______________________________
Signature of member/applicant
Date: _____________________
Place: ______________________
Surname and initials of member/applicant:________________________________________________________ 49

Annexure 3
1. Shares and other financial interests

(See note 1)
Number of shares/ Nature Nominal value R Name of company/entity
Extent of financial interests
2. Directorships and partnerships

(See note 2)
List directorships and partnerships Type of business activity Rand amount of remuneration or
in any corporate body benefits in kind
3. Remunerated work
(See note 3)
Name of employer Type of work/business Rand amount of remuneration
4. Consultancies and retainerships

(See note 4)
Name of client Nature Type of business activity Rand value of any benefits
received in cash or in kind
5. Sponsorships and assistance

(See note 5)
Source of sponsorships or assistance Description of sponsorship or Rand value of sponsorship or
assistance assistance
6. Gifts and hospitality (from a source other than a family member)

(See note 6)
Source Description of gift or hospitality Rand value of gift or hospitality

Annexure 3
7. Land and property

(See note 7)
Description of land and Extent Area Rand value
property
8. Have you been convicted of an offence involving fraud?

________________________________
OATH/AFFIRMATION
1. I certify that before administering the oath/affirmation I asked the deponent the following questions
and wrote down his/her answers in his/her presence:
(a) Do you know and understand the contents of the declaration?
Answer ________________
(b) Do you have any objection to taking the prescribed oath or affirmation?
Answer ________________
(c) Do you consider the prescribed oath or affirmation to be binding on your conscience?
Answer ________________
2. I certify that the deponent has acknowledged that he/she knows and understands the contents of
this declaration. The deponent uttered the following words: “I swear that the contents of this
declaration are true, so help me God.”/“I truly affirm that the contents of the declaration are true.”
The signature/mark of the deponent was affixed to the declaration in my presence.
__________________________________(Signature)
Commissioner of Oaths/Justice of the Peace
PARTICULARS OF COMMISSIONER OF OATHS/JUSTICE OF THE PEACE
Full first names and surname: _______________________________________________________
____________________________________________________________________ (block letters)
Designation (rank) _____________________________________ex officio Republic of South Africa
Street address of institution __________________________________________________________
________________________________________________________________________________
Date ____________________________ Place __________________________________________
CONTENTS NOTED BY RESPONSIBLE MINISTER
Signature: _____________________________________
Date: _________________________________________

Annexure 4
Annexure 4: Identifying and dealing with conflicts of interest
General background
South Africa is a relatively small country, where only a limited number of individuals may possess
critical competencies (skills, expertise, experience, and knowledge) and therefore are sought for
serving on a number of (potentially conflicting) boards. As a consequence, the potential for conflicts of
interest may be unavoidable in a reasonable number of appointments – this is often the price of
appointing people with knowledge of and expertise in specialised areas.
A conflict of interest will not necessarily bar an appointment, although a serious conflict may mean a
candidate is not suitable for an appointment, or should resign if the conflict arises during the course of
the appointment. Systems should be put in place to ensure that potential conflicts of interest are
identified and managed in order to protect the decision-making integrity of boards and public
confidence in them.
The key points in respect of conflicts of interest are identification and management. Whenever an
appointment is made, the Executive Authority should be confident that –
• every actual or potential conflict of interest that can reasonably be identified has been identified;
and
• where a conflict of interest has been identified, an acceptable mechanism or system has been
proposed or established to deal with the conflict appropriately.
What is a conflict of interest?
Ethical context
Conflicts of interest should be viewed within an ethical context of good faith, honesty, impartiality and
constitutional principles.
• Good faith: members of boards have an obligation at all times to act in good faith and in the best
interests of the body to which they have been appointed.
• Honesty: members of boards have an obligation to act honestly at all times in relation to all
matters concerning the body to which they have been appointed.
• Impartiality: members of boards must observe the principles of fairness and impartiality in all
official dealings. No individual or organisation with which board members or officers are involved
may be given improper preferential treatment – whether by access to goods and services or
access to information, or anything similar.
• Values: members of boards should adhere to the values and principles governing public
administration as set out in Chapter 10 of the Constitution, 1996.
Definition
A conflict of interest arises where a prospective or existing board member has an interest which
conflicts (or might conflict, or might be perceived to conflict) with the interests of the governing body
itself. The key question to ask when considering whether an interest might create a conflict is: does
the interest create an incentive for the appointee to act in a way which may not be in the best interests
of the governing body? If the answer is 'yes', a conflict of interest exists. The existence of the
incentive is sufficient to create a conflict. Whether or not the appointee would actually act on the
incentive is irrelevant.
52
Annexure 4
Types of conflicts of interest
A conflict of interest may take a number of forms. It may be financial or non-financial. It may be direct
or indirect. It may be professional or family related. A conflict of interest may arise from:
• Directorships or other employment
• Interests in business enterprises or professional practices
• Share ownership
• Beneficial interests in trusts
• Existing professional or personal associations with the governance body concerned
• Professional associations or relationships with other organisations
• Personal associations with other groups or organisations
• Family relationships
A conflict of interest may be more perceived than actual. Perception is a very important factor in the
public sector; the processes of government (including institutions in the wider public sector) must be
fair and ethical, and must be very clearly seen to be so.
In identifying conflicts of interest, those involved should focus on interests that are specific to the
appointee, rather than generic in nature. Generic interests are those held in common with the general
public or a significant sector of the general public (eg where the appointment relates to a component
in the transport sector and the appointee has a car, or the appointment relates to a component in the
education sector and the appointee has children of school-going age). Interests that are solely generic
are not relevant and should be disregarded.
Examples
Some hypothetical examples of conflicts of interest follow. This is not an exhaustive list of every
possible conflict of interest – conflicts are many and varied and some may be very subtle.
Example 1: An appointee to the board of a trading state or state controlled institution holds shares in a
company that is in direct competition with the institution.
Comment: The appointee has a direct financial interest in the competing company. Poor performance
on the part of the public institution may translate into greater profits for the competing company and
its investors (including the appointee). The appointee therefore has an incentive to put his/her own
financial interest ahead of the interests of the board.
Example 2: An appointee to the board of a state or state controlled institution is a partner in an

accountancy firm, which regularly undertakes consultancy work for the entity.
Comment: The appointee has a direct conflict of interest. Persuading the board to give more
consultancy work to his/her firm is likely to result in financial gain for the appointee. The member
therefore, has an incentive to place the interests of the consulting firm ahead of the board’s interest in
finding the best value consultants. Other board members may find it difficult to criticise the
performance of the accountancy firm in light of the appointee’s presence on the board. Additionally,
the appointee may be tempted to pass confidential information relating to the board’s activities to the
firm, providing it with inside information, which will give it an advantage over their competitors.
Example 3: An appointee is considered for appointment to the board of a state or state controlled
institution that has a regulatory function in respect of a particular industry. The appointee is the
director and major shareholder in a company that operates in that industry.
Comment: There is often value in including industry representation on the board of a regulatory body.
Sometimes it is a statutory requirement. However, there may also be risks. In this case, the appointee
has a strong financial incentive to influence board decisions in favour of his/her company or the
53
Annexure 4
industry as a whole. The appointee may also be tempted to disclose confidential board information to
colleagues or other industry participants for improper purposes.
Example 4: An appointee to a board of a state or state controlled institution is the wife of the body's
chief executive.
Comment: The board must be able to appraise critically the performance of the chief executive and
other employees of the institution. A close family relationship between a board member and the chief
executive is very likely to inhibit or prevent that critical appraisal.
Example 5: An appointee to a board of a state or state controlled institution was previously employed
by a lobby group in the same industry as the public institution, although the association has now
ceased.
Comment: The candidate no longer has any personal or financial interest in the lobby group, so there
is no actual conflict in this case. However, the past association may mean that there is a public
perception of a conflict of interest.
These are just some hypothetical examples of the types of conflicts of interest that may arise. There
will be many variations on these themes. Legal advice should be sought where there is any doubt.
Assessing conflicts of interest
Having established the existence of a conflict of interest, the next consideration is the seriousness of
the conflict. Conflicts can be divided into two categories:
(a) Unmanageable conflicts of interest: where a conflict of interest is –

• unavoidable (ie the appointee cannot or will not divest him or herself of the conflicting interest);
• serious (in terms of the significance and/or value of the interest, and the appointee's
circumstances);
• pervasive (ie would affect so many of the board's decisions that management mechanisms are
not practical); and
• likely to render the appointee ineligible for the position.
(b) Manageable conflicts of interest: where a conflict of interest has been identified, but –
• the appointee is prepared to divest him or herself of the interest or sever the connection that is
causing the conflict;
• the conflict of interest is so minor (taking into account the circumstances of the appointee) or so
remote that it provides no real incentive to the appointee to act against the best interests of the
board;
• there is little risk of a negative public perception;
• the conflict of interest affects a confined area of the board's operations; or
• the conflict of interest can probably be avoided, or alternatively managed, through some
appropriate mechanism.
Mechanisms for avoiding or managing the risk of conflicts of interest
Many conflicts of interest fall into the "manageable" category. If a candidate is otherwise suitable,
there will often be mechanisms available to avoid or minimise any risk to the decision-making integrity
of the board. The main methods of dealing with a conflict of interest are:
• Divestment: the appointee agrees to divest him or herself of the interest that is creating the
conflict (eg to sell shares).
54
Annexure 4
• Establishing a trust: under this arrangement, the appointee transfers assets (such as shares) to a
trust. A trustee manages the trust and the investment of its assets with almost complete
autonomy. After transfer, the appointee retains very little knowledge or control of the transferred
assets.
• Severing connections: the appointee agrees to leave an employment position or an organisation
which gives rise to the conflict.
• Confidentiality agreements: the appointee agrees not to pass confidential information relating to
the state or state controlled institution or the board to professional or personal associates outside
the ambit of board business. Confidentiality agreements will often help to minimise the risk of
conflicts of interest.
• Declarations of interest: the appointee retains the interest, but agrees to declare it when related
issues arise for discussion and/or decision at board meetings. The process for recording
declarations of interest may vary, depending on the nature of the body. For some bodies, the
rules and procedures relating to declarations of interest are provided by statute (either the
legislation establishing the component, or general legislation such as the Companies Act, 1973).
In the absence of specific legislative provisions, boards should establish appropriate systems for
recording declarations of interest. A declaration of interest should be noted on each occasion in
the board minutes.
• Abstaining from voting: in addition to declaring the interest, the appointee agrees that he/she will
not participate in any vote on related issues. The abstention should be noted on each occasion in
the minutes.
• Withdrawing from discussion: in addition to declaring the interest and abstaining from voting when
related issues arise for discussion and/or decision at board meetings, the appointee agrees that
he/she will withdraw from the meeting for the duration of the item. The withdrawal should be noted
on each occasion in the minutes.
• Non-receipt of relevant information: in addition to declaring an interest and withdrawing from the
discussion and the vote, the appointee agrees that he/she should not be given any information (ie
board papers, written or oral briefings) relating to the interest by the board or the body.
• Agreement not to act: the appointee agrees not to participate in any other board action
concerning the interest (eg signing documents that relate to the interest on behalf of the board).
These methods of managing a conflict of interest may be used singly or in combination, depending on
the nature and extent of the conflict of interest that is being considered. If the board is governed by
statute, there may be relevant statutory provisions that provide appropriate rules and procedures.
Examples
The various mechanisms for avoiding or managing conflicts of interest can be considered in relation to
the factual examples above, as follows:
Example 1: An appointee to the board of a trading state or state controlled institution holds shares in a
company which is in direct competition with the public institution.
Comment: The appropriate action will depend on the value of the shares held and, possibly, on the
appointee's own circumstances (ie the relative importance of the shares to the appointee's financial
situation). If the value of shares is very small and there is no risk of a negative public perception, the
conflict may be immaterial. If the value of the shares to the appointee is more significant, it would
probably be necessary to require that they be sold or placed in a blind trust. Declarations of interest
would not be suitable, because the conflict of interest concerns the performance and success of the
institution as a whole, rather than one specific area of its operation.
Example 2: An appointee to the board of a state or state controlled institution is a partner in an

accountancy firm which regularly undertakes consultancy work for the body.
Comment: This conflict of interest is unlikely to be manageable, because it is ongoing and serious.
Even if the appointee were to sign a confidentiality agreement and to agree to remove him or herself
from discussions on specific items relating to the firm, the appointee’s relationship with the other
55
Annexure 4
board members might affect their decision making on those items. In addition, the public perception of
the arrangement would be likely to be very negative.
Example 3: An appointee is considered for appointment to the board of a state or state controlled
institution that has a regulatory function in respect of a particular industry. The candidate is the
director and major shareholder in a company that operates in that industry.
Comment: Declaring an interest (and possible absenting him/herself from board discussions and
votes) will be suitable only if regulating the industry in which the appointee's company operates is just
one of the board's activities. If regulation of that industry is the board's main activity, the conflict of
interest may be too serious to allow the appointee to be confirmed, unless the appointee severs the
relationship with the company and divests him/herself of shareholding in the company. Decisions on
whether this type of conflict can be managed may depend on statutory provisions. A number of
institution-specific statutes provide for some type of industry representation, but explicitly rule out
candidates who are intimately or financially connected to the industry concerned. Where there is any
doubt, legal advice should be sought to determine whether the conflict means that the appointment is
untenable.
Example 4: The appointee to a board of a state or state controlled institution is the wife of the
component's chief executive.
Comment: The closeness of the family relationship, combined with the ongoing and pervasive nature
of the conflict, means that the appointee is probably unsuitable for appointment, or if the situation
arises mid-term, should resign.
Example 5: An appointee to a board of a state or state controlled institution was in the past employed
by a lobby group in the same industry as the institution, although the association has now ceased.
Comment: Whether the perception of a conflict is manageable or not will depend on a number of
factors: the significance of the institution, the political sensitivity of the appointment, the passage of
time between the appointee's involvement with the lobby group and the date of the appointment, the
public profile of the appointee and/or the body, the likelihood of the appointee resuming contact with
the lobby group after expiry of his/her term on the board, et cetera. Even though the conflict of interest
may be more perceived than real, the appointment may not be tenable if it would seriously
compromise the integrity and standing of the board according to public opinion.
Not all conflicts of interest will be clear-cut in terms of how serious they are and how (or if) they can be
managed. In considering these issues, those involved should take into account:
• The nature of the body's functions
• The values and broad criteria applicable to the appointment
• The qualifications and expertise required for the appointment and the size of the available pool
of candidates
• The significance of the appointment
• The political sensitivity of the appointment
• The nature of the conflict
• The extent of the conflict
• Any relevant legislative provisions
• The candidate's own circumstances
It is sensible to err on the side of caution. In many cases it will be desirable to obtain legal advice.
56
BIBLIOGRAPHY
(a) Board Appointment and Induction Guidelines, State Services Commission, New Zealand,
August 1999 [www.ssc.govt.nz] (accessed December 2002).
(b) King Report on Corporate Governance for South Africa 2002, King Committee on Corporate
Governance, Institute of Directors, March 2002.
(c) [http://www.iodsa.co.za/corpgov.html] (accessed December 2003).
(d) Crown Entities: Review of Board Appointment and Induction Processes, Occasional Paper No
19, State Services Commission, New Zealand [http://www.ssc.govt.nz] (accessed December
2002).
(e) Protocol on Corporate Governance in the Public Sector, Department of Public Enterprises,
September 2002 [http://www.dpe.gov.za] (accessed January 2003).
(f) Public Service Act, 1994, Proclamation No 103 of 1994, as [http://www.dpsa.gov.za].
(g) Public Finance Management Act, 1999, No 1 of 1999, as amended by Act 29 of 1999
[http://www.treasury.gov.za].
57

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Handbook for the appointment of persons

to boards of state and state controlled

Approved by Cabinet on 17 September 2008

CHAPTER FIVE – APPOINTMENT PROCESS................................................................................... 26

In this Handbook, unless the context otherwise indicates –

“Cabinet” also means the Executive Council of a province;

“MEC” means a member of a provincial Executive Council;

“parent department” means a national or provincial department designated by an Executive

“Parliament” also means a provincial legislature;

“PFMA” means the Public Finance Management Act, 1999;

“state institution” means a national or provincial –

CHAPTER ONE – INTRODUCTION

Purpose of the Handbook

6. The Handbook is not intended to be used as an instrument to promote governance at board

8. The specific objectives of the Handbook are to:

Applicability of the Handbook

9. The Handbook is applicable to the appointment of persons to the board of –

regards policy implementation, performance, integrated planning, budgeting and service

State controlled institutions

12.1 A public entity is an institution –

12.2 A government enterprise is an institution –

(iii) is not in the ordinary course of its business funded from –

Public interest institutions

14. In this Handbook, public interest institution includes –

CHAPTER TWO – FIDUCIARY DUTIES/EXECUTIVE OWNERSHIP AND

Ownership and control by Executive Authorities

Public Finance Management Act

Duty to act in the best interest of the institution

Duty to act independently

The King II Report also describes

Companies Act, 1973

Implications for office bearers

18. The legal consequences of a breach of a fiduciary duty may include –

CHAPTER THREE – QUALIFYING PRINCIPLES

Members of the National Assembly and members of a provincial legislature

2. A member of the National Assembly or a member of a provincial legislature may not

3. A member of the National Assembly or a member of a provincial legislature, who is not a

Members of the Cabinet, deputy ministers and members of provincial

Members of municipal councils

18. The PSA provides that special advisers may be appointed to –

Public service officials

32. As an alternative to serving on the board of a government enterprise, public service

State and state controlled institutions

Public interest institutions

(b) Capacity building – Building the capacity of

Relocation or secondment to another department

Limiting multiple memberships of boards

Remuneration and reimbursement for expenditure

Public service officials

48. The PSA stipulates that –

52. Departments must ensure that –

State and state controlled institutions

CHAPTER FOUR – ROLES AND RESPONSIBILITIES

2. Parliament or committees of Parliament nominate, recommend, approve, or appoint

3. An Executive Authority may request Parliament to make recommendations on the

Executive acts of the President

Criteria to decide on the significance of appointments

The Executive Authority

14. The Executive Authority formally appoints board members.