It is for this reason that Ansie Ramalho, CEO of the Institute of Directors in Southern Africa and head of the task team, has announced that the report will be revised and re-released in 2016. Legislative developments, notably the Protection of Personal Information Act, new requirements regarding integrated reporting and the need for social and ethics committees expressed in the new Companies Act, have also prompted a relook at the report.
Nina le Riche, partner at professional services firm Deloitte, believes the updated report will benefit small entities the most. "From the beginning, the King report has focused on the apply-or-explain principle, which means that the code is not legislated and directors are at liberty to work out what the required level of governance for their company should be," she says. "What is particularly encouraging is that the revisions will place greater emphasis on the objective behind the principle, rather than the principle itself."
For example, the requirement that a board needs to consist of a majority of non-executive directors, of which the majority should be independent, could be rewritten to place greater weight on the objective, i.e. that the decision-making of directors needs to be influenced in a balanced manner between executive, non-executive and independent directors.
"There's no doubt that by focusing on the objective, it will become easier for smaller companies, NGOs and public sector entities to apply the report's governance principles," Le Riche comments. "By emphasising the objective rather than the principle, the power rests with you rather than the rulemaker."
She says the changes are also important because certain elements of King III, for example, the implementation of ethical leadership and IT governance, are still not as well embedded as initially intended. "The worldwide emphasis on information security, business sustainability and executive remuneration continues to intensify and it remains important that corporate governance in South Africa stays abreast of these developments," she concludes.
