King V code demands board independence and transparency
The King V code has updated SA’s corporate governance rules, replacing King IV after almost a decade.
The update pushes companies to strengthen board independence, boost transparency and adopt global sustainability reporting norms.
King V, SA’s latest corporate governance code, was released on October 31 by the Institute of Directors and the King committee.
It replaces King IV and will apply to companies for financial years starting from January 1 2026, though companies are encouraged to adopt it sooner.
“The release of King V comes nine years after King IV, during which the governance landscape has shifted dramatically.
“Organisations today face intensifying challenges. At the same time, new regulatory developments have raised expectations of boards and governing bodies,” IoDSA said.
King V introduces a mandatory disclosure system that “marks a significant departure from King IV”, requiring companies to follow a new disclosure framework and “state any practices not adopted”, with reasons. Firms must also provide a “concluding statement on the realisation of the governance outcomes”.
Streamlined and toughened
The King committee said multiple King IV provisions had been streamlined and toughened in King V.
Several principles have been consolidated in King V, with some considered integral to the governing body’s role in providing ethical and effective leadership. As a result, the number of principles has been reduced from 17 in King IV to 13 in King V.
The code also removes the previous rule for institutional investors, noting that principle 17 from King IV has been excluded from King V.
The committee said its limited use appeared to create confusion in practice, though it continues to encourage investors to apply the revised Code for Responsible Investing in SA (Crisa) guidance.
Mervyn King, chair of the committee on corporate governance, which has released the King V code. (Supplied)
“Principle 17 from King IV, which focused specifically on institutional investors such as pension funds, life insurers and asset managers, has been excluded from King V. While Principle 17 aimed to link King IV with the Code for Responsible Investment in SA (Crisa), its limited applicability appeared to create confusion in practice,” the regulations note.
“The King committee has therefore opted not to include it in the King V Code and instead continues to advocate that institutional investors should apply both King V and the updated Crisa 2 principles and practices to achieve the intended outcomes of responsible investment and value creation.”
The update comes as boards globally face pressure to navigate climate change, digitisation and geopolitical instability. SA companies have also weathered governance failures in recent years across state-owned enterprises and the private sector, with regulators and investors signalling expectations for tougher oversight.
Sustainability reporting
King V elevates environmental and stakeholder-impact responsibilities. The code confirms sustainability reporting should now operate on a “double materiality” basis, noting that organisations must disclose issues that “significantly affect its finances and prospects … but also information about matters that impact its ability to create sustainable value for stakeholders over time”.
“The notable changes to committees of the governing body in King V relate to the composition of the risk committee and the social and ethics committee. The revised practice recommendation now stipulates that each of these committees should comprise a majority of nonexecutive members, including at least one independent member. This represents a departure from King IV, which required only a simple majority of nonexecutive members without specifying independence,” the regulations say.
The updated recommendation introduces a more rigorous standard than that set out in the Companies Act regarding social and ethics committees. While the act prescribes certain requirements for these committees, it does not mandate the inclusion of independent members.
Furthermore, the act does not address the composition of risk committees, though other legal and regulatory provisions may be applicable depending on the nature of the organisation.