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The Draft Report for Corporate Governance for South Africa (King III or King 3) and the Draft Code of Governance Principles were released for comment on 25 February 2009. Comment should be submitted before 25 April 2009.  The practice notes or guidelines (which provide the necessary guidance on the implementation of the code) will not be available for public comment and will be made available on 1 September 2009 together with the final King III.

Who will it apply to ? It applies to all entities - big and small, public and private - on an “apply or explain” basis.  The Report states that:

“In contrast to the King I and II codes, King III applies to all entities regardless of the manner and form of incorporation or establishment.“

The Code states that:

“All entities should apply both the principles in this Code and the best practice recommendations in the Report. In situations where the board or those charged with governance decide not to apply a specific principle and/or recommendation, this should be explained fully to the entity’s stakeholders. Where entities have applied the Code and best practice recommendations in the Report, a positive statement to this effect should be made to stakeholders.“

All entities and directors should be reading, considering the implications of and if necessary submitting comments on King III.

Where can I get King 3? The Draft King Report and Code for South African 2009 are available on the web site of the Southern African Chapter of the Institute of Directors.  You can read them as an eBook or download them.  Please let us know if you struggle to access them.

Listen to Helaine Leggat’s thoughts on the launch (about 4 minutes in duration).

Some interesting aspects or key points adopted that stood out for us are:

1. Apply or explain basis - you should apply it or give reasons why you have not applied it
2. Risk based approach - as opposed to pure legal compliance
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   Tags: ADR, IT Governance, King 3