King Report and King Code on Corporate Governance

The King Report and King Code 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 latest King Report and King Code, King IV, and links to relevant source documents.

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.

How can we help you?

• Gain the tools and insight to help you transition from King III to King IV by attending our 2-hour hour Transition from King III to King IV Workshop.
• Improve your organisation’s IT Governance, Risk and Compliance by attending our Practical IT GRC workshop.
• Make the right disclosures for King IV™ by asking us to assist you. We have created clever ways to assist you to draft accurate customised disclosures for your organisation as painlessly as possible.
• Transition from King III to King IV™ by getting our King III to King IV comparison tables and King planning tool.
• 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 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
• Conducting an Intellectual Property Audit to protect your intellectual property assets.

Who does it apply to?

The King Code applies to all organisations, 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 King IV effective date was 1 April 2017). The King Reports have undergone many changes since 1994. 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. Each version of King builds on the one before. Although King IV is based on the underlying principles of the previous King Reports, it now emphasises more stakeholder inclusion, IT governance and disclosure.

King III had 75 principles whereas King IV™ only has 17 principles in total. The 17th principle only applies to institutional investors, so organisations are left with 16 principles that they have to comply with. 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 (Cybercrime 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 also 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, we are keeping up with international practices. Other countries have codes similar to the King Codes. These countries include the US, Canada and Australia.