King IV Independent directors

How to assess independence

One of the key principles in King IV is the establishment of a unitary Board which reflects a balance of power. In order to ensure that no one individual, or group of individuals yield unfettered power on the Board, King IV proposes the appointment of independent non-executive directors. It should be noted upfront that all directors, regardless of the classification as an executive, non-executive or independent non-executive director, require the application of an independent state of mind and objective judgment. In essence, ALL directors are required to always act in the best interests of the company, and this can only be achieved if directors set aside their personal interests.

In this document we discuss the need for and value of independent directors, as well as the King IV approach to the assessment of the independence of directors.

We specifically elaborate on the following:

  • The value of independent directors
  • Practical implications of assessing independence
  • Comparing independence requirements : The Companies Act, King III and King IV
  • International trends
  • Questions for directors to ask
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