Corporate governance awareness and practices have been enhanced under the guidance of King I to III. However, a number of developments have made a new version necessary. King IV was issued in November 2016; effective in respect of financial years commencing on or after 1 April 2017.
King IV sets out normative statements (i.e. is outcomes and norms driven) on what organisations want to achieve. Once this is done, practices are set in place. This takes the process up a level and is fundamentally different from King III.
More aspirations under King IV include: stake-holder inclusivity, catering for all organisations, reduction of principles from 75 to 16+1, being less prescriptive and more transparent and provides proportionality (i.e. how to scale the practice to the size of the organisation) , ‘’apply AND explain’’ (King IV) versus ‘’apply or explain’’ (King III), a more practical approach and focus on the perception of directors’ independence rather than factual independence or a tick-box approach, greater involvement of the Social & Ethics Committee on remuneration (monitoring and reporting). Executive remuneration should now take into account performance across the triple context, (i.e. nature, society and business) and the various forms of capitals (i.e. financial, manufacture, intellectual, social and human capital) and not only shareholder value.
King IV recognises information in isolation of technology as a corporate asset that is part of the company’s stock of intellectual capital and confirms the need for governance structures to protect and enhance this asset. The Code also requires disclosure on the structures and processes for information and technology, the key focus areas, the mechanisms for monitoring technology and information management as well as to give an indication of how the organisation’s current and future objectives are affected by digital development.
Good stakeholder relationships are critically important; however, these relationships also pose a large risk to organisations: i.e. the use of social media and interactions with stakeholders across multiple social media platforms could prove particularly relevant and challenging.