Mar 20, 2009
King III will seek to correct unintended consequences of previous codeBack
Johannesburg|Africa|Africa|South Africa|Lindie Engelbrecht|Mervyn King
© Reuse this
"Some of the principles had unintended consequences and we have tried to rectify this, as it has affected financial institutions, listed companies and private companies.
"Private companies were asked to comply but, because they were not specifically listed, decided not to comply.
"For example, if an entity or company does not have a risk committee, instead of complying, it will decide to explain the reason why it does not have a risk committee.
"The reality is that the process of risk management in that entity is compromised," said Engelbrecht.
The draft King III report was released in February for public comment and, once finalised, will be issued in September.
King III became necessary because of the anticipated new Companies Act and changes in international governance trends.
The seminar provided insight into the changes being introduced, including those related to the evolving role of the board, the management of modern key risks, risk-based internal audits, fundamental and affected transactions and alternative dispute resolutions.
Engelbrecht added that King III would be applicable to all entities.
"These codes are not rules. Corporate governance cannot be applied to a one-size-fits-all scenario. We decided to change the codes to include ‘apply' or ‘explain'. We want to move away from substantial compliance."
Last year, Prof Mervyn King, chairperson of the Global Reporting Initiative, said that he expected a 'revolutionary change' in the role internal auditors played in corporate governance within the next five years.
He added that King III would look specifically at whistleblowing and the role internal auditors played in managing corruption and fraud within companies.
He noted, however, that fraud and corruption could be managed through setting up codes of conduct within organisations, as well as through making use of internal auditors, external auditors and audit committees.
King further stated that many companies across the world were bigger than some governments and that companies were integral to society as many people spent more time at work than they did at home.
"Corruption has a rippling effect on thousands of people in a company that the corruptor might not know or see," commented King," adding that people wanted to have trust and confidence in a company.
"When there is corruption, the trust and confidence in the company starts waning, and, thus, the corruption must be stopped," concluded King.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines
Other News This Week News
Updated 7 minutes ago Excavations at an archaeological site at Kathu, in the Northern Cape, which is estimated to be between 700 000 and one-million years old, have uncovered “tens of thousands” of early stone-age artifacts, including hand axes and other tools. The discoveries were...
Updated 13 minutes ago After becoming the first US university to offer a Master’s degree programme taught by full-time faculty residents in Africa, the Carnegie Mellon University’s (CMU’s) satellite campus, in Rwanda, has graduated its first class of students, awarding 22 students...
Updated 15 minutes ago Private equity investor Actis has “substantially” exited from financial services provider, Alexander Forbes Group, offloading 9% of its 13% stake in an oversubscribed offer through the JSE. Alexander Forbes relisted on the JSE on Thursday.
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...