King code principles

Question 1

The meaning of the King Code principles

Answer 1

The King Code was developed by the former Judge of the High Court, Mervyn
King and by the King Commission. The King Code aims to set a code for ethical
and effective leadership by the board of directors.

Question 2

The application of the King Code principles

Answer 2

Transparency
Accountability
Responsibility

Question 3

Transparency interluded

Answer 3

The board should ensure that the company’s ethics are effectively
implemented.

• Decisions and actions must be clear to all stakeholders.
• Staffing and other processes should be open and transparent.
• Employees, shareholders, and directors should be aware of the employment
  policies of the business.
• Auditing and other reports must be accurate/available to shareholders/
  employees.

Question 4

Accountability interluded

Answer 4

There must be regular communication between management and
stakeholders.
* The company should appoint internal and external auditors to audit fi nancial
statements.
* The board should ensure that the company’s ethics are effectively
implemented.
* Businesses should be accountable/responsible for their decisions/actions.
* Businesses should present accurate annual reports to shareholders at the
Annual General Meeting (AGM).
* Top management should ensure that other levels of management are clear
about their roles and responsibilities to improve accountability.

Question 5

Responsibility interlude

Answer 5

• The business/board should develop and implement programmes that should
  be aimed at protecting the communities in which they operate.
• The business/board should develop remedial programmes to protect the
  environment, for example, reduce air and water pollution.

Question 6

Ways in which professional, responsible,
ethical and effective business practice should
be conducted

Answer 6

• Business decisions and actions must be clear/transparent to all stakeholders.
• Businesses should be accountable /responsible for their decisions and actions/
  patent rights.
• The business should hire honest, trustworthy accountants/financial
  officers with good credentials to ensure transparent recording and
  financial statements.
• The payment of taxes must be regular/timeous, and the business must
  disclose all needed information to SARS and not find loopholes to avoid
  paying taxes.
• The business should draw up a code of ethics/conduct. This document must
  state acceptable behavior in the business.