The enforcement of the King IV Code with emphasis on the role of the board of directors for corporate governance in South Africa.

Abstract

Corporate governance refers to the processes used to manage a company. The governing body of an organisation, which includes the board of directors of a company, is responsible for corporate governance. The King IV Code (The Code) recommends principles and practices to achieve good corporate governance in South Africa. While, following of the Code by directors is voluntary, there is a need for its enforcement, because the decisions of directors affect all stakeholders. Internal and external stakeholders of the company benefit from good corporate governance. The Code can be enforced by its application, the business judgement rule, the Johannesburg Stock Exchange (JSE) listing requirements and the Companies Act 71 of 2008. This study adopts a desktop research incorporating case law, legislation, journals, diagrams, articles, research papers and a comparative analysis of expert views to examine the effect and enforceability of the Code. The research is exploratory in nature and includes a literature study, which provides an understanding of the need for enforcement of the Code. The objective of this study is to examine the application of the Code on the boards of directors to establish why it needs to be enforced and the mechanisms through which it can be enforced.