South Africa has become an acknowledged leader in corporate governance with its series of ‘King’ reports.
The long-awaited update of the King Report on Corporate Governance for South Africa, King IV™, was launched at a high-level conference at the Sandton Convention Centre on 1 November 2016.
“King IV introduces some important updates to the landmark King III’s report. In addition, it breaks new ground by differentiating clearly between principles and practices, and linking practices to outcomes—all with a view to making implementation easier,” said Angela Cherrington, CEO of the Institute of Directors in Southern Africa (IoDSA). “Governance is ever evolving, and King IV provides closer, more practical guidance on how to integrate its principles into the way organisations do business.”
Ansie Ramalho, the former CEO of the IoDSA and leader of the King IV task team, said that a number of developments in corporate governance have made a new version necessary. These include the increased focus on executive remuneration; the key role of social and ethics committees, the regulations for which only came out after the launch of King III; and the continuing development of integrated reporting, which was originally recommended in King III.
“King IV breaks new ground by offering an integrated approach to corporate governance encompassing the economic, social and environmental spheres as well”, said Prof Mervyn King. “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 differs from King III in a number ways. The code is now integrated into the report, with a clear differentiation between principles and practices, with the latter linked to outcomes – these and other innovations are designed to make it easier to use.
This is to help organizations move beyond the compliance mindset to describing how implemented practices advance progress towards giving effect to each principle – the application of which is assumed due to it being basic to good governance.
“Too many people see corporate governance as a compliance issue whereas it is actually a critical tool for strengthening all our public and private institutions, to the benefit of the whole economic system. The overriding message is clear that good corporate governance practices help any organization improve its ability to sustain itself and the social environmental context in which it operates” says Ramalho.