Corporate governance

Pick n Pay Stores Limited

Legal report

Compliance

The compliance framework rests on the Group's comprehensive set of policies. These are regularly updated to reflect governance best practice and the evolving legal environment. All Group companies and employees are obliged to comply with these policies.

The Group has created a set of compliance questionnaires that are distributed bi-annually to the relevant departments. The compliance questionnaires indicate levels of compliance to statutes that impact the retail industry such as the Consumer Protection Act, the Competition Act and the Companies Act 2008. Statutory developments are regularly monitored to establish the compliance regime, and we are currently reviewing what is needed to establish compliance with the provisions of the Protection of Personal Information Bill.

Compliance questionnaires are also used to educate employees in the requirements of statutory and regulatory compliance in the retail sector, and staff members are trained in sessions dealing with important legal issues such as the provisions of the Consumer Protection Act.

The questionnaires are regularly audited internally to ensure accurate reporting.

No judgments, damages, penalties or fines were recorded and/or levied against any Group company, directors, officers or employees during the period under review for non-compliance with any legislation.

Each year, the executive directors and senior managers are required to declare in writing that to the best of their knowledge they, and the companies they serve, have complied with all relevant statutes and regulations. The most recent of these exercises was completed during April 2013, and no incidents of contravention of the policies or the statutes were reported.

Competition Commission

In August 2012, a subsidiary company received a summons from the Competition Commission regarding an investigation into whether or not long-term exclusive lease agreements, as entered into between landlords and various South African national retail chains, are anti-competitive. Pick n Pay is co-operating fully with the Competition Commission in providing all information requested, and remains convinced that no anti-competitive behaviour exists.

In February 2013, a subsidiary company received notification of a complaint laid against it with the Competition Commission by a small number of Pick n Pay franchisees relating to the sourcing of suppliers and the centralised buying system. Pick n Pay co-operated fully with the Competition Commission in providing all information requested. After reviewing all documentation, the Competition Commission declined to refer the complaint to the Competition Tribunal.

Following the recent statutory changes to, inter alia, the Competitions Act 2008, the Consumer Protection Act and the Companies Act, our franchise agreement was thoroughly reviewed by both commercial and competition lawyers, and was amended to ensure that Pick n Pay and our franchisees remain compliant with all statutory requirements.

Litigation matters

The Company and its subsidiaries are not involved, and have not in the 2013 annual financial period been involved, in any legal or arbitration proceedings which may have or have had a material effect on the financial position of the Pick n Pay Group of Companies, nor is the Company aware of any such proceedings that are pending or threatened.