King III Amendment
By Parmi Natesan
Senior Governance Specialist, Institute of Directors in Southern Africa
arlier this year, the Institute of Directors in Southern Africa (IoDSA) released an amendment to the King Code of Governance for South Africa 2009 and the King Report on Governance for South Africa 2009 (collectively referred to as King III). The IoDSA is the copyright holder of the various King reports, and released the amendment on behalf of the King Committee on Governance in South Africa.
When King III was released in September 2009, the basis for the Companies Act references therein was the version of the Companies Act before the Amendment Bill.
Subsequent to the release of King III, amendments were made to the Companies Act and the final Companies Act, 2008 (the Act) and related Companies Regulations (the Regulations) were issued and became effective on 1 April 2011. Amendments to King III were therefore required in order to align King III with the final Act, where necessary.
The amendments to King III were restricted to what was deemed absolutely necessary to rectify any direct conflicts between King III and the Companies Act. It is important to note that King III is intended to be an aspirational document, and so may recommend best practice that goes beyond legislation. In such instances, King III has not been amended. Similarly, where the Act expands on issues that are only referenced in King III, the amendments were limited to clarifying the linkage, if necessary.
As a result, no fundamental changes to King III were necessary. The one notable change is to Principle 2.26 which now states that companies should disclose the remuneration of individual directors and prescribed officers. Instead of referring to prescribed officers it previously called for disclosure of certain senior executives’ remuneration. Other amendments can be viewed on the IoDSA website. Please refer to the link below:
http://www.iodsa.co.za/Portals/0/library/documents/King%20III Amendment 2 May 2012.pdf
It needs to be noted that while attempts have been made towards the alignment of King III with the Companies Act, in so far as it is possible, King III is aspirational and may recommend practices that go beyond legislation; the legislation constituting the minimum standard in place. The responsibility is on the user of King III to ensure that King III is not relied upon to also ensure legislative compliance.