Understanding the Shift from King III to King IV: A Guide for South African Organisations
On 1 November 2016, the King IV Report on Corporate Governance for South Africa™ officially replaced King III, taking effect for all financial years beginning on or after 1 April 2017. While still a voluntary framework, King IV is mandatory for listed companies and others as prescribed by legislation.
Why King III Was Replaced
The transition to King IV was prompted by major shifts in the global governance landscape. The need for greater accountability, inclusive capitalism, and sustainable business practices led to a more forward-thinking and stakeholder-oriented governance model.
Although small and medium-sized enterprises (SMEs) are not legally required to comply with King IV, many are choosing to adopt its principles to enhance transparency, build trust, and strengthen relationships with stakeholders.
King IV Structure at a Glance
King IV simplifies corporate governance into:
17 core principles
208 recommended practices
Sector-specific supplements for:
Municipalities
Non-Profit Organisations
Retirement Funds
SMEs
State-Owned Entities
This structure is more practical, adaptable, and relevant to organisations of all sizes and across sectors.
Key Concepts Introduced in King IV
King IV brings several important elements to the forefront of governance in South Africa, including:
A strong emphasis on outcomes-based governance
Increased transparency in reporting
Accessibility and clarity in language for easier implementation
Greater focus on balanced and independent board composition
Clear delegation of responsibilities to management and board committees
The need for competent governance professionals
Regular performance evaluations for the governing body
Strengthening of the Social and Ethics Committee’s role
A deeper focus on risk oversight and regulatory compliance
Emphasis on fair and responsible remuneration policies
Shareholder advisory votes on remuneration
Introduction of a combined assurance model
Guidance on responsible tax policy
Support for shareholder activism
Consideration of mandatory audit firm rotation
Adoption of dispute resolution processes
Conclusion
As governance expectations continue to evolve, it’s no longer sufficient to rely on compliance alone. King IV encourages organisations to embed governance into their culture, align it with long-term value creation, and demonstrate real commitment to ethical leadership and responsible corporate citizenship. Whether you are a large listed company or a growing SME, adopting the principles of King IV can drive meaningful change, build stakeholder trust, and position your organisation for sustainable success.
