The synergies and interaction between King III and the Companies Act 61 of 2008

• Jurisdiction: South Africa
• Author: Mervyn E King SC
• Published date: 15 August 2019
• Citation: 2010 Acta Juridica 446
• Date: 15 August 2019
• Pages: 446-455

The synergies and interaction between

King III and the Companies Act

61 of 2008

MERVYN E KING SC*

The new Companies Act 61 of 2008 incorporates into statute for the f‌irst time

issues of corporate governance. Governance, strategy and sustainability have

become inseparable. This is so because of the ecological and biodiversity crisis

on planet earth. This leads to the King III recommendation of integrated

reporting, namely, a holistic and integrated representation of the company’s

performance in terms of both its f‌inance and its sustainability.The new Act has

a chapter on accountability and transparency and includes setting out the

director’s duties of good faith, care, skill and diligence. The Companies

Tribunal will carry out, by way of voluntary alternative dispute resolution,

reviews of administrative decisions made by the Commission, in line with the

international emerging governance trend of mediation and arbitration clauses

in major procurement contracts. Internal audit is now risk-centric and advises

the board on the adequacy and effectiveness of internal controls. IT gover-

nance and IT security are now pervasive in the business of a company and dealt

with in King III. Company law sets the framework in which the company

operates and the recommended practices set out in King III provide guidance

for directors as to how they should direct the business of the company and

make decisions on behalf of the company. In this sense, the newAct and King

III complement each other.

South African company law was essentially based on English company law

until 1973, when the Companies Act 61 of that year departed from the

English statute in several respects. The Companies Actl 61 of 2008 (the

new Act) repeals the whole of the Companies Act 61 of 1973 (the old

Act).

The old Act did not deal with matters of corporate governance. Since

1994, corporate governance has been dealt with exclusively on a volun-

tary basis under the Code of Corporate Practices and Conduct formulated

by the King Committee (King I), which was replaced in 2002 (King II).

The new Act not only sets out how a company acquires legal personality

and raises funds, but incorporates issues of corporate governance for the

f‌irst time since the limited liability company was introduced in South

Africa by the Joint Stock Companies Limited Liability Act 23 of 1861 in

the Cape.

* BA, LLB (Wits) (Cum Laude), PhD (hc) in Law, Chairman of Brait Société Anonyme,

Strate, the Global Reporting Initiative, the King Committee on Corporate Governance in

SouthAfrica and Professor Extraordinaire at the Centre for Corporate Citizenship at UNISA.

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2010 Acta Juridica 446

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