The King Code of Governance Principles and the King Report on Governance (King III) should be a non-legislative code, said a member of the King Committee on Corporate Governance on Tuesday.

Lindie Engelbrecht, CEO of the Institute of Directors South Africa and a member of the King Committee on Corporate Governance, praised the non-legislated principle-based approach.

"South African listed companies are today regarded by foreign investors as among the best governed in the world's emerging economies.

"However, it should also be mentioned that there are now King II recommendations which have become law owing to the Companies Act," she said.

King III was unveiled at the Sandton Convention Centre in
Johannesburg earlier on Tuesday, following the release of the draft King III Code and Report, introduced in February 2009 and opened to public comment.

The final King III incorporated a number of important changes that the committee believed improves the interpretation and usability of the report.

"At a glance, it would seem that a lot of changes have been made, when compared to the draft Code and Report.

"However, it was merely a case of simplifying and clarifying some of the recommendations."

She said the final report had been written in conjunction with the public.

"The committee gave priority to each recommendation, presented anonymously to ensure complete objectivity, which in turn has enabled us to produce a Code and the Report which is undoubtedly one of the foremost reports on corporate governance in the world."

The King III Code received the most public comment yet, which Engelbrecht believed was owing to the current financial climate, the Code's relevance, the allocated time for public comment as well as statutory and regulatory issues such as the revised Companies Act.

"The philosophy of King III revolves around leadership, sustainability and corporate citizenship.

"This approach mirrors global corporate governance which also incorporates emerging governance trends such as alternative dispute resolution (ADR); risk-based internal audit; shareholders and remuneration; and evaluation of the board and directors," she said.

As part of the King committee's efforts to incorporate public comment and recommendations, the Code and the Report also include improvements to principles such as IT governance and business rescue.

"A key recommendation was that IT governance should be addressed separately as, in today's technology world where information resources and the management thereof is outsourced, the risk is complex and requires a dedicated approach aligned with key international guidelines," Engelbrecht explained.

Unlike its predecessors, King III applied to all entities regardless of the manner or form of incorporation or establishment whether public, private or the non-profit sector, she said.

King III comes into effect on March 1, 2010.

Until then King II will apply.

The new Code and Report also fall in line with the Companies Act No, 71 of 2008, which is expected to become effective on July 1, 2010.