In the ever-evolving landscape of corporate governance, transparency has become the focus of reporting. The format of such reporting has traditionally been narrative in nature – the company prepares a few paragraphs to explain compliance. In the recently published draft update of the Report on Corporate Governance for South Africa (referred to as the draft King V) a Disclosure Template.
Under the current King IV, organisations are required to adopt an ‘apply and explain’ regime. This means providing a narrative account of how the organisation applied each principle and recommended practices. This allows organisations to explain in their own words how they achieved the desired governance outcomes. While this approach fostered flexibility and qualitative insight, it led to considerable variability. The form, depth, and comparability of disclosures differed widely across organisations, making it challenging for stakeholders to draw meaningful comparisons.
King V seeks to address this challenge by introducing a Disclosure Template as an integral part of the Code’s implementation. This template prescribes both the form of disclosures and requires organisations to address each principle and their associated practices. The result will be a more standardised, comprehensive, and comparable disclosure regime to set a new standard for transparency in South African corporate governance.
One of the significant advantages of the Disclosure Template is the clarity it brings to governance reporting. Rather than leaving it to each organisation to determine the scope and detail of their narrative, the template sets out specific requirements for what must be disclosed. This reduces ambiguity and the risk of selective or superficial reporting. Every material aspect of governance – be it ethical leadership, risk management, stakeholder engagement, or sustainability – is systematically addressed.
This structured approach also enhances consistency. Stakeholders, from shareholders and employees to regulators and the broader public, can now more easily compare disclosures across organisations and sectors. The narrative portion still exists, so while comparing compliance has become easier, the quality of compliance remains open to interpretation.
A further innovation of the King V Disclosure Template is its outcome-orientated approach. While King IV’s narrative disclosures often focused on describing practices and processes, King V requires organisations to demonstrate how the implementation of these practices, taken as a whole, achieves the associated principles and governance outcomes. One of the innovations introduced by King IV was to move organisations beyond box-ticking or compliance for its own sake. This further development in King V continues that journey, requiring organisations to provide evidence of the effectiveness and impact of their governance arrangements.
A potential concern with any move towards standardisation is the risk of losing flexibility. The Disclosure Template addresses this by retaining the narrative section. While organisations are still expected to scale and adapt their practices according to their size, complexity, and context, they must now explain these adaptations within the structured framework of the Disclosure Template. This ensures that transparency is not sacrificed for flexibility, and that any deviations from leading practice are clearly justified and disclosed.