The Institute of Directors in Southern Africa (IoDSA) and the King Committee are consulting on the latest King Report—King IV which expands the current corporate governance code into more non-financial reporting areas and also replaces King III’s “apply or explain” with an “apply and explain” approach.

The King Committee, under the leadership of Professor  Mervyn King and the King IV task team, led by Ansie Ramalho, the former CEO of the IoDSA, have been working on the new document since late 2014. Ramalho said that  a number of developments in corporate governance made a new version necessary. Among these developments were the increased focus on executive remuneration; the key role of social and ethics committees, regulations which only came out after the launch of King III; and the continuing development of Integrated Reporting, which was first recommended in King III.

Ramalho said the change to an “apply and explain” approach was intended to help organisations move beyond a compliance mind-set to describing how implemented practices advance progress towards giving effect to each principle - the application of which is assumed due to it being basic to good governance.

“The King Codes have helped make South Africa a global leader in corporate governance—subjecting King IV to the rigour of public comment is thus important,”said King.

“King IV breaks new ground by offering an integrated approach to corporate governance encompassing the economic, social and environmental spheres as well. It also impacts on sectors other than listed or large companies such as state-owned enterprises, local government, non-profits, SMEs and retirement funds, among others. Quality and effective corporate behaviour offers a way out of many of our current economic and sustainable development challenges.”

The public consultation is taking place over two phases.  The first phase covers the King IV Report which sets out philosophy, concepts and the foundational principles. During the second phase comment will be sought on the Sector Supplements, which are dependent on the main report. The IoDSA said this approach would allow Ramalho’s team to solicit further specialist comment on the sector supplements before they are released publicly. The main report, IoDSA said, had already had the benefit of comment from institutional members of the King IV Committee, corporate governance specialists, directors, preparers, users and academics.