Governance Fundamentals Review – Charter, ToR, DoA

The “paperwork” of governance—dry, overlooked, and critically important. Three documents form the foundation of how your board operates: Board Charter, Terms of Reference, and Delegation of Authority. Without them, decision rights are ambiguous, accountability is unclear, and disputes have no framework for resolution. The Sirdar board evaluation process determines whether your governance documents are fit for purpose.

The Three Core Governance Documents

Board Charter

The board charter defines the board’s mandate, composition, decision-making authority, and operating framework. It answers: What is the board responsible for? How many directors? What skills are required? How often do we meet? What decisions are reserved for the board, and which are delegated to management? When does the board need a supermajority? How is the chair appointed? When a new director joins or a dispute arises, the charter is the reference point.

Terms of Reference (ToR)

Each committee has its own ToR—audit, risk, remuneration, nomination, social and ethics. The ToR defines the committee’s specific mandate, authority limits, reporting lines, meeting frequency, and what information they need. A solid ToR is specific enough to guide action but flexible enough to adapt to changing circumstances.

Delegation of Authority (DoA)

The DoA specifies who in management can approve what, at what financial threshold, and under what conditions. A contract approved at R500k by the CFO might require board approval at R5m. Real estate decisions may follow a different approval chain than procurement. The DoA prevents disputes, reduces decision-making bottlenecks, and creates accountability trails.

Why These Documents Matter

Governance documents serve three functions: (1) they distribute decision rights—ensuring clarity about who decides what, (2) they create accountability—documenting who is responsible for specific governance outcomes, (3) they provide continuity—institutional memory doesn’t depend on who the chair is or which directors are present. When these documents are absent or outdated, governance defaults to personality and politics.

What a Governance Fundamentals Review Checks

Currency: When were these documents last updated? If they predate your last strategic pivot, regulatory change, or material acquisition, they need a rework.

Alignment: Do Terms of Reference match actual committee practice? Are committees doing what their ToR says, or has practice evolved without updating the documents?

Completeness: Are all required documents in place? Many boards lack formal DoAs. Some have out-of-date ToRs for committees that no longer exist.

Clarity: Would a new director understand their mandate from these documents alone? Can they identify their reporting responsibilities? Would they know which decisions are theirs and which aren’t?

Enforceability: Are these documents treated as living governance documents, or stored in a folder never to be seen again?

South African Governance Context

King IV sets out detailed expectations for board structure, committee mandates, and decision delegation. The JSE Listings Requirements specify committee composition, independence, and frequency requirements. B-BBEE scorecard criteria often evaluate governance documentation and its integrity. Non-listed South African businesses frequently overlook these documents—which becomes a problem when they raise capital, seek BEE partnership, or prepare for acquisition.

Frequently Asked Questions

1. How often should governance documents be reviewed?

At minimum annually. After significant strategic changes, new regulations, or material acquisitions, review immediately. We recommend a formal evaluation of governance documentation every two to three years.

2. Who is responsible for maintaining them?

The company secretary or governance officer typically maintains these documents on behalf of the board. The board—often via the nomination committee—owns the governance framework. When documents drift, it’s usually because ownership is unclear.

3. Can we do a fundamentals review without a full evaluation?

Yes. A governance fundamentals review is standalone—focused, fast, and practical. You might commission it because a new chair joins, a regulatory change occurs, or you suspect documentation gaps. It’s a targeted diagnostic, not a comprehensive board evaluation.

4. What’s the most common gap you find in governance documentation?

Outdated or missing Delegation of Authority. Many boards have inherited DoAs written five or ten years ago that no longer reflect actual practice, organisational structure, or authority levels. The second gap is ToRs that describe what committees should do but not what they actually do.