The Institute of Directors Southern Africa (IoDSA) and the King Committee recently invited public commentary on the draft King IV Report on Corporate Governance for South Africa. As a proud partner and sponsor of this Report, Adams & Adams hosted a commentary session in Sandton recently. The Report is the fourth edition, setting out the philosophy, principles, practices and outcomes which serve as the benchmark for corporate governance in South Africa. An update of the previous version became necessary as a result of various developments in corporate governance since King III came into effect in 2009.
The King IV Objectives [Download the Draft Report Here]
The intention of King IV is to:
- promote good corporate governance as integral to running a business or enterprise and delivering benefits such as (i) an ethical culture; (ii) enhancing performance and value-creation by the organisation; (iii) enabling the governing body to exercise adequate and effective control and (iv) building and protecting trust in the organisation, and its reputation and legitimacy;
broaden the acceptance of good corporate governance by making it accessible and fit for application by organisations of a variety of sizes, resources and complexity of strategic objectives and operations;
- reinforce good corporate governance as a holistic and inter-related set of arrangements to be understood and implemented in an integrated manner, and
- present good corporate governance as concerned with not only structure and process but also an ethical consciousness and behaviour.
Some King III and King IV Differences
- The 75 principles in King III have been replaced with 16 principles in King IV.
- The “apply or explain” requirement will now be “apply and explain”.
- The test for the independence of directors has been widened.
- Sector supplements have been included with specific corporate governance guidance to SMEs, non-profit organisations, public sector organisations and entities, municipalities and pension funds.
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