Companies
or organisations that are known to have good corporate governance are often
better rated by the market. Good governance relies on relevant laws and
voluntary codes such as NamCode and King IV code of Governance. The announcement by the Minister of Public
and Enterprises on the implementation of Namibia Public Enterprise Governance
Act, Act 1/2019 is a clear demonstration by government of its efforts to
strengthen and ensure good corporate governance. Laws provide the framework that people must
not transgress and provides the sanctions they will face if they do. By
contrast, a voluntary code like King IV seeks to set out the principles and
best practices that organisations with a sincere desire to achieve good
governance should follow. We can enact laws after laws, but as long as
the intended users and organizations fail to deduce the interest thereof, the
objectives of such laws will not be realized and they will become white elephants.
As the new law unfolds it is essential that we obtain some understanding and
recipes of sector supplements in governance such as King IV.
Well, the more we discuss good governance, its outcomes and what it can
do, the better it will be understood and once the understanding is acquired, it
will be easy for entities to apply the laws and principles. King IV report is
not a law but a suggestive governing tool. It is a voluntary report which is highly
rated for its principles that cut across all sectors be it State Owned Enterprises
(SOEs), NGOs, Public entities, and Investment institutions. King IV objectives among others are:
- Promotes corporate governance as integral to running an organisation and delivering governing outcomes.
- Encourage transparency and meaningful reporting to stakeholders.
One of a notable character of the King IV is the outcome-based
approached. It implies that our approaches to governance should be results
driven and not necessary compliance. The Four (4) outcomes of good corporate
governance are:
- Ethical Culture
- Good performance
- Effective control
- Legitimacy
For
an organisation to be said as good governed; the four outcomes must be achieved.
More emphasis is placed on creating an ethical
culture and mindset, because ultimately ethical behaviour is a matter of choice.
When an ethical mindset is present, individuals and companies will seek to act
in the right way, even when nobody is looking, because they understand that, to
do so makes good business sense and reduces risk.
For
the four outcomes to be achieved, the governing body must perform the four (4) responsibilities as:
- Steer and set strategic direction
- Approves policy and planning
- Ensure accountability
- Oversee and monitor
The
4x4 notion is deduced from the four outcome and responsibilities to bring out
the sixteen principles of good corporate governance, in its own way King IV is
a well calculated governing tool. King IV recognises that, each organization operates in its own context; hence
is designed flexible enough to be useful to all types of organisation and all
principles are required to substantiate a claim that good governance is being
practiced. It is a voluntary code that sets sixteen plus one principles of good
corporate governance and it focuses on the
principles that inform what should be achieved, not on mandating specific
actions. Application of principles should surely base on a foundation of
intellectual honesty, fairness, accountability, responsibility and
transparency.
King
IV, unlike its predecessor (King III), twisted to the principles of explain and
apply. Which means; if an organisation did not apply all the principles it
should explain its reasons. The required explanation allows stakeholders to
make an informed decision as to whether or not the organisation is achieving
the four good governance outcomes required by King IV. Explanation also helps
to encourage organisation to see corporate governance not as an act of mindless
compliance, but something that will yield results only if it is approached mindfully,
with due consideration of the organization’s circumstance. This it will
increase the organization’s transparency.
As
we welcome and celebrate the implementation of the new Act, let us remind
ourselves as role players that the objectives of the Act are not guaranteed,
however they can only be realized if we add value to them. It is my strong
conviction that, once we obtain understanding and gain vision of what we should
do to attain good governance, then the new Act will have meaning.
By:
Onesmus K Joseph -
ACIS/BAP/CFIP/PPL
MPHIL Candidate - KNUST
(Kumasi; Ghana)
Governance
Practitioner
josephonesmus@yahoo.com
