King IV State-Owned Enterprise supplement : the impact on the SOE's approach to governance in South Africa

Abstract

The State-Owned Enterprise (SOE), to be trusted and accountable to the public, they need to implement effective governance processes that are beneficial to the stakeholders, particularly the government, which is a major shareholder. The advent of King IV SOE's supplement gave impetus to the implementation of the governance framework and effective control processes that empower the governing bodies to carry out their fiduciary duties effectively as it is expected and to provide strategic direction, policy approval, oversight and accountability. The SOE's supplement serves as a guide to proper governance in the SOE. The implementation of the King IV SOE's supplement enables the SOEs to fulfil their constitutional mandate and be profitable and realise the outcome of ethical culture, good performance, effective control and legitimacy. This paper is conceptual and made a critical analysis of the requirements of the King IV SOE sector supplement practices, and was compared and contrasted with the SOEs practices, duties and responsibilities using a literature review. The paper used SOEs (SOE's) in South Africa as units of analysis to interrogate the role that the sector supplement ought to play. The paper confirmed the extent to which the sector supplement satisfies corporate governance rules and practices. It also pointed out the recent failures in corporate governance in SOEs in South Africa, and the extent to which they left suspicion on the practices of the governing bodies and their adherence to acceptable governance practices, which have an impact on the organisational financial performance.