Addressing the changes
Similar to the reduction of principles that occurred from King III to King IV, it is also worth noting that the principles under corporate governance in King IV to the draft King V will be consolidated from 17 principles to 12 principles. Principle 17 in Kind IV dealing with the responsibilities of institutional investors falls away. Furthermore, King V sets out a separate disclosure template dealing with the required disclosure as opposed to how King IV set out the reporting requirements as part of the principles themselves. This is aimed at making the document and content more accessible and easier to navigate when preparing the organisation's disclosures. These reporting requirements, require further sustainability disclosures considering materiality from both a financial and impact perspective.
The emerging risks and themes covered in King V include technological developments (such as artificial intelligence), climate change and sustainability, mainly from a social and environmental perspective. The sustainability, reporting, and remuneration principles are now subject to the consideration of social and environmental requirements. This requires the governing body of an organisation to consider the combined context of the economy, society and environment within which the organisation operates.
The information governance principle has been expanded in King V to deal with emerging technologies (such as artificial intelligence) and remains broad enough to cater for future technologies and risks that may arise. The principle requires that artificial intelligence systems are implemented with a level of human oversight in line with the level of risk involved, which is aligned with the South Africa National Artificial Intelligence Policy Framework that was published in 2024. The King IV requires steps to be taken to prevent cyber-attacks, but under King V covers this requirement in broader terms as it speaks to the prevention of data leaks (irrespective of the root cause of the leak) and other security breaches. This broadens the scope to cater for the Protection of Personal Information Act, 2013 and breaches that could occur as a result of human error.
The remuneration governance principle has been reduced in King V and no longer sets out what must be included in the remuneration policy but rather refers to the remuneration report in terms of section 30(4) of the Companies Act, 2008. The principle acknowledges that not all organisations are required to submit a renumeration report for non-binding advisory voting by the shareholders but encourages all organisations to do this.
The IoDSA will be closing the public comment window in early April 2025, and we expect that another draft of King V will be released before it is finalised.
