[Last updated: 1 January 2024, unless otherwise noted]

In 1992, the King Committee on Corporate Governance was formed in South Africa, and, in line with international thinking, considered corporate governance from a South African perspective. The first King Code on corporate governance for South Africa was established in 1994 and has been subsequently amended and updated. Although the code is not enforced through legislation, it co-exists with a number of laws that apply to companies and directors including the Companies Act. Compliance with the King Code is a requirement for companies listed on the JSE. The most recent update to the King Code, known as King IV, came into effect during May 2017.

A company listed on the JSE is required to disclose the following information in its annual report and in its annual financial statements with respect to the King Code:

• A statement addressing the company’s implementation of the King Code through the application of the King Code disclosure and application regime.

A listed company must comply with the following specific requirements of the King Code:

• There must be a policy evidencing a clear balance of power and authority at board of directors’ level to ensure that no one director has unfettered powers of decision-making.
• The company must have an appointed chief executive officer and chairman and these positions must not be held by the same person. Either the chairman must be an independent non-executive director, or the company must appoint a lead independent director, in accordance with the King Code.
• The company must appoint an audit committee, a remuneration committee and a social and ethics committee. The composition of such committees must comply with the Companies Act (as applicable) and should be considered in accordance with the recommended practices in the King Code on an apply and explain basis. A brief description of their mandates, the number of meetings held and other relevant information must be disclosed in the annual report.
• A brief curriculum vitae of each director must be provided in respect of a new listing. Further, a brief CV for each director standing for election or re-election at a general meeting or annual general meeting should accompany the notice of the general meeting or annual general meeting.
• The capacity of each director must be categorized as executive, non-executive or independent, using the following as guidelines to determine which category is most applicable to each director:
  • Executive directors are directors that are involved in the management of the company and/or in full-time salaried employment of the company and/or any of its subsidiaries.
  • Non-executive directors are directors that are not involved in the day-to-day management of the business, or are not full-time salaried employees of the company and/or any of its subsidiaries.
  • Independent directors should be determined holistically, and on a substance over form basis in accordance with the indicators provided in Section 94(4)(a) and (b) of the Companies Act and the King Code. In addition, it must be noted that any director that participates in a share incentive/option scheme, will not be regarded as independent.
• The company must have an executive financial director. The JSE may, at its discretion, when requested to do so by such company, and due to the existence of special circumstances, allow the financial director to be employed on a part-time basis only. This request must be accompanied by a detailed motivation by the company and the audit committee.
• The audit committee must (i) consider, on an annual basis, and satisfy itself of the appropriateness of the expertise and experience of the financial director, (ii) ensure that the issuer has established appropriate financial reporting procedures and that those procedures are operating (which should include consideration of all entities included in the consolidated group IFRS financial statements, to ensure that it has access to all the financial information and allow the issuer to effectively prepare and report on its financial statements), and (iii) assess the suitability for appointment or reappointment of the company's current or prospective audit firm. The audit committee must further ensure that the appointment of the auditor is presented and included as a resolution at the annual general meeting of the listed company. The company must confirm to its shareholders that the audit committee has executed these responsibilities.
• The company must have a company secretary and should apply the recommended practices in the King Code. The board of directors must consider and satisfy itself of the competence, qualifications and experience of the company secretary. The company must confirm this by reporting to its shareholders, including providing details of the steps taken and information relied upon by the board in making the assessment.
• The board of directors or the nomination committee, as the case may be, must have a policy on the promotion of broader diversity at board level, specifically focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience. The issuer must confirm this by reporting to shareholders in its annual report on how the board or the nomination committee, as the case may be, have considered and applied the policy in the nomination and appointment of directors.
• The remuneration policy and the implementation report must be tabled every year for separate non-binding advisory votes by shareholders of the issuer at the annual general meeting. The remuneration policy must record the measures that the board of directors of the company commit to take in the event that either the remuneration policy or the implementation report, or both, are voted against by 25% or more of the votes exercised. In order to give effect to the minimum measures referred to in the King Code, in the event that either the remuneration policy or the implementation report, or both, are voted against by shareholders exercising 25% or more of the voting rights exercised, the issuer must in its voting results announcement provide for (a) an invitation to dissenting shareholders to engage with the issuer; and (b) the manner and timing of such engagement.