Acknowledgments Acknowledgments The Institute of Directors in Southern Africa and the King Committee on governance acknowledge w
Acknowledgments Acknowledgments The Institute of Directors in Southern Africa and the King Committee on governance acknowledge w
Copyright coPYRIgHt INSTITUTE OF DIRECTORS IN SOUTHERN AFRICA The Institute of Directors in Southern Africa owns the copyright i
Contents contents Introduction and background.5 chapter 1.19 Ethical leadership and corporate citizenship.9 chapter 2.28 Boards
Introduction and background IntRoductIon And bAckgRound 1. the need for king III The third report on corporate governance in Sou
Introduction and background The names of the conveners and the members of the subcommittees are given in an attachment to this R
Introduction and background report a narrative statement as to how they had complied with the principles set out in King II, pro
Introduction and background As far as the body of legislation that applies to a company is concerned, corporate governance mainl
Introduction and background Every public company and state-owned company must have a company secretary, who has specific duties
Introduction and background The company is integral to society, particularly as a creator of wealth and employment. In the world
Introduction and background mental performance. 2. Sustainability is the primary moral and economic imperative of the 21st centu
Introduction and background Recently, President Obama of the United States stated that sustainability issues would be central to
Introduction and background Sustainability also means that management pay schemes must not create incentives to maximise relativ
Introduction and background The integrated report, which is used throughout the Report and is explained in Chapter 9, should hav
Introduction and background It is accepted around the world that ADR is not a reflection on a judicial system of any country, bu
Introduction and background 11. new issues in the report Information technology governance Information systems were used as enab
Introduction and background Fundamental and affected transactions We did not concern ourselves with fundamental and affected tra
Introduction and background tial’ application of this Code and the Report does not achieve compliance. The Code applies to entit
Chapter 1 Ethical leadership and corporate citizenship © 2009 Institute of Directors in Southern Africa. All rights reserved 9
Chapter 1 Ethical leadership and corporate citizenship cHAPteR 1 ethical leadership and corporate citizenship Principle .: The b
Chapter 1 Ethical leadership and corporate citizenship social and ethics committee in terms of section 72(4) of the Act. 10. The
Chapter 1 Ethical leadership and corporate citizenship 15.2 Inclusivity of stakeholders is essential to achieving sustainability
Chapter 1 Ethical leadership and corporate citizenship for example, access to education, health care and other resources. 21. In
Chapter 1 Ethical leadership and corporate citizenship very effective, especially for ethics, as it strengthens the impact and c
Chapter 1 Ethical leadership and corporate citizenship 34. Building and sustaining an ethical corporate culture requires ethical
Chapter 1 Ethical leadership and corporate citizenship tive ethics risks, its focus tends to be on rules and guidelines that can
Chapter 1 Ethical leadership and corporate citizenship are necessary to provide the board and management with relevant and relia
Chapter 2 Boards and directors © 2009 Institute of Directors in Southern Africa. All rights reserved 8
Chapter 2 Boards and directors cHAPteR 2 boards and directors Role and function of the board Principle 2.1: The board should act
Chapter 2 Boards and directors 10. The board should ensure that its long-term planning will result in sustainable outcomes. Stra
Chapter 2 Boards and directors Principle 2.7: The board should be responsible for the governance of risk Refer to Chapter 4 for
Chapter 2 Boards and directors interpretation of the best interests of the company. 15. The foundation of each decision should b
Chapter 2 Boards and directors 26. Every listed company should have a policy of prohibiting dealing in its securities by directo
Chapter 2 Boards and directors 35. The board should request the practitioner to furnish security for the value of the assets of
Chapter 2 Boards and directors 40.6 managing conflicts of interest. It is not sufficient merely to table a register of interests
Chapter 2 Boards and directors he holds. The relative size and complexity of the companies in question should be taken into acco
Chapter 2 Boards and directors work of delegated authority. 53. The CEO should endeavour to ensure that a long-term strategy of
Chapter 2 Boards and directors justifiably explained. 61. The board should also ensure that a succession plan is in place for th
Chapter 2 Boards and directors 67.5 is not a member of the immediate family of an individual who is, or has during the preceding
Chapter 2 Boards and directors director to the board. 74. A programme ensuring a staggered rotation of non-executive directors s
Chapter 2 Boards and directors 81. Boards should ascertain whether potential candidates are competent to be appointed as directo
Chapter 2 Boards and directors 88.1 the reasons for the removal, resignation or retirement of directors. The purpose of this is
Chapter 2 Boards and directors and laws applicable to the business of the company, including accounting standards and policies,
Chapter 2 Boards and directors 104. The company secretary should ensure that the board and board committee charters and terms of
Chapter 2 Boards and directors 114. The board should state in the integrated report whether the appraisals of the board, its com
Chapter 2 Boards and directors Board committees Principle .: The board should delegate certain functions to well-structured comm
Chapter 2 Boards and directors committee considers their input and contribution to be of value to the decision-making process. 1
Chapter 2 Boards and directors 141. Depending on the jurisdiction in which the subsidiary company operates, different legal and
Chapter 2 Boards and directors 150. The remuneration committee should assist the board in its responsibility for setting and adm
Chapter 2 Boards and directors 160. Incentives may be given for both long-term and short-term goals. However, the performance dr
Chapter 2 Boards and directors There should be no re-pricing or surrender and re-grant of awards on ‘underwater’ share options.
Chapter 2 Boards and directors time served of vesting periods. Principle .: Companies should disclose the remuneration of each i
Chapter 2 Annex Annex 2.1: lead independent non-executive director (lId) A company may have sound reasons for appointing a chair
Chapter 2 Annex The non-executive directors should meet from time to time without the executive directors to consider the perfor
Chapter 3 Audit committees © 2009 Institute of Directors in Southern Africa. All rights reserved 55
Chapter 3 Audit committees cHAPteR 3 Audit committees Principle .: The board should ensure that the company has an effective and
Chapter 3 Audit committees Membership and resources of the audit committee Principle .: Audit committee members should be suitab
Chapter 3 Audit committees 14. Because of the audit committee’s responsibility to oversee integrated reporting, there is a clear
Chapter 3 Audit committees 23. The audit committee serves as a committee of the board for duties assigned to it by the board ove
Chapter 3 Audit committees reports, preliminary or provisional result announcements, summarised integrated information, any othe
Chapter 3 Audit committees review the results of such engagement. 40. Where the external auditor is appointed to perform a publi
Chapter 3 Audit committees Principle .5: The audit committee should ensure that a combined assurance model is applied to provide
Chapter 3 Audit committees Internal assurance providers Principle .: The audit committee should satisfy itself of the expertise,
Chapter 3 Audit committees committees to perform these functions but should ensure that these functions are appropriately addres
Chapter 3 Audit committees testing and report back to the audit committee. This enables the audit committee to perform its respo
Chapter 3 Audit committees Information technology (IT) risks as it relates to financial reporting Refer to Chapter 5 Principle 5
Chapter 3 Audit committees reasons for any changes, obtaining feedback as necessary about the conduct of the audit from key memb
Chapter 3 Audit committees 85.9 a statement on whether or not the audit committee recommended the integrated report to the board
Chapter 3 Annex Annex 3.1 extract from the companies Act no 71 of 2008 Audit committees 94. (1) This section— (a) applies concur
Chapter 3 Annex (iii) a material supplier or customer of the company, such that a reasonable and informed third party would conc
Chapter 3 Annex (iii) (iv) the internal financial controls of the company; or any related matter; (h) to make submissions to the
Chapter 4 The governance of risk © 2009 Institute of Directors in Southern Africa. All rights reserved 7
Chapter 4 The governance of risk cHAPteR 4 the governance of risk The board’s responsibility for risk governance Principle .: Th
Chapter 4 The governance of risk 9.2 the risk management framework i.e. the approach followed, for instance, COSO, ISO, IRMSA ER
Chapter 4 The governance of risk Principle .: The risk committee or audit committee should assist the board in carrying out its
Chapter 4 The governance of risk 25. Management is accountable to the board for designing, implementing and monitoring the syste
Chapter 4 The governance of risk complete. Risk assessments should not rely only on the perceptions of a group of managers. Risk
Chapter 4 The governance of risk 41.4 Instinct: the ability to avoid ‘following the herd’ when there are systemic and pervasive
Chapter 4 The governance of risk 45. Enterprise is often described as risk for reward but it may be possible to reduce risk whil
Chapter 4 The governance of risk 49. Reports from management to the board should provide a balanced assessment of the key risks
Chapter 5 The governance of information technology © 2009 Institute of Directors in Southern Africa. All rights reserved 8
Chapter 5 The governance of information technology cHAPteR 5 the governance of information technology (It) Principle 5.1: The bo
Chapter 5 The governance of information technology Principle 5.: IT should be aligned with the performance and sustainability ob
Chapter 5 The governance of information technology There should be relevant representation from business and IT in this structur
Chapter 5 The governance of information technology 25.3 assigning accountability for organisational changes required to benefit
Chapter 5 The governance of information technology Principle 5.: The board should ensure that information assets are managed eff
Chapter 5 The governance of information technology 39. Personal information should be processed according to applicable laws. In
Chapter 6 Compliance with laws, rules, codes and standards © 2009 Institute of Directors in Southern Africa. All rights reserved
Chapter 6 Compliance with laws, rules, codes and standards cHAPteR 6 compliance with laws, rules, codes and standards Principle
Chapter 6 Compliance with laws, rules, codes and standards the establishment of an effective compliance framework and processes.
Chapter 6 Compliance with laws, rules, codes and standards avoid duplication of effort and missed opportunities for synergies. 1
Chapter 7 Internal audit © 2009 Institute of Directors in Southern Africa. All rights reserved 9
Chapter 7 Internal audit cHAPteR 7 Internal audit The need for and role of internal audit Principle 7.: The board should ensure
Chapter 7 Internal audit Internal audit’s approach and plan Principle 7.: Internal audit should follow a risk based approach to
Chapter 7 Internal audit Principle 7.: Internal audit should provide a written assessment of the effectiveness of the company’s
Chapter 7 Internal audit 20. Internal audit should play a pivotal role in the combined assurance model by providing independent
Chapter 7 Internal audit 29. The CAE should attend all audit committee meetings and provide the meeting with a written assessmen
Chapter 7 Internal audit 36. The internal audit function should be skilled and resourced to the extent that their tools and audi
Chapter 8 Governing stakeholder relationships © 2009 Institute of Directors in Southern Africa. All rights reserved 99
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Acknowledgments Acknowledgments The Institute of Directors in So
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Acknowledgments Acknowledgments The Institute of Directors in So
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Copyright coPYRIgHt INSTITUTE OF DIRECTORS IN SOUTHERN AFRICA Th
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Contents contents Introduction and background.5 chapter 1.19 Eth
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Introduction and background IntRoductIon And bAckgRound 1. the n
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Introduction and background The names of the conveners and the m
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Introduction and background report a narrative statement as to h
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Introduction and background As far as the body of legislation th
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Introduction and background Every public company and state-owned
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Introduction and background The company is integral to society,
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Introduction and background mental performance. 2. Sustainabilit
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Introduction and background Recently, President Obama of the Uni
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Introduction and background Sustainability also means that manag
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Introduction and background The integrated report, which is used
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Introduction and background It is accepted around the world that
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Introduction and background 11. new issues in the report Informa
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Introduction and background Fundamental and affected transaction
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Introduction and background tial’ application of this Code and t
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Chapter 1 Ethical leadership and corporate citizenship © 2009 I
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Chapter 1 Ethical leadership and corporate citizenship cHAPteR 1
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Chapter 1 Ethical leadership and corporate citizenship social an
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Chapter 1 Ethical leadership and corporate citizenship 15.2 Incl
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Chapter 1 Ethical leadership and corporate citizenship for examp
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Chapter 1 Ethical leadership and corporate citizenship very effe
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Chapter 1 Ethical leadership and corporate citizenship 34. Build
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Chapter 1 Ethical leadership and corporate citizenship tive ethi
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Chapter 1 Ethical leadership and corporate citizenship are neces
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Chapter 2 Boards and directors © 2009 Institute of
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Chapter 2 Boards and directors cHAPteR 2 boards and directors Ro
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Chapter 2 Boards and directors 10. The board should ensure that
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Chapter 2 Boards and directors Principle 2.7: The board should b
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Chapter 2 Boards and directors interpretation of the best intere
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Chapter 2 Boards and directors 26. Every listed company should h
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Chapter 2 Boards and directors 35. The board should request the
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Chapter 2 Boards and directors 40.6 managing conflicts of intere
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Chapter 2 Boards and directors he holds. The relative size and c
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Chapter 2 Boards and directors work of delegated authority. 53.
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Chapter 2 Boards and directors justifiably explained. 61. The bo
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Chapter 2 Boards and directors 67.5 is not a member of the immed
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Chapter 2 Boards and directors director to the board. 74. A prog
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Chapter 2 Boards and directors 81. Boards should ascertain wheth
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Chapter 2 Boards and directors 88.1 the reasons for the removal,
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Chapter 2 Boards and directors and laws applicable to the busine
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Chapter 2 Boards and directors 104. The company secretary should
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Chapter 2 Boards and directors 114. The board should state in th
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Chapter 2 Boards and directors Board committees Principle .: The
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Chapter 2 Boards and directors committee considers their input a
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Chapter 2 Boards and directors 141. Depending on the jurisdictio
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Chapter 2 Boards and directors 150. The remuneration committee s
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Chapter 2 Boards and directors 160. Incentives may be given for
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Chapter 2 Boards and directors There should be no re-pricing or
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Chapter 2 Boards and directors time served of vesting periods. P
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Chapter 2 Annex Annex 2.1: lead independent non-executive direct
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Chapter 2 Annex The non-executive directors should meet from tim
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Chapter 3 Audit committees © 2009 Institute of Di
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Chapter 3 Audit committees cHAPteR 3 Audit committees Principle
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Chapter 3 Audit committees Membership and resources of the audit
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Chapter 3 Audit committees 14. Because of the audit committee’s
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Chapter 3 Audit committees 23. The audit committee serves as a c
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Chapter 3 Audit committees reports, preliminary or provisional r
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Chapter 3 Audit committees review the results of such engagement
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Chapter 3 Audit committees Principle .5: The audit committee sho
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Chapter 3 Audit committees Internal assurance providers Principl
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Chapter 3 Audit committees committees to perform these functions
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Chapter 3 Audit committees testing and report back to the audit
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Chapter 3 Audit committees Information technology (IT) risks as
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Chapter 3 Audit committees reasons for any changes, obtaining fe
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Chapter 3 Audit committees 85.9 a statement on whether or not th
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Chapter 3 Annex Annex 3.1 extract from the companies Act no 71 o
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Chapter 3 Annex (iii) a material supplier or customer of the com
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Chapter 3 Annex (iii) (iv) the internal financial controls of th
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Chapter 4 The governance of risk © 2009 Institute of
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Chapter 4 The governance of risk cHAPteR 4 the governance of ris
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Chapter 4 The governance of risk 9.2 the risk management framewo
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Chapter 4 The governance of risk Principle .: The risk committee
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Chapter 4 The governance of risk 25. Management is accountable t
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Chapter 4 The governance of risk complete. Risk assessments shou
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Chapter 4 The governance of risk 41.4 Instinct: the ability to a
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Chapter 4 The governance of risk 45. Enterprise is often describ
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Chapter 4 The governance of risk 49. Reports from management to
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Chapter 5 The governance of information technology © 2009 Ins
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Chapter 5 The governance of information technology cHAPteR 5 the
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Chapter 5 The governance of information technology Principle 5.:
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Chapter 5 The governance of information technology There should
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Chapter 5 The governance of information technology 25.3 assignin
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Chapter 5 The governance of information technology Principle 5.:
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Chapter 5 The governance of information technology 39. Personal
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Chapter 6 Compliance with laws, rules, codes and standards © 200
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Chapter 6 Compliance with laws, rules, codes and standards cHAPt
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Chapter 6 Compliance with laws, rules, codes and standards the e
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Chapter 6 Compliance with laws, rules, codes and standards avoid
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Chapter 7 Internal audit © 2009 Institute of Dir
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Chapter 7 Internal audit cHAPteR 7 Internal audit The need for a
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Chapter 7 Internal audit Internal audit’s approach and plan Prin
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Chapter 7 Internal audit Principle 7.: Internal audit should pro
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Chapter 7 Internal audit 20. Internal audit should play a pivota
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Chapter 7 Internal audit 29. The CAE should attend all audit com
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Chapter 7 Internal audit 36. The internal audit function should
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Chapter 8 Governing stakeholder relationships © 2009 Instit
IOD
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