M2 KING IV Governance Flashcards
Is it required by anyone to apply the king IV code?
It is a JSE listing requirement
What does the king IV code say about the composition of the board?
Principle 7
- they must members who have the appropriate skills, knowledge and experience
- the governing body must consist of majority non-executive members and most of those non exe members should be independent
- the CEO and at least one other executive director should be a appointed to ensure it has more than one point of direct interaction with management
- there should only be 1 CEO (deduced from when they say, “the CEO”
- the governing body should promote diversity in skills, knowledge experience, as well as age, gender and race
- the governing body to establish staggered rotation of its members
- should establish a success plan for who is next
- they must also have time for it
- the chair of the governing body
* must be an independent non-executive member
* someone non-executive and independent should be ready to lead when they are not there
* the CEO should not be the chair
* chair should not be a member of the audit committee
* the chair should be a member of the nominations committee and can also be the chair of that committee
What does the KING IV code say about board committees
Principle 8
- the governing body as a whole should ensure that each committee has the necessary skills, knowledge, capacity and experience to effectively carry out their duties
- each committee should have a minimum of 3 members
- members of the executive pr senior management should be periodically invited to help the committee gain their insights
- every member of the board is entitled to attend every committee meeting as an observer
- any delegation of responsibility bynthr governing body will not discharge its responsibilities
- they must establish an audit committee
- the audit committee will must meet thr following
* all members of the audit committee should be non-executive independent members
* they should Meet annually with the internal and external auditors
* they need to show a statement saying they are satisfied that thr external auditor is independent
Word: S3EMDANMS
What does the KING IV code say about appointments to management?
principle 10
- there should only be 1 CEO
- CEO should not be a member of the remuneration, audit or nomination committees but should still attend some of those meetings by invitation
What does the KING IV code say about what type of leaders to have?
- principle 7
- principle 1, 2 and 3
What are the important principles of the KING IV code?
Principle 1 - the governing body should lead ethically and effectively
Principle 2 - the governing body should Govern the ethics of the organization in a way that supports the establishment of an ethical culture
Principle 3 - responsible corporate citizenship
Principle 6 - primary role and responsibilities of the governing body
Principle 7 - composition of the governing body
Principle 8 - committees of the governing body
Principle 10 - appointment and delegation to management
Principle 13 - law compliance Governance
Principle 14 - remuneration governance
Principle 15 - Assurance reports
What does the king IV code say about remuneration?
Principal 14
- the policy in place needs to address organization wide remuneration
- the policy needs to achieve specific objectives mentioned in the principle book
- the governing body should ensure that remuneration is disclosed by means of a remuneration report in three parts namely a background statement, and overview of the main provisions of the remuneration policy, and implementation report which contains details of All remunerational awatded to individual members of the government body and executive management during the reporting period
- in terms of the company’s act fees for non-executive directors for their services as directors must be submitted for approval by special resolution by shareholders within the two years preceding payment
What does the KING IV code say about assurance reports?
Some things said in principle 15 are
- if a chief audit executive is needed (leader of the internal audit) the governing bodies that prove the appointment thereof including the employment contract, remuneration, and ensure the person who fills the position has the necessary competence, objectivity and skills.
- the chief audit executive should have access to the chair of the audit committee
- 4 reasons of independence achieve or executive should not be a member of executive management but should be invited to attend executive meetings
How should you respond to a typical corperate governance evaluation?
- take note of the scenario at hand
- state the revelant paragraphs and principles
- state how they are being complied with or contrvened
- repeat
