The King IV Report is set to be released in the final quarter of 2016. The current King III has been largely successful to the extent that it has even been adopted as a listing requirement for the JSE. In theory, King III is applicable to all companies, however, the reality is that King has not been popular amongst unlisted companies and private companies. The new King IV is aimed at being compatible with “all entities.” Thus, King IV is set to play a larger role in private companies. An example of an important principle included in the draft version of King IV is the consideration of all stakeholders’ interests in the decision-making process.
Although King IV is to be implemented on a voluntary basis, the King corporate governance codes are starting to gain legal authority. Courts are willing to use King to assist them in applying the Companies Act 71 of 2008. Stilfontein Mining illustrates how King II was used to determine whether the directors had breached their fiduciary duties as a result of their mass resignation amidst an environmental catastrophe. Hussain J referred to King II in finding that a company, as a good corporate citizen, must act responsibly in relation to environmental issues. In addition, the board is ultimately accountable and responsible for the corporate governance and the affairs of the company. The Board must thus act accordingly when dealing with environmental and human rights issues.
Due to the increasing social and judicial value being placed on this corporate governance code it is advisable that all interested parties partake in the current public consultation phase, particularly the private sector.
(Public comments close 15 May 2016)