Governance element	Principle/s	Summary recommendation/s	Difference to King II
Chapter 2. Boards and directors
Role and function of the board	2.1. The board should act as the focal point for and custodian of corporate governance	The board is responsible for ensuring the continued success of the company and is guided by its charter. It is the link between management and stakeholders and should meet at least four times per year.	Similar to King II
	2.2. The board should appreciate that strategy, risk, performance and sustainability are inseparable	The board should inform and approve the company’s strategy and satisfy itself that business plans are not encumbered by unexamined risks. In doing so it identifies key performance and risk areas. The board also ensures that the strategy will result in sustainable outcomes and considers sustainability to be a business opportunity.	Greater emphasis on opportunity as opposed to only risk.
	2.3. The board should provide effective leadership based on an ethical foundation	Explained in chapter 1	Refer to chapter 1
	2.4. The board should ensure that the company is and is seen to be a responsible corporate citizen	Explained in chapter 1	Refer to chapter 1
	2.5. The board should ensure that the company’s ethics are managed effectively	Explained in chapter 1	Refer to chapter 1
	2.6. The board should ensure that the company has an effective and independent audit committee	Explained in chapter 3	Refer to chapter 3
	2.7. The board should be responsible for the governance of risk	Explained in chapter 4	Refer to chapter 4
	2.8. The board should be responsible for information technology (IT) governance	Explained in chapter 5	Refer to chapter 5
	2.9. The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards	Explained in chapter 6	Refer to chapter 6
	2.10. The board should ensure that there is an effective risk-based internal audit	Explained in chapter 7	Refer to chapter 7
	2.11. The board should appreciate that stakeholders’ perceptions affect the company’s reputation	Explained in chapter 8	Refer to chapter 8
	2.12. The board should ensure the integrity of the company’s integrated report	Explained in chapter 9	Refer to chapter 9
	2.13. The board should report on the effectiveness of the company’s system of internal controls	Explained in section on internal financial controls	Refer to section on internal financial controls
	2.14. The board and its directors should act in the best interests of the company	Directors act in the best interests of the company by, amongst other actions, disclosing conflicts where they exist, dealing in securities only as allowed by internal policies and by adhering to legal standards of conduct. Where required, they should be permitted to take independent advice.	Similar to King II
	2.15. The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act	Explained in chapter 10	Refer to chapter 10
	2.16. The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board	Where the guidelines in the principle are not applied, a lead independent director should be appointed and disclosure provided in the integrated report. The role of the chairman should be formalised and assessed annually and a succession plan put in place. The chairman should consider the number of chairmanships held.	King II did not contain a requirement that the CEO should not become the chairman until three years has elapsed. Lead independent director concept already introduced in King II and refined in King III.
	2.17. The board should appoint the chief executive officer and establish a framework for the delegation of authority	The board ensures that the role of the CEO is formalised and his performance evaluated against specified criteria. It also makes recommendations regarding senior management appointments and its own assessment of materiality for the company.	Similar to King II
	2.18. The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent	The majority of non-executive directors should be independent, with independence assessed annually. As a minimum, the CEO and director responsible for finance should be appointed to the board. The section also deals with the re-appointment, rotation and removal of directors.	King II did not contain a requirement that the CEO and directors responsible for finance be appointed to the board.
	2.19. Directors should be appointed through a formal process	The director appointment process should be transparent and include background and reference checks. It is the responsibility of the nomination committee to identify suitable members.	King II required the board to comprise a balance of executive and non-executive directors, preferably with a majority of non-executive directors of which sufficient should be independent of management. King II did not suggest that the memorandum of incorporation of the company should allow the board to remove any director from the board, including executives, without shareholder approval.
	2.20. The induction of and ongoing training and development of directors should be conducted through formal processes	New and inexperienced directors should be suitably trained through formal induction and mentorship programmes. Directors should be kept up to date through regular briefings and continuing professional development programmes.	Similar to King II
	2.21. The board should be assisted by a competent, suitably qualified and experienced company secretary	The board appoints and removes the company secretary. The requirements of the Companies Act in relation to the company secretary apply to listed and state-owned companies. King III further elaborates on the duties of the company secretary.	King II did not contain the same level of detail regarding the responsibility of the company secretary.
	2.22. The evaluation of the board, its committees and the individual directors should be performed every year	Annual evaluations of the board, its committees and directors (including evaluations of the chairman, CEO and other executive directors) should be performed by the chairman or an independent service provider. The overview of the process should be disclosed in the integrated report. The performance evaluation of directors assists in identifying their training needs and should be a requisite before reappointment.	King III requires the board to consider whether the evaluation of performance should be done by the chairman or independently by professional service providers.
	2.23. The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities	Committees should be appropriately constituted and should formulate terms of references that are reviewed annually. The need for audit, risk, nomination and remuneration committees is also discussed. Committees (with the exception of the risk committee) should comprise a majority of non-executive directors of which the majority should be independent.	King II required that, at a minimum, companies have an audit and remuneration committee.
	2.24. A governance framework should be agreed between the group and its subsidiary boards	Governance matters related to listed subsidiaries, the nomination of directors to the boards of subsidiaries and the disclosures coupled thereto required in the integrated report, are discussed.	King II did not address interaction with subsidiaries.
	2.25. Companies should remunerate directors and executives fairly and responsibly	Refer to section on remuneration	Refer to section on remuneration
	2.26. Companies should disclose the remuneration of each individual director and certain senior executives	Refer to the section on remuneration	Refer to section on remuneration
	2.27. Shareholders should approve the company’s remuneration policy	Refer to the section on remuneration	Refer to section on remuneration