DOING BUSINESS IN SOUTH AFRICA 47
The Takeover Regulation Panel is responsible for regulating fundamental transactions. The Financial Reporting Standards Council is responsible for consulting with the Minister of Trade and Industry on the making of Regulations establishing financial reporting standards.
KING III REPORT INTRODUCTION Boards of directors are confronted with many difficult decisions on a regular basis. The right choice is not always obvious. The draft King III Report on Corporate Governance provides a list of best practice principles to assist and guide directors in making the right choices for their company. These principles have become an indispensable guide on Corporate Governance to directors and regulators alike. The King III Report provides guidance to all corporate entities on various governance related aspects, including: Boards and directors Corporate citizenship, leadership, integrity and responsibility Audit committees Risk management Internal audit Integrated sustainability reporting and disclosure Compliance with laws, regulations, rules and standards Managing stakeholder relationships Fundamental and affected transactions. KING III AND THE COMPANIES ACT There is no statutory obligation on companies to comply with King III. The underlying intention of King III is not to force companies to comply with recommended practice (King II required companies to ‘comply or explain’), but rather for companies to ‘apply or explain’. Directors are accountable to shareholders, and where directors opt not to implement the recommended practices as set out in King III, they should be able to explain their reasoning and motivation to their shareholders. Since directors can be held personally liable for noncompliance with their statutory duties (as set out in the Companies Act), they need to ensure each and every decision they make is taken with care. Every decision counts! Most, if not all of the recommended best practice principles set out in King III relate to the legislative duties of a director to exercise their powers and perform their functions in good faith and for a proper purpose in the best interests of the company, and with the degree of care, skill and diligence which may reasonably be expected of a director. As such, King III constitutes a valuable guide to directors and other office bearers to ensure compliance with the provisions of the Companies Act. It is recommended that directors pay close attention to the enumerated principles, and aim to apply all such principles.