What's new in King III - IT governance, fundamental transactions, and compliance |
IT Governance
As IT systems have become such an integral part of doing business, King III now provides specific guidelines to ensure effective IT governance. It is necessary for directors to ensure proper management of operational risk with regard to IT systems and security. Directors need to take the necessary steps to ensure authenticity, confidentiality, security, and integrity of data, as well as the availability, reliability and functioning of IT systems.
Fundamental and affected transactions
The Companies Act provides for the regulation of fundamental transactions. Fundamental transactions are transactions that would fundamentally alter a company, including the disposal of substantial or all of its assets or undertaking a scheme of arrangement, or a merger or amalgamation.
King III provides guidance to directors that are involved in fundamental transactions. Directors should declare potential conflicting interests, remain independent and provide shareholders with an independent assessment of the transaction.
Compliance
The Board is responsible for overseeing the management of the company’s compliance risk and is liable for the consequences of non-compliance. In turn, management is responsible for the
effective management of the company’s compliance risk. The board should ensure awareness of and compliance with statutory, regulatory and supervisory requirements throughout the business. The Board may mandate management to establish a compliance function to implement measures and procedures to ensure that the board’s policy on compliance is observed.
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