King committee on corporate governance6th May 2021 0 By indiafreenotes
The King Report on Corporate Governance is a booklet of guidelines for the governance structures and operation of companies in South Africa. It is issued by the King Committee on Corporate Governance. Three reports were issued in 1994 (King I), 2002 (King II), and 2009 (King III) and a fourth revision (King IV) in 2016. The Institute of Directors in Southern Africa (IoDSA) owns the copyright of the King Report on Corporate Governance and the King Code of Corporate Governance. Compliance with the King Reports is a requirement for companies listed on the Johannesburg Stock Exchange. The King Report on Corporate Governance has been cited as “the most effective summary of the best international practices in corporate governance”.
Unlike other corporate governance codes such as Sarbanes-Oxley, the code is non-legislative and is based on principles and practices. It also espouses an apply or explain approach, unique to the Netherlands until King and now also found in the 2010 Combined Code from the United Kingdom.
The philosophy of the code consists of the three key elements of leadership, sustainability and good corporate citizenship. It views good governance as essentially being effective, ethical leadership. King believes that leaders should direct the company to achieve sustainable economic, social and environmental performance. It views sustainability as the primary moral and economic imperative of this century; the code’s view on corporate citizenship flows from a company’s standing as a juristic person under the South African constitution and should operate in a sustainable manner.
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.
The key principles from the first King report covered:
- Board of directors’ makeup and mandate, including the role of non-executive directors and guidance on the categories of people who should make up the non-executive directors
- Appointments to the board and guidance on the maximum term for executive directors
- Determination and disclosure of executive and non-executive director’s remuneration
- Board meeting frequency
- Balanced annual reporting
- The requirement for effective auditing
- Affirmative action programs
- The company’s code of ethics