The King Report and King Code on Corporate Governance in South Africa defines corporate governance as “the exercise of ethical and effective leadership by the governing body”. This is why the King Report and King Code is so important – it sets out what ethical and effective leadership is. The article is a short summary of the King Report and King Code, links to source documents, and enables you to comment on it.
Why the King Report and King Code is Important
The purpose of King is to:
- create an ethical culture in organisations,
- improve their performance and increase the value they create,
- ensure there are adequate and effective controls in place,
- build trust between all stakeholders,
- ensure the organisation has a good reputation,
- ensure legitimacy.
These are all crucial to build value and create a better society.
Who does it apply to?
The King Code applies to all organisations in South Africa, including organisations listed on the JSE, unlisted companies, trusts and NGO’s. The King Code has always applied to all organisations but because of its complexity, smaller organisations have seldom applied the principles. The latest version tried to address this by making it simpler and easier to understand. Smaller organisations and NGOs will therefore find it easier to apply the principles to their organisation.
King is voluntary, you do not have to comply
What is different in the versions?
It was published way back in 1994 and we have had King I, King II, King III™ with King IV™ being the latest edition. The Kind Reports have undergone many changes since then. With all the changes in business (such as technological changes) it was inevitable that the King Report and King Code would have to be updated from time to time. Although King IV™ is based on the underlying principles of the previous King Reports, it emphasises stakeholder inclusion, IT governance and disclosure. Each version of King builds on the one before.
King III™ had 75 principles whereas King IV™ only has 17 principles in total. The 17th principle only applies to institutional investors. The King IV™ report has been scaled down to only 82 pages. Previously the codes and reports were published separately but King IV™ integrates the code into the report. The Report has decreased in size and is more applicable to its audience. The document is easier to read and understand. This helps smaller companies to apply the principles in their businesses.
King IV™ is more effective as it contains all the principles of the previous King reports but it is updated. The content is applicable to the current needs of the business world. Emphasis on technology and information is prominent. With the introduction of the Cybercrimes and Cybersecurity Bill (Cybercrimes Bill) last year there was a need to address cyber risks in the new code. King IV™ does this. The final King IV™ report was released on the 1 November 2016. The King committee published the five King IV™ supplements that will be used in conjunction with the King IV Report and Code™. The supplements offer guidelines to specific sectors on how to apply the King Principles within their organisations.
Countries with Similar Codes
By updating the Report, South Africa is keeping up with international practices. Other countries have codes similar to the King Codes. These countries include the US, Canada and Australia.
How can we help you?
- Read King IV™ by downloading the King IV Report™ (Note it is 6MB big!) or getting the King IV™ Report App for R269.99 through the App Store or Google Play.
- Align your organisation with the King IV™ corporate governance principles by consulting with us.
- Increase your awareness on IT Governance by attending a practical workshop on IT GRC.
- Align your IT Policies with the King IV™ principles by asking us to review or draft IT policies that are compliant with the principles.
- Comply with IT Laws by getting a List of IT Laws and the Michalsons IT Legal Framework.
Note: Copyright and trademarks for the King III™ and IV Report on Corporate Governance™ are owned by the Institute of Directors in Southern Africa. All views are our own and we are not endorsed in any way by the Institute of Directors in Southern Africa.