Why does one need a Group Governance Framework?
27th February 2020
Given the recent scandals in large listed companies and state owned enterprises, it seems that the predominant quagmire in these group type organisations was the lack of an appropriate group governance framework being in place.
With most organisations adopting the recommended practices of the King IV Report on Corporate Governance for South Africa, 2016™ (“King IV™”), even King IV seemed to lack the gravitas in providing clear guidelines on implementing a group governance framework to instil fairness, accountability, responsibility and transparency across a group. After various calls for guidance, the King Committee released the much anticipated King IV Practice Note on Group Governance in January 2019.
When developing your framework, there is no one size fits all approach and key regard must be given to inappropriate and/or excessive oversight by a holding company, dilution of accountability at a subsidiary board level, potential lack of strategic alignment and the jurisdictions in which the group operates.
The King IV Practice Note on Group Governance recommends that a group governance framework must address key items such as leadership, legal governance framework, ethical culture, strategy and performance, group policies, information management, processes for external reporting and the role of holding company in the external audit. It is further recommended that the holding company must also reach agreement with its subsidiaries regarding its required governance outcomes and address specific issues relevant to a specific subsidiary, if required.
Contact us
Please do not hesitate to contact either of our offices in Cape Town, Durban or Gauteng should you require any assistance with your governance framework.
Chris Wilson – Managing Director
Direct number: +27 21 417 8734
Email: chris.wilson@kilgetty.co.za