King’s fourth in line
The King 4 report will simplify SA’s current corporate governance code, becoming a more user-friendly framework, says good business practice expert Michael Judin.
Judin, a commercial lawyer at Judin Combrinck Attorneys, has been a member of the King Committee since it wrote SA’s initial corporate governance report (King 1) in 1994.
He said at a seminar held by the SA Venture Capital Association last week that the team behind the latest King report was “making the report more accessible to business people in SA”. The idea is also to allow more flexibility in the way businesses achieve certain desired outcomes that are based on existing principles.
King 4 is expected to be released next year in August. Its predecessors came in 2002 (King 2) and 2009 (King 3).
The current code of conduct, King 3, has been lauded globally for its influence on corporate governance.
“King 3 has been the subject of research by Harvard Business School due to the influence that it has had on governance internationally. It is also regularly quoted by our courts and has been held out as exemplary by eminent persons and international academics,” says Ansie Ramalho, King 4 project lead at the Institute of Directors in Southern Africa.
Anton van Wyk, the head of audit and advisory group PwC’s Africa Assurance Practice, says King 3 was designed to ensure that corporate governance in SA moved to the forefront of the international stage.
“Changing trends in international governance necessitated the delivery of King 3,” he says. “King 2 was a leader in highlighting the importance of reporting on how a company has affected the economic and environmental situation of the community it operates in. The company needs to adjust its business practice so that it enhances the economy of the community in question.”
King 3 became the world’s first corporate governance code to require the board of directors to indicate the effectiveness and integrity of all financial and other controls in its annual integrated report.
The audit committee should provide details of any material weaknesses that gave rise to material loss, fraud or error, and corrective action taken.
King 4 is expected to be made available in a mobile phone-friendly format.