King III: Under The Governance Tree

Abstract

King III[1] came into effect on 1 March 2010 superseding King II.[2] The drafters of King III were convened by the Institute of Directors of Southern Africa to update governance guidelines in response to changing governance trends worldwide and the new Companies Act, 2008 (No. 71 of 2008), which was not in effect when this paper was written, but came into effect on 1 May 2011. Noting global developments, King III takes an integrated approach to sustainability and recommends the integration of social, environmental and economic issues to achieve integrated reporting and integrated performance. In addition to sustainability, King III endorses other emerging trends, including the increasing prominence of alternative dispute resolution as an element of good governance. King III supports a risk-based approach to internal audit, which requires the determination of the effectiveness of the systems of internal controls. King III introduces the requirement for shareholders to pass a non-binding vote advisory vote on a company’s remuneration policy, addresses business rescue and provides detail on information technology governance. This paper outlines the principal differences between King II and King III and describes emerging governance areas.

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