Michael Judin, a partner at Johannesburg law firm Judin Combrink Inc, is part of the King Committee Task Team reviewing the King III codes and Corporate Governance Report in preparation for the updated King IV’s later this year. Speaking at the PRISA Conference in Durban in August, Judin offers insights into King IV and what this year’s report entails.
By Adam Wakefield
On Wednesday, 17 August and Thursday, 18 August, the Public Relations Institute of Southern Africa (PRISA) will be holding its annual conference during Loeries Creative Week in Durban.
The theme for this year’s conference is “Advance, Rise, Grow”, and among the speakers on the Thursday of the conference will be Judin. He is one of the people responsible for reviewing the King Report on Corporate Governance, with its latest version, King IV, set for release on Tuesday, 1 November this year.
When he takes the lectern in Durban, Judin says he will be speaking about corporate governance and the new King IV report, which incorporates the King Code of Governance Principles.
“Complying with good corporate governance is not only important, but rather critically important, for the PR industry,” Judin explains.
“King IV sets out 17 principles which all entities must comply with. The recommendations to assist with complying are set out in the report. All 17 are equally important and must be followed in order for good corporate governance to apply.”
Asked what the leading causes of governance problems within small and medium-sized business are, Judin says a definitive list cannot be arrived at because there are so many leading causes.
“But if forced to do so, I would say that the leading causes are the failure of the board to fully understand good corporate governance and failing to ensure that the correct policies and procedures are in place, that the correct sub-committees are created, that management are properly trained in corporate governance and that all of the risks which the entity faces have not been properly appreciated and addressed,” he says.
The previous
King III report was released in 2009, when social media was in its relative infancy.
Twitter was three years old,
Facebook five, while
WhatsApp had not yet been released. Fast forward to 2016, where
Twitter,
Facebook and
WhatsApp alone are worth billions of dollars each.
Social media and digital technology have changed society, a change Judin and his colleagues took heed of when crafting King IV.
“Social media and digital technology are a new world. You are destined to definitely fail unless you understand and have a proper appreciation of both social media and digital technology. Both of these definitely affected the way in which the task team wrote and approached King IV,” Judin says.
“It was uppermost in our mind at all times.”
According to Judin, digital media has made the question of sound corporate governance easier, with it important to know that the same rules that apply in the brick and mortar world also apply in the “click and mortar” world.
An instrument where the practicalities of corporate governance play out on a daily basis is at board level. Ideally acting as a contextual counterweight to the authority vested in top office holders, the board is a critical decision making body.
Judin believes that it is valuable for a company’s board to have non-executive directors appointed to it, both from the company’s specialised field and those with general business experience.
Additionally, given the impact of social media and digital technology have made on business, board members possessing knowledge of social and digital are critical. But Judin says that the Task Team did appreciate that, in certain instances, entities could not afford the cost of non-executive directors and, therefore, provided that the board acts in accordance with King IV and the Companies Act, can be excused from having non-executive directors.
“All directors must have a sound understanding and knowledge of the business of the company. But directors from outside bring another perspective which can be very important,” Judin explains. “Boards must ensure that there are people on the board who fully understand the new world of digital technology in social media, failing which they are destined to fail.”
As the release of King IV looms ever closer, it will be intriguing to know how its authors have tackled the social and digital beast. On November 1, that curiosity will be satisfied.