Achieving King IV Code Compliance with Board Management Software in South Africa

In a country marked by socio-economic inequality and unemployment, governance compliance has been a useful mechanism for fostering stability and growth in South Africa. The emphasis on governance compliance is especially critical in sectors with a history of governance failures, such as state-owned enterprises (SOEs).

Such entities have faced public scrutiny due to governance lapses, often rooted in weak boards and processes routinely manipulated for personal interests. The collapse of trust in these institutions has underscored broader economic and social consequences of non-compliance. Thus, prompting calls for stricter enforcement of governance standards.

The introduction of the King Codes of Corporate Governance in South Africa has reinforced a compliance-driven approach. Organisations are expected not only to embrace the ethical tenets of King Codes but also to demonstrate how they are applied to achieve governance outcomes.

King IV Code of Corporate Governance in South Africa

The King IV Code of Corporate Governance is a set of voluntary principles and practices developed by the Institute of Directors in Southern Africa (IoDSA), and released in 2016. It represents the latest revolution in a series of governance codes that began with King I in 1994, under the guidance of Justice Mervyn King, who stated:

“The overarching objective of King IV™ is to make corporate governance more accessible and relevant to a wider range of organisations, and to be the catalyst for a shift from a compliance-based mindset to one that sees corporate governance as a lever for value creation.”

King IV uses an “apply AND explain” approach to the implementation of corporate governance practices, contrary to King III requiring an “apply OR explain”. This means that organisations must both:

• Apply: Actively implement the 17 principles of governance as stated in the King IV code.
• Explain: Provide clear, meaningful disclosure on how they have implemented the principles in practice.

This is different from a “comply or explain” approach, where organisations might justify why they haven’t adhered to certain requirements. Instead. King IV assumes that all principles should be applied, but allows flexibility in how it is done.

King IV Outcomes and Principles

The King IV Code provides 17 principles, reduced from 75 in King III, that guide governing bodies in achieving good corporate governance. They are applied universally to organisations, regardless of size or sector. The principles are grouped into four interrelated governance outcomes:

Outcome 1: Ethical Culture

An ethical culture ensures the organisation’s leadership and operations are rooted in integrity, fairness, and accountability. This outcome emphasises responsible behaviour, compliance with laws, and ethical leadership practices.

1. Leadership: The governing body should lead ethically and effectively.
2. Organizational Ethics: The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.
3. Corporate Citizenship: The governing body should ensure that the organisation is and is seen to be a responsible corporate citizen.

Outcome 2: Good Performance

Good performance is achieved when an organisation creates sustainable value and effectively implements its strategic objectives. Such outcome emphasises achieving long-term success while remaining agile and competitive.

4. Strategy and Performance: The governing body should appreciate that the organization’s core purpose, its risks, and opportunities, strategy, business model, and sustainable development are all inseparable elements of the value creation process.
5. Reporting: The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation’s performance and its short-, medium-, and long-term prospects.

Outcome 3: Effective Control

Effective control ensures the organisation has robust systems and policies to safeguard assets and comply with applicable laws and standards.

6. Primary Role of the Governing Body: The governing body should serve as a focal point and custodian of corporate governance in the organisation.
7. Composition of the Governing Body: The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity, and independence for it to discharge its governance roles and responsibilities objectively and effectively.
8. Committees of the Governing Body: The governing body should ensure that its arrangements for delegation within its own structures promote independent judgement and assist with the balance of power and the effective discharge of its duties.
9. Performance Evaluations: The governing body should ensure that the evaluation of its own performance and that of its committees, its chair, and its individual members, support continued improvement in its performance and effectiveness.
10. Appointment and Delegation to Management: The governing body must ensure that the appointment of, and delegation to, management contributes to role clarity and effective exercise of authority and responsibilities.
11. Risk Governance: The governing body must govern risk in a way that supports the organisation in setting and achieving its strategic objectives.
12. Technology and Information Governance: The governing body should govern technology in a way that supports the organisation in setting and achieving its strategic objectives.
13. Compliance Governance: The governing body must govern compliance with applicable laws and adopted, non-binding rules, codes, and standards in a way that supports the organisation being ethical and a good corporate citizen.
14. Remuneration Governance: The governing body should ensure that the organisation enumerates fairly, responsibly, and transparently to promote the achievement of strategic objectives and positive outcomes in the short-, medium-, and long-term.
15. Assurance: The governing body must ensure that assurance services and functions enable an effective control environment and that these support the integrity of information for internal decision-making and external reporting.

Outcome 4: Legitimacy

This reflects the organisation’s ability to build and sustain trust with its stakeholders. This is also critical for maintaining social license to operate and ensuring long-term success.

16. Stakeholders: In the execution of its governance role and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests, and expectations of material stakeholders in the best interests of the organisation over time.
17. Institutional Integrity: The governing body of an institutional investor organisation must ensure that responsible investment is practised to promote good governance and the creation of value by the companies in which it invests.

Sector Supplements of King IV

King IV incorporates sector-specific supplements designed to assist different types of entities on how the corporate governance code must be interpreted and applied in several contexts or legislative regimes. These include:

• Municipalities: Address governance challenges related to public participation, accountability, and service delivery.
• Non-Profit Organisations: Guides NFPs in assessing their programmes and the economic, social, and environmental impacts of their activities.
• Retirement Funds: Focuses on fiduciary duties, investment decisions, and risk management.
• SMEs: Offers simplified guidance for small and medium-sized enterprises, recognising their specific needs and constraints.
• State-Owned Entities: Emphasises accountability, transparency, and public interest.

The Role of Board Management Software in Supporting King IV Principles

King IV aims to foster sustainable organisation through its focus on ethical leadership, good performance, effective control, and legitimacy. Similarly, board management software is designed to improve board operations by digiting and streamlining board functions. Organisations seeking to achieve King IV compliance and governance excellence can leverage such software.

King IV Principle 1-3: Enhancing Ethical Culture

An ethical culture depends on clear, accountable leadership and adherence to ethical standards across the entity. This is how board management software contributes:

• Provides a transparent environment where leaders can track decision-making processes.
• Helps stay aligned with ethical policies through build-in compliance.
• Ensures boards have the data they need to lead ethically, such as real-time access to meeting materials and decision records.

King IV Principle 4-5: Driving Good Performance

Achieving good performance requires organisations to align strategic objectives with sustainable value creation. A board management software can help:

• Enables boards to collaborate on strategic documents with a centralised platform.
• Makes it easier to compile, update, and distribute information on performance metrics using automated reporting features.
• Presents performance data in an actionable format with dashboards and analytics tools.
• Streamlines meeting preparation and collaboration with agenda creation, board pack distribution, and document management.

King IV Principle 6-15: Strengthening Effective Control

Effective control involves robust systems and processes that protect organisation assets and ensure compliance. Investing in a board management software:

• Helps monitor risks through dashboards that highlight emerging issues and track mitigation efforts.
• Guarantee clear lines of accountability and prevent responsibility overlaps through role assignment tools.
• Make compliance tracking more efficient with the use of audit trails, regulatory checklists, and document version control.
• Maintain confidentiality and protect sensitive data through advanced security features like role-based access controls and encryption.

King Principle 16-17: Building Legitimacy

Fostering legitimacy involves strengthening trust, inclusivity, and transparency with stakeholders. Here’s how a board management software can help:

• Enables effective stakeholder communication using virtual meeting tools.
• Ensures stakeholders have access to relevant, real-time information with secure document-sharing capabilities.
• Promotes board inclusivity and alignment using feedback options or voting tools, multi-language capabilities, and accessibility features.

Convene: A King IV-Ready Board Management Software

Compliance with the King IV Code is essential for organisations aiming to achieve ethical leadership, sustainable performance, and effective oversight. By adhering to its principles, boards can ensure transparency, accountability, and long-term value creation. But navigating the complexities of King IV compliance can be challenging. This is where board management software can help.

Convene is a leading King IV-ready board management software designed to help organisations streamline governance while staying aligned with King IV principles. With features that promote transparency and efficiency, Convene empowers boards to implement King IV principles effectively — and even achieve governance outcomes with ease.

• Board Meeting Tools: Convene simplifies the entire lifecycle of board meetings, from agenda preparation to post-meeting follow-ups. Its intuitive tools enable seamless scheduling, distribution of board packs, and real-time collaboration during meetings. By reducing admin burdens, Convene helps board members focus on strategic decision-making — aligning with King IV’s emphasis on effective control and good performance.
• Document Management: Convene’s Document Library and Review Room provide centralised, secure storage for critical governance documents. Directors can access, review, and annotate documents in real-time. Hence, supporting King IV’s call for an ethical culture and proper documentation for accountability and transparency.
• Action Items and Audit Trail: Our platform’s built-in action item tracker and audit trail functionality ensure all board decisions, tasks, and follow-ups are documented and monitored. Convene’s comprehensive audit also supports effective compliance reporting and demonstrates adherence to King IV’s “apply and explain” philosophy.
• Voting and Resolutions: With Convene’s Voting and Resolutions features, board members can conduct secure and transparent voting on key decisions. Whether during or between meetings, such features ensure that resolutions are well-documented and accessible for review. This aligns with King IV’s emphasis on legitimacy, fostering trust through clear and inclusive decision-making.
• System Security: Our board management software prioritises the security of governance processes with features like role-based access controls, user activity logs, and advanced password policies. These measures safeguard sensitive board materials, ensuring compliance with King IV’s principle of effective control, while protecting against unauthorised access and data breaches.

Take the next step in your governance journey with Convene. Schedule a demo today and find out how it can help you achieve seamless King IV compliance.