In 2002 the second King Report on Corporate Governance was published. It contains a Code of Corporate Practices and Conduct. Although voluntary, the Johannesburg Securities Exchange has requested listed companies to comply with the King Report recommendations or to explain their level of non-compliance.
This report applies only to certain categories of business enterprises which are:
- Companies listed on the JSE
- Banks, financial and insurance entities
- Public sector enterprises governed by the Public Finance Management Act and the Municipal Finance Management Act.
It refers to seven characteristics of good corporate governance:
Discipline - a commitment to behaviour that is universally recognised and accepted as correct and proper.
Transparency - the ease with which an outsider is able to analyse a company's actions.
Independence - the mechanisms to avoid or manage conflict.
Accountability - the existence of mechanisms to ensure accountability.
Responsibility - processes that allow for corrective action and acting responsibly towards all stakeholders.
Fairness - balancing competing interests.
Social Responsibility - being aware of and responding to social issues.
Summary of King II
Download in Adobe Acrobat (60KB)
In 1992 the King Committee on Corporate Governance was formed in South Africa, and, in line with international thinking, considered corporate governance from a South African perspective.
The result was the King Report 1994, which marked the institutionalisation of corporate governance in South Africa. It aimed to promote corporate governance in South Africa and established recommended standards of conduct for boards and directors of listed companies, banks, and certain state-owned enterprises, with an emphasis on the need for companies to become a responsible part of the societies in which they operate. King I advocated an integrated approach to good governance, taking into account stakeholder interests and encouraging the practice of good financial, social, ethical and environmental practice.