In 1992, South Africa established the King Committee on Corporate Governance to develop governance principles suited to the country’s context, while aligning with global best practices. The first King Code was introduced in 1994, and it has since undergone several revisions. Although the Code is not legally binding, it works alongside legislation such as the Companies Act and is mandatory for companies listed on the Johannesburg Stock Exchange (JSE).

The most recent version, King IV, came into effect in May 2017.

Annual Reporting Obligations for Listed Companies

JSE-listed entities must include in their annual report and annual financial statements:

• A statement describing how the company applies the King IV principles, using the disclosure and application regime provided in the Code.

Key Governance Requirements Under King IV for JSE-Listed Companies

1. Board Structure and Leadership

• The board must be structured to ensure a fair balance of power and no single director may hold unrestricted decision-making authority.
• The roles of chairperson and chief executive officer must be separate. If the chairperson is not an independent non-executive director, a lead independent director must be appointed.

2. Mandatory Committees

• The company must have an audit committee, a remuneration committee, and a social and ethics committee.
• Membership of these committees must comply with the Companies Act and align with King IV’s recommended practices.
• Annual reports must outline each committee’s mandate, number of meetings, and relevant activities.

3. Director Appointments and Disclosures

• For a new listing, a brief CV of each director must be provided.
• For re-election at annual or general meetings, a CV must be included with the meeting notice.
• Directors must be classified as executive, non-executive, or independent, with independence assessed holistically under section 94(4)(a) and (b) of the Companies Act and King IV guidelines.
• Directors participating in share incentive or option schemes cannot be considered independent.

4. Financial Director Requirements

• A listed company must employ an executive financial director.
• The JSE may allow part-time employment of the financial director under special circumstances, with detailed motivation from the company and its audit committee.
• The audit committee must annually:
  1. Assess the financial director’s expertise and experience.
  2. Confirm that adequate financial reporting processes are in place across the group.
  3. Evaluate the suitability of the audit firm.
• Appointment or reappointment of auditors must be approved at the AGM.

5. Company Secretary

• A company secretary must be appointed, with the board confirming their competence, qualifications, and experience.
• The board must disclose in the annual report how it made this assessment.

6. Board Diversity

• The board or nomination committee must have a diversity policy covering gender, race, culture, age, skills, and experience.
• The annual report must explain how this policy influenced director nominations and appointments.

7. Remuneration Governance

• The remuneration policy and its implementation report must be tabled separately at the AGM for non-binding advisory votes.
• If 25% or more of shareholders vote against either document, the company must:
  • Announce an invitation for dissenting shareholders to engage.
  • Specify how and when this engagement will occur.
• The remuneration policy must set out the board’s actions if shareholder dissent exceeds this threshold.