Corporate governance has become a defining feature of responsible business practice in the 21st century. In South Africa, the King Reports on Corporate Governance (“King Reports”) have long served as a guiding light for organisations striving to balance profitability with ethical leadership and accountability. Among these, the King IV Report on Corporate Governance for South Africa (2016) (“King IV”), otherwise commonly referred to as King IV, marked a significant evolution in governance philosophy and practice.
Background and Origins:
The King Reports trace their roots to 1994, with the release of the first King Report. Each iteration has reflected the changing landscape of business, society and regulation, both globally and locally. King IV, released by the Institute of Directors in Southern Africa in November 2016, is the fourth version in this lineage. It was designed to be more accessible, adaptable and outcomes-oriented than its predecessors, particularly King III, which had been in effect since 2009.
King IV responds to new global realities, including rapid technological advances, climate change, social inequality and growing stakeholder expectations. It aligns with international developments such as the United Nations Sustainable Development Goals, the Africa 2063 Agenda and South Africa’s National Development Plan 2030, integrating them into a cohesive framework of corporate accountability.
What Is King IV?
At its core, King IV is a set of voluntary principles and best practice recommendations that help organisations cultivate effective, ethical and sustainable governance. It defines corporate governance as “the exercise of ethical and effective leadership by the governing body”, aiming to deliver four key governance outcomes:
- ethical culture;
- good performance;
- effective control; and
- legitimacy.
Importantly, King IV is not a prescriptive checklist. Instead, it introduces a more refined “apply and explain” approach. Organisations are expected not only to apply the principles but also to explain how these are implemented in the context of their particular circumstances. This marks a shift from the “apply or explain” regime in King III, promoting transparency and contextual application over compliance-based governance.
Key Features and Innovations
King IV is structured around 17 principles, 16 of which apply to all organisations regardless of their size or legal structure, with the 17th specific to institutional investors. Unlike earlier versions, King IV is designed to be universally applicable, to listed companies, state-owned enterprises, non-profits, municipalities, retirement funds, and even small and medium enterprises. Sector-specific supplements help tailor the King IV to different organisational types.
The King IV also emphasises integrated thinking and sustainable development, urging organisations to consider the “triple context” of the economy, society and the environment, as well as the six capitals, namely:
- financial;
- manufactured;
- intellectual;
- human;
- social and relationship, and
- natural capital.
Another innovation in King IV is the focus on outcomes rather than rules. This approach encourages long-term, sustainable value creation over short-term profit maximisation. Governance, under King IV, becomes a tool for resilience, adaptability and legitimacy and not just compliance.
Why Follow King IV:
While King IV is not legally binding, its influence is far-reaching. It has been embraced by the Johannesburg Stock Exchange as part of its listing requirements and is considered best practice for all South African organisations. Adhering to King IV can enhance an organisation’s reputation, improve stakeholder trust, and attract investors who are increasingly attuned to ethical and sustainable business practices.
Moreover, as business risks become more complex and interconnected, King IV provides a flexible yet robust framework to navigate these challenges through sound governance.
Conclusion:
Though King IV continues to offer relevant guidance, it has recently been superseded by King V, which reflects further advances in governance thinking and practice. An article exploring the principles and features of King V will follow as a continuation of this series.
VDMA’s team of experts is at your disposal to assist in assessing and enhancing your organisation’s governance practices in alignment with the principles and outcomes of King IV. We provide guidance to ensure compliance with your memorandum of incorporation, the Companies Act No 71 of 2008, and leading corporate governance standards.
Published 27 May 2025
