King III: Draft code
The significance of corporate governance is widely recognised as a lever to address the converging interest of competitiveness, corporate citizenship and social and environmental responsibility. It is also an effective mechanism for encouraging efficiency and combating corruption.
Corporate governance is the system or process by which all business entities are directed and controlled. A board of directors, members of a close corporation and trustees of a trust are jointly and separately responsible for the governance of their enterprise.
There is no single universally appropriate model of corporate governance. This principle is recognized in King III, which reiterates that companies are governed within the framework of the laws and regulations of the country in which they operate. Four pillars – responsibility, accountability, transparency and fairness – are internationally recognised as the fundamentals of corporate governance.
A Draft Code of Governance Principles was published on 25 February 2009. It is suggested that all entities should apply the principles contained in the draft code. In situations where a board or those responsible for governance decide not to apply a specific principle or recommendation, a full explanation should be given. The principle of apply or explain is therefore applicable.
The principles covered in the draft code are of equal importance. Together they form a holistic approach to governance. By applying the code, compliance is achieved.
Boards of directors and those responsible for governance issues are urged to familiarise themselves with the draft code and practice notes available on the IOD website.
For more information, contact Mr JS (Tenk) Loubser on tel. 021 808 7220 or e-mail firstname.lastname@example.org.