King IV provides practical guidance for the governing body to create specific committees to assist with the discharge of the governing body’s duties. This practice note explains the approach in King IV regarding governing body committees.
The purpose of this practice note is to provide clarity around the rationale and approach taken in the King IV Report on Corporate Governance™ for South Africa 2016 (King IV) in relation to governing body committees. Governing bodies are in general terms permitted to establish committees to assist the governing body with its role and duties. Where the organisation is a company, the Companies Act 71 of 2008, as amended (the Act) also contemplates that the board of directors may appoint committees as needed or determined by the board. The Act also requires certain companies to establish an Audit Committee and Social and Ethics Committee in specific instances. The King III Report on Governance for South Africa 2009 (King III) encouraged the governing body to create specific committees to assist with the discharge of the governing body’s duties, this guidance was given at a principle level. This approach is also followed in King IV, however the guidance is given at a practice level. It is key not to focus on the input but rather on the outputs – substance over form. In keeping with its emphasis on outcomes, the approach in King IV has a different nuance. This practice note is intended to explain the approach in King IV regarding governing body committees. This practice note does not in any way change any legal obligations an organisation may have in terms of the Act or any other relevant legislation with regards to any governing body committees an organisation is legally required to have.
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