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The King Report on Governance for South Africa 2009 (King III), which was released on 1 September 2009, provides a list of best practice principles to assist and guide directors in Corporate Governance.

King III applies to all corporate entities regardless of the manner incorporation, whether in the public, private sectors or non-profit sectors.

It is expected that the new Companies’ Act will become operative on 1 July 2010. The King III report will be effective from 1 March 2010.

Key aspects of the Report:

There are 4 concepts that are absolutely brand new being:

1. King III recommendations apply to all corporate entities on an “apply or explain” basis
2. Information Technology Governance (Workshops on compliance and governance to be held by Shoden Academy)
3. Business Rescue (Rescue recommendations for economically viable companies in financial difficulties)
4. Fundamental and Affected transactions (mergers acquisitions amalgamations)

Emerging trends in the King III report:

1. ADR or Alternative Dispute Resolution (mediation, conciliation arbitration)
2. Risk-based internal audit
3. Shareholder approval for Non-Exec remuneration
4. Evaluation of directors and Board performance
5. Integrated Reports
6. Sustainability and Integration of People, Planet Profit or put another way, Social, Environmental and Economic principles
7. The Inclusive Stakeholder approach (not just serving shareholders)

Of interest are that these and other recommendations are applicable to all companies and not only listed companies. Other corporate entities will now also have to consider applying the Codes in areas like:

1. Composition of the Board (majority independent non-executive directors)
2. Duties of Chairperson and CEO clarified
3. Audit Committees
4. Governance of Risk

Some new issues in the report:

• Information technology governance
• Composition of the board,
• Duties of the chairperson and the CEO
• Remuneration of directors
• Performance assessment of directors
• Alternative dispute resolution and stakeholder relationships
• Integrated reporting and disclosure
• Audit committees
• The governance of risk
• Compliance with laws, rules, codes and standards