AUTHORS: RISHAL BIPRAJ AND TATTON BOURAS
PUBLISHED; 20TH NOVEMBER 2025
Monarchy in South Africa is not dead. In 1994, at the dawn of its democracy, South Africa was one of the first countries to introduce a code of corporate governance, with the release of the Code of Corporate Practices and Conduct, compiled by a committee under the leadership of Mervyn King. This code is known as “the King Code”. The King Code applies to all JSE listed companies, but non-listed companies are strongly encouraged to apply the King Code, specifically to attract foreign investment.
Since 1994, the King Code has been reviewed 4 times. Each review has aligned with the changing landscape in the business, regulatory and social context. The King V Code was released on 31 October 2025 and is effective from 1 January 2026. This latest edition of the King Code comes about 9 years after the last King Code was reviewed and amended. The prompt for the King V Code was, inter alia, the need for companies to align with global governance and statutory disclosure requirements.
The King V Code has a deconstructed presentation, with separate documents accessible from the website of the Institute of Directors South Africa. Its objects are to improve clarity, usability and reliance on governance practices. Specifically, the King V Code lists four governance outcomes, and these are:
- Ethical Culture – shared values, beliefs and practices promoting ethical behaviour and decision making;
- Performance and Value Creation – organisation creating value in economic, social and environmental context (in a sustainable manner);
- Conformance and Prudent Control – conformity with laws and adopted standards and the establishment and monitoring of internal controls; and
- Legitimacy – organisation having a good reputation and being trusted as a responsible corporate citizen / having strong stakeholder relationships.
These outcomes are achieved through the provisions set forth in the King V Code. Notably, the King V Code provides clarity on the elusive term “independent member”. It does so by providing criteria on when a director may be considered independent. Courts will usually consider the code when evaluating what is regarded as practice in a particular situation, especially where governance duties are involved.
The principles found in the King V Code are the foundations of corporate governance and have universal applicability. It is intended to apply to a wide variety of entities (although only the JSE makes its application compulsory for listing), including:
- Listed and unlisted companies;
- State-owned enterprises (SOEs);
- Municipalities;
- Non-profit organisations (NPOs);
- Small and medium-sized enterprises (SMEs);
- Retirement funds and life insurers; and
- Public higher education institutions
The King V Code aims to be simpler than its predecessors with 13 principles instead of the previous 17. Notwithstanding this the King V Code imposes certain governance principles which will change how companies operate, such as the further inclusion of environmental, disclosure and committee structures and policies. Moreover, the King V Code has recognised the dramatic entrance of AI and has implemented certain measures in this regard.
While the principles of the King V Code may have been drafted to be more simplified, an entity seeking to apply these principles will need guidance on how to do so. Take just Principle 1 for example which states that “the governing body leads ethically and effectively as the focal point of corporate governance in the organisation.” How would an entity comply with this principle, and what responsibilities and duties arise in order for that entity to be said to be acting “ethically” and “effectively”?
Garlicke and Bousfield is ready to assist with any advice, guidance and training that may be required and to assist anyone to prepare for readiness for the coming into effect of the King V Code. Contact us if you would like to discuss or need assistance in preparing for the reign of the King V Code.
Tel: 031 570 5371, Email: rishal.bipraj@gb.co.za
Tel: 031 570 5336, Email: tatton.bouras@gb.co.za