What is the King IV Report of Governance?

The Institute of Directors in Southern Africa (IoDSA) formally introduced the King Code of Governance Principles and the King Report on Governance (King III). King III came into effect on 1 March 2010 – until then King II applied. The Code and Report also falls in line with the Companies Act no 71 of 2008, which became effective on 1 May 2011.

Like its 56 commonwealth peers, King III has been written in accordance to the comply or explain principle based approach of governance, but specifically the apply or explain regime. This regime is currently unique in the Netherlands and now in South Africa. Whilst this approach remains a hotly debated issue globally, the King III Committee continues to believe it should be a non-legislative code on principles and practices

The latest version, King IV, was released on 1 November 2016.  It is effective for financial years commencing from  1 April 2017.

King IV builds on King III insofar as that it has been revised to bring it up to date with international governance codes and best practice. King IV is structured as a Report that includes a Code, with additional, separate sector supplements for SME’s, NPO’s, State-Owned Entities, Municipalities and Retirement Funds. The King Code contains both principles and recommended practices aimed at achieving governance outcomes. Whilst King IV is voluntary (unless prescribed by law or a stock exchange Listings Requirement) it is envisaged that it will be applicable to all organisations irrespective of their form or manner of incorporation. 

The main differences between King III and IV are:

  1. King IV is outcomes oriented, ie it places accountability on the governing body (e.g. the board in companies) to attain the governance outcomes of an ethical culture, good performance and effective control within the organisation and legitimacy with stakeholders, as opposed to just a "tick box" mentality.
  2. King IV requires an “Apply AND Explain” approach to disclosure, as opposed to King III which was ‘Apply Or Explain’. This means that application of the principles is assumed and that an explanation is disclosed on the practices that have been implemented and how these support achieving the associated governance principle according to KPMG.
  3. King IV provides five ‘sector’ supplements
    1. Municipalities
    2. Non-Profit Organisations
    3. Retirement Funds
    4. Small and Medium Enterprises
    5. State-owned Entities

For more information, please refer to the following sources:

  • SAICA (portal with various commentaries from large audit firms)
  • Link to the King IV App launched by the Institute of Directors
  • Portal by the Institute of Directors regarding King IV, including infographics, a Q&A section, etc.