The 21st Century has been characterised by fundamental changes in both business and society. Such changes provided the central context within which the King committee set out to draft King IV and have influenced its content an approach.
New global realities are testing the leadership of organisations on issues as diverse as inequality, globalised trade, social tensions, climate change, population growth, ecological overshoot, geopolitical tensions radical transparency and rapid scientific and technological advancement.
The United Nations Sustainable Development Goals which were agreed by governments in 2015, the Africa 2063 Agenda and the South African National Development Plan 2030 have a common theme of value creation that is accomplished in a sustainable manner.
King IV was accordingly drafted with the above in mind and to respond to these changing times.
The objectives of King IV is to promote corporate governance as integral to running an organisation and delivering governance outcomes such as ethical culture, good performance, effective oversight and legitimacy.
It is also aimed at broadening the acceptance of King IV by making it accessible and fit for implementation across a variety of sectors and organisational types.
It was developed to reinforce corporate governance as a holistic and interrelated set of arrangements to be understood and implemented in an integrated manner.
And finally the King IV is expected to encourage transparent and meaningful reporting to stakeholders.
Present corporate governance is concerned with not only structure and process, but also with an ethical consciousness and conduct.
As opposed to its predecessor the King IV advocates an outcomes based approach. Achieving the principles and therefore ultimately good governance, optimises the organisation to realise the good governance outcomes.
There is a clear differentiation between principles and practices. Principles are achieved by mindful consideration and application of the recommended practices.
The King IV is designed and drafted to be more accessible to users and reinforce governance as a set of holistic arrangements.
Broader forms of address are utilised namely “organisations” and “governing body”.
Supplements are provided to help organisations across a variety of sectors and organisational types to interpret and implement King IV to their particular circumstances
Kind IV provides guidance on how to apply the recommended practices proportionately in line with the organisations resources and size, complexity of the organisational activities.
To balance the less prescriptive approach adopted in King IV there is greater emphasis on transparency with regards to how judgement was exercised when considering the practice recommendations contained therein.
For directors of companies it is becoming increasingly important to adopt good governance practice as contained in the voluntary codes such as King IV which provisions find their way into jurisprudence and become part of the common law. Consequently failure to meet an established corporate governance practice, albeit not legislated may invoke liability.
By Richard Foster
* Richard Foster is an IoDSA facilitator, corporate governance advisor and independent chairman. He will be presenting the King IV course