KING V: THE NEXT EVOLUTION IN SOUTH AFRICA’S CORPORATE GOVERNANCE FRAMEWORK

Taybah Taupas | Secretariat Department

Corporate governance in South Africa has evolved through the King Reports, promoting ethical leadership and sustainable business practices. King V builds on King IV, focusing on modern challenges such as AI governance, digital transformation, ESG responsibilities, and stakeholder inclusivity.



The new framework strengthens compliance, risk management, and board oversight, especially for public companies and financial institutions. By aligning governance structures with emerging regulatory demands, organisations can enhance transparency, long-term sustainability, and stakeholder trust.

From King IV to King V: Key Differences and Enhancements

King V is a natural evolution from King IV, refining governance principles to address modern complexities. Below are some of the key changes and enhancements introduced in the King V draft:

1. Stronger Oversight on Compliance, Risk, and Information Governance

  • Boards must direct compliance, risk, and information governance, integrating them with business strategy. Independent assurance will assess governance effectiveness periodically.
  • Policies must be integrated into the broader organizational strategy, ensuring that governance is not siloed but part of a holistic business approach.

2. Greater Accountability for AI and Digital Transformation

  • King V introduces ethical AI governance mandating human oversight and continuous monitoring. Boards must balance innovation with regulatory compliance and ethical standards.

3. Reinforcing Stakeholder Inclusivity and Ethical Remuneration

  • Stakeholder engagement now includes employees, customers, and society. Executive remuneration must be fair and transparent, with disclosures ensuring accountability.

4. Strengthened Board Oversight and Assurance

  • Boards must oversee robust assurance services, with internal audit functions receiving greater support and direction. Independent CAEs and external quality reviews are required. Committees may be formed to support governance duties.

5. Governance in Group Companies and Shareholder Engagement

  • Holding companies must govern subsidiaries effectively while maintaining their independence. King V promotes fair shareholder engagement and transparent AGM procedures.

Implications for Public Companies and Banks

For banks and public companies, the transition from King IV to King V introduces both opportunities and challenges. The key implications include:

  1. Regulatory Alignment and Compliance
    • Compliance with King V aligns organisations with the Prudential Authority and FSCA. This requires updating governance and risk policies.
  2. Risk Management and Ethical Leadership
    • Beyond financial risk, boards must address AI ethics, cybersecurity, sustainability, and stakeholder trust while fostering ethical leadership.
  3. Sustainability and ESG Compliance
    • King V deepens ESG integration—calling for better sustainability reporting, climate risk management, and social responsibility efforts.

Evaluating the Benefits and Challenges of King V

Benefits:

  • Corporate Reputation – Improved investor confidence through transparency.
  • Risk Management – Broader focus on AI, cybersecurity, and ESG.
  • Stakeholder Trust – Inclusive governance encourages long-term value.
  • Global Alignment – Embracing international standards boosts competitiveness.

Challenges:

  • Implementation Costs – Upgrading systems and staff training incur expenses.
  • Structural Complexity – Adapting to new governance and ESG demands.
  • Regulatory Scrutiny – Boards face increased oversight and accountability.

Next Steps and Industry Response

King V remains in its draft phase and is subject to further refinement. However, industry leaders, including the Banking Association South Africa (BASA) and corporate governance professionals, are actively reviewing its implications and submitting recommendations.

For banks and public companies, the key next steps include:

  • Reviewing the draft framework and identifying areas that require governance updates.
  • Engaging in industry consultations to provide feedback and shape final implementation.
  • Strengthening internal governance policies to align with King V’s emerging principles.
  • Preparing leadership teams for heightened oversight responsibilities.

King V marks a significant advancement in South Africa’s corporate governance, addressing modern issues such as AI ethics, ESG, and stakeholder inclusivity. While the transition may bring challenges, it offers a path to stronger governance, resilience, and corporate integrity. Public companies and banks must act decisively to align with these changes and remain forward-thinking in a dynamic regulatory environment.