Page 16 - KZN Business Sense - 8.2

KING IV IS AS VALID TODAY AS IT WAS

WHEN INITIATED IN 2017

David White, CEO, out the philosophy, principles, The outcome-based approach successful. It is critical that the terms? An integrated report assists
DRG practices, and outcomes which is centred around ethical and governing body is aware that stakeholders and investors in
serve as the benchmark for effective leadership, and has four it is their responsibility to, as sharing a common understanding
C Africa. King IV was released on which the governing body is be aware that the organisation easily possible from only reading
Professor Mervin King says,
of the organisation, which is not
corporate governance in South
distinct areas of measurement
through the financial report, or an
is lifeless without the courage,
required to meet, comply with,
1 November 2016 and became
orporate effective for financial years and explain how organisational commitment, confidence, ESG focused sustainability report.
practices helped it to meet the
commencing from 1 April 2017.
creativity, and communication
governance is Code’s defined principles and from the governing body – and Integrated reporting also
the combination One of the significant advances outcomes. The four outcome that the role of the directors on helps to explain how the
of rules, in the King Commission, measurements include: the governing body is to be the operations of the organisation
processes, and the King IV Code, is the organisation’s heart, mind and have already, and will in the
and laws responsibility of the entire ■ Building an ethical and soul. The 17 principles are: future, impact on society, the
by which governing body to apply and engaged culture within the 1. Leading ethically and environment, and the economy.
businesses explain the organisation’s organisation effectively This is critical in defining
are operated, governance outcomes, as ■ Ensuring good performance positive and negative impacts,
regulated opposed to earlier King Codes of the organisation, and 2. Supports an ethical culture and opportunities and risks,
and where the governing bodies meeting organisational and 3. Responsible corporate which need to be enhanced or
controlled. The term where required merely to stakeholder expectations citizenship corrected respectively as the
encompasses the internal apply or explain variances in ■ Ensuring adequate and 4. Appreciate that corporate organisation moves forward in
and external factors of an intentions and outcomes. effective controls / oversight governance, including its endeavours.
organisation that affect the King IV is applicable to within the organisation sustainable development, is The integrated report is not
interests of the organisation’s all organisations be they an inseparable element of the about disclosing confidential
stakeholders, including companies, trusts, NGOs, state ■ Ensuring legitimacy, value creation process information, but rather to
trust, and confidence in the
shareholders, customers, enterprises, local authorities, organisation 5. Ensure the validity or share relevant information
employees, suppliers, university councils, pension, reporting and informed about the organisation that will
government regulators, and and retirement funds, and any To reach the four intended assessments make it easier for associated
other. other commercial or serving positive governance outcomes, 6. Governing body as custodian people and stakeholders to
The purpose of corporate entities. Boards in the King governing bodies are required to of good governance understand and support the
governance is to help build IV Code are referred to as show how the application of 17 7. Governing body composition organisation. This in turn
an environment of trust, governing bodies, and people principles within the Code has 8. Effective governing body assist funders in approving,
transparency and accountability appointed to governing bodies led to positive and anticipated structures and delegation of for example, financial loans
necessary for fostering long- are responsible for ethical and outcomes. Each of the 17 authority and lower interest rates. The
term investment, financial effectiveness leadership of the principles must be achieved, 9. Performance evaluation comprehensive report will also
stability and business integrity, organisation in which they and practices must be put in help to attract higher quality
therefore supporting stronger serve, and are measured in place to support the governing 10. Governing body / people to work in and supply
growth and more inclusive terms of four clearly defined body and operational teams in management relationships goods to the organisation,
organisations and societies. outcomes which are clarified in meeting the defined principles 11. Risk governance and help to focus measures to
the Code. and outcomes. 12. Technology and information alleviate social, environmental,
Corporate law dictates the and economic challenges.
formation and the activities The King IV Code is a Practices to reach the 17 governance
of corporations, while voluntary set of principles, and principles may change from 13. Compliance governance Conclusion
governance regulates the although not statutory law as organisation to organisation 14. Remuneration governance Corporate governance
balancing of interests among per the directing requirements depending on the size of the 15. Assurance and its integrated reporting
an organisation’s different in the Companies Act, it can entity, or in which industry the 16. Stakeholder-inclusive methodologies is a positive
stakeholders. Corporate law have legal consequences for a entity operates. Although no approach step forward in governance for
and governance therefore governing body in them being direct guidance is given to the both developing and mature
directly shape what businesses held liable for poor governance practices that governing bodies 17. Responsible investment organisations, in that it provides a
do and how they do it. compliance through case and organisations are expected The Code encourages a holistic well thought through framework
law and its direct linkage to to implement, there does need
History and Present common law. to be sight of significant thought approach and consideration to reduce organisational risk,
to governance, referred to as
to support ethical and effective
In July 1993 the Institute of South Africa as a Governance and consideration induced to Integrated Reporting, and leadership, to align initiatives to
Directors in South Africa asked Pioneer ensure that the practices chosen suggests that six capitals be sustainability endeavours, and to
retired Supreme Court of South support to the 17 principles considered. These important better inform stakeholders of the
Africa judge Mervyn E. King to South Africa through the King being achieved. areas of focus directly impact organisation’s pending challenges,
chair a committee on corporate Commission and Integrated The 17 principles are divided stakeholder relationships and opportunities and expectations. 
governance. He viewed this as Reporting Council has been a into the following groups of include:
an exciting opportunity to share leading authority on governance focus areas and are linked by
his passion and experience in and organisational reporting common themes and concepts. ■ Financial For more information contact
corporate leadership, and to throughout the world. Many These themes and concepts can ■ Manufactured E: david@drg.co.za
educate the newly democratic countries have adopted the be broadly grouped into the ■ Human W: www.drg.co.za
South African public on the King Codes to better manage following headings: ■ Natural
working of a free economy. and ensure accurate reporting, ■ Leadership, ethics and ■ Intellectual
responsibility and outcomes of
In 1994 the first King report governing bodies. corporate citizenship ■ Social
on corporate governance (King ■ Strategy, performance and
I) was published, this was the The Nuts and Bolts reporting Integrated reporting
first corporate governance code King IV is an outcome-based ■ Governing structures and helps to define a clear and
for South Africa. It established governance code. The rational delegation understandable way to show
recommended standards being that if the internal ■ Governance functional areas stakeholders how the governing SCAN
of conduct for boards and and external outputs of an body applied their minds to the QR CODE
directors of listed companies, organisation are measured ■ Stakeholder relationships sustainability and value creation
banks, and certain state-owned and managed within clearly ■ Integrated Reporting of the organisation. TO SEE
enterprises. defined parameters, it is likely The 17 principles flow from Integrated reporting helps to VIDEO

King IV is the fourth set of that the organisation has been the common themes and answer questions as, has the
codes created for the purpose of led effectively, and will achieve concepts and help to define organisation developed a strategy (Open the camera on your phone and
ensuring effective governance positive outcomes and maintain the activities that will result in to ensure sustainable performance hover steadily for 2-3 seconds over the
within organisations, and sets quality governance standards. the organisation likely being in the short, medium, and long QR Code to see the video.)

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