Most, if not all, corporate organisations are aware of the King Reports on Corporate Governance in South Africa (the most recent King III Report on Corporate Governance [“King III”] being published in 2009). On 15 March 2016, the draft King IV Report on Corporate Governance (“King IV”) was released for public comment by the Institute of Directors in Southern Africa (IoDSA) and the King Committee.
The King Committee leader, Professor Mervyn E King, stated that “King IV breaks new ground by offering an integrated approach to corporate governance encompassing the economic, social and environmental spheres as well. It also impacts on sectors other than listed or large companies such as state-owned enterprises, local government, non-profits, SMEs and retirement funds, among others. Quality and effective corporate behaviour offers a way out of many of our current economic and sustainable development challenges”.
King IV is aimed at broadening the acceptance of corporate governance by making it accessible to organisations of a variety of sizes, resources and complexity. The principles contained in King III have been significantly reduced, from 75 to 16. Another noteworthy change in King IV is the requirement to “apply and explain”, as opposed to “apply or explain” (as currently dealt with in King III), aimed at encouraging qualitative application and the explanation of how principles are being effected. King IV now stipulates the minimum requirements for a remuneration policy and provides for adoption of that policy by a 75% non-binding advisory vote of the shareholders (previously 50 + 1%). A stakeholder-inclusive approach is adopted in King IV, which will require the governing body to consider, weigh and balance the legitimate needs, interests and expectations of all stakeholders in making decisions in the best interests of the organisation.
A copy of King IV can be accessed via:
The first phase of the comment period runs until 15 May 2016. Should you wish to comment on King IV, follow the following link: https://answeredinsight.fluidsurveys.com/s/kingiv_p1_public_comments.
The sector supplements, which are intended to provide specific guidance on specific categories of organisations such as SMEs, non-profit organisations and public sector organisations, will be published and open for comment during April 2016.