King IV™ is the 4th edition of the King IV Report on Corporate Governance. King III™ was replaced predominantly due to the significant increase in focus on corporate governance and regulatory reporting, both locally and internationally.

According to Michael Judin, a member of the King Committee Task Team established for the review and rewrite of the King III Report, it was written as a very African code with the spirit of Ubuntu running throughout. The code was written with the input of today’s generation, and the up and coming investors ensuring it can be applied by all entities, profit making or not.

The intention of King IV is to broaden acceptance of corporate governance by simplifying and defining governance objectives and interpretations, including sector specific supplements to aid application. King IV is effective for financial years commencing on or after 1 April 2017, it is mandatory for companies listed on the Johannesburg Stock Exchange from November 2017 and voluntary for all other companies.


The new report is considered a significant improvement on its predecessor being more succinct and containing fewer principles. Below is a summary of some of what we believe to be the most important differences between King III and King IV.

1. Less principles more practices

King IV consolidates King III’s 75 principles into just 16, plus one for institutional investors, with each principle linked to distinct outcomes. It clearly differentiates between principles, practices and governance outcomes. King IV details over 200 practices that would demonstrate the relevant outcomes. The practices are seen as a guide to demonstrating the outcomes and can be tweaked to be more applicable to your company. The new code aims to improve applicability to a wider audience, and hopefully make it easier for smaller companies to apply. 

2. “Apply or explain” to “Apply and explain”

King IV changes King III’s “apply or explain” approach to a “apply and explain” approach. This approach assumes entities to already be applying the principles and requires them to explain how they achieve this. The intention is to move beyond simple “tick box” approach, to describing how the implemented practices achieve the principles and demonstrate the outcomes.

JSE-listed companies are already under an obligation to apply King III whereby they would explain, ie they had to explain where by didn’t apply a principle. JSE listed companies will now be required to apply and explain their compliance with King IV.

While King is still legally voluntary for all other entities, it is important to note that the South African Courts are now using King as the required standard of care in their rulings against directors and some practices of good governance have been legislated. It is therefore now considered binding and part of our common law, specifically where it impacts the appropriate standard of conduct for those charged with governance.

3. Outcomes-based over “tick-box” approach.

King IV therefore aims to be outcomes-based, reflecting what would be achieved through the effective application of the governance principles. Its objective is to reduce the “tick-box” approach often applied under King III. The King IV outcomes that the principles lead to are:

  • An ethical culture;
  • Good performance and value creation;
  • Adequate and effective control; and
  • Trust, good reputation, legitimacy.

Investors want to know how the entities are demonstrating these.

4. Focus on the board

References to “The Board” have been amended to “The Governing Body” as King IV broadens its relevancy to a wider scope of organisations including those without a board. The primary roles of the Governing body have also been clearly defined. The non-executive director’s classification as ‘independent’ has been broadened, focussing on the substance of their function combining all the relevant factors. King IV also places numerous obligations on the governing body, with a major focus on management, protection and oversight of technology and information even requiring a “cyber-security plan” and additional disclosure on this. The governing body must also approve the formal strategy whereby the core purpose and direction of the entity is set.

5. Board committees

 The audit committee is now required to consider certain prescribed factors when assessing auditor independence. King IV also recommends that the membership of the audit committee and the risk committee overlap in order to function better. Where an entity has a combined audit and risk committee, the agenda should separately address audit, risk and opportunity considerations. King IV expands on the Companies Act requirements for the social and ethics committee specifically relating to their direction and oversight of the management of ethics. The governing body is also required to consider the social responsibility of the remuneration policy.

6. Remuneration policy

The remuneration policy must be tabled annually for separate non-binding advisory votes by shareholders at the AGM where the policy is not supported by a vote of 75% or more, the governing body is required to take steps to address the dissenting votes as well as make disclosures in this regard. King III simply had a 50% majority vote approval requirement and no further actions required.

7. Sector supplements

Sector supplements have been introduced in King IV with specific guidance included through five sector supplements. These sector supplements are:

  • Municipalities;
  • Non- Profit Organisations;
  • Small and Medium Enterprises;
  • State- owned entities; and
  • Retirement funds.


The changes introduced by King IV is expected to improve corporate governance to result in a greater degree of application. This is predominantly due to increased involvement with stakeholders, and a greater emphasis on reporting the outcomes, which increases transparency and accountability of the governing body and stakeholders. King IV hopes to be a step forward as it focuses on achieving outcomes and not just applying principles. Is your company socially responsible, giving back to the community and the environment? What are your outcomes? Why should people trust you with their money? This is what investors want to know, this is what King IV tries to help you report on. King is no longer an exercise that can be done quickly around a boardroom table. It requires time, thought and action.

“Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC (IoDSA) and all of its rights are reserved”.

By Abishek Maharaj & Justine Combrink