A brief history of the King Codes

The King Codes have long set the standard for corporate governance, and are recognised internationally for their forward-thinking, principles-based approach:

• King I (1994) laid the foundations of corporate governance in South Africa post-apartheid.
• King II (2002) expanded the scope, emphasising sustainability and the importance of broader stakeholder engagement and inclusivity.
• King III (2009) marked a pivotal shift, applying to all entities, and introducing integrated reporting, amongst other things.
• King IV (2016) streamlined the governance principles from 75 to 17 and introduced an “apply and explain” approach.

Now, King V builds on these foundations with refinements and updates to address emerging governance challenges.

What’s new in the Draft King V?

Terminology and structure

King V adopts a plain-language approach, removing technical jargon to ensure clarity. Additionally, some governance principles have been combined to streamline content, resulting in a more concise and accessible framework overall. The main structure of King IV has been retained, namely the outlining of broad, universally accepted governance principles, with practical recommendations then set out under each principle as guidance for entities on to how to implement the philosophy.

Standardised disclosure

King V introduces a Disclosure Template that provides a uniform structure for organisations to clearly communicate their governance practices. This enhances transparency and enables easier comparison across different entities, which will be beneficial to investors and stakeholders alike.

Removal of the principle for institutional investors

The previous standalone principle related to institutional investors in King IV has been removed. This change reflects the development of dedicated stewardship codes and governance frameworks specifically aimed at institutional investors (such as the Code for Responsible Investing in South Africa), making this separate principle within the King Code unnecessary.

Changes to independence criteria for members of a governing body

King V refines criteria for determining independence of members of a governing body. Key changes include:

• An additional “cooling-off” period of at least two years for former executive managers who seek classification as independent members (even though they had been in executive management prior to the previous three years). During this cooling off period, individuals must have no significant involvement with the organisation.
• The introduction of a “nine-year rule” – members serving beyond nine years may no longer be categorised as independent. Under the current King IV, the only implication of the nine-year period is that a particularly rigorous review of a director’s independence ought to be undertaken – but the King V draft states that the nine years could suggest non-independence per se.
• The independence factors or criteria are now to be assessed in respect of directors’ related persons as well, and not only in respect of directors themselves. This ensures a more rigorous scrutiny of relationships that could impact independence.

Independent members on key committees

Risk and Social & Ethics Committees must now include at least one independent non-executive member. This strengthens objectivity and oversight, reflecting the increasing importance and complexity of these committees’ roles.

Enhanced information governance with a new focus on AI

King V substantially updates its guidance on information and technology governance, explicitly recognising artificial intelligence (AI) as a critical governance consideration. Organisations must now explicitly address how they govern AI use, particularly regarding human oversight, ethical implications and transparency.

Succinct remuneration governance

In light of recent amendments to the Companies Act 71 of 2008 (Companies Act), King V streamlines its remuneration governance provisions to avoid redundancy. However, it retains the critical practice of requiring a non-binding advisory shareholder vote on remuneration policies and their implementation reports in respect of companies that must have their annual financial statements audited in terms of the Companies Act and to which the remuneration resolutions provided for in the Companies Act are not applicable. This practice provides shareholders with a mechanism to express their views. If more than 25% of voting shareholders oppose either the remuneration policy or implementation reports, the governing body is obliged to proactively engage with dissenting shareholders to address their concerns.

Why your business should pay attention

The updates to the King Code will be of most interest to companies listed on the Johannesburg Stock Exchange (JSE), as the JSE Listings Requirements make the implementation of certain recommended practices in King IV mandatory.

More broadly, the King Code significantly influences corporate governance standards and is becoming increasingly relevant in measuring director duties under South African law. For businesses, keeping up with the King Code is about more than compliance – it is about credibility, resilience and long-term success. Effective governance reduces the risk of reputational damage, supports investor confidence, and strengthens relationships with stakeholders from employees to regulators to communities.

King V’s updates represent an evolution rather than a revolution, with the drafters stating that adapting to the revised requirements should not be too onerous for organisations that already comply with King IV. Nevertheless, the draft King V brings important refinements that businesses should not overlook.

Although the draft King V is still in the public comment phase, we recommend that organisations familiarise themselves with these developments early, consider their practical implications, and prepare to align governance practices accordingly.