The third King report on Governance for South Africa 2009 (King III report) came into effect on 1 March 2010, with companies having to apply the principles in respect of financial years commencing on or after 1 March 2010.

The underlying intention of King III is not to force companies to comply with recommended practice 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 the shareholders.

The following principles of King III are currently being addressed so as to ensure compliance to the extent that it can be effectively implemented:

A succession plan should exist for the CEO, senior Executives and Board Members – an informal succession plan is in place which will be formalised and documented Internal audit should verify/provide assurance of the effectiveness of internal controls – Internal audit is in the process of being implemented on a group basis