Companies Act enforce corporate governance, King III, ISO 26000

The Companies Act require certain employers to form a social and ethics committee, standardised by King III, corporate governance and ISO 26000.

The Companies Amendment Act, 3 of 2011, in section 72(4), extends the scope, and adds six sub-sections on social and ethics committees. When the Companies Regulations were gazetted in 2011, even more substantial guidance was given in Section 43, writes Rudy Maritz, Verification Standards Committee director of the newly formed National Institute of Compliance Consulting (NIOCCSA).

Since May 2012, social and ethics committees have become a reality in state-owned, listed, and ‘public interest’ companies in South Africa.

In the first draft of the Companies Act of five years ago, there was a single sentence on a new board committee that might be required; “The minister may by regulation prescribe that a company or a category of companies must have a social and ethics committee, if it is desirable in the public interest, having regard to (a) its annual turnover; (b) the size of its workforce; or (c) the nature and extent of its activities.”

Suppliers and contractors have to support compliance

Requirements developed by and imposed by these committees will inevitably filter down to other companies, who do not fall in the required category. Evidence of this has already been seen in vending and screening of service providers and suppliers of multi-national, state-owned and para-statal enterprises, in particular to the application of anti-corruption, money-laundering, terrorism and organised crime laws.

Secondary requirements will soon follow, where all companies will be required to provide evidence that their service providers and suppliers have been properly vetted as part of the total value and supply chain of the larger corporate.

Compliance Officers to manage corporate governance

Compliance Officers soon will find themselves overwhelmed with an array of requirements based on the Companies Act, King III report on corporate governance, and ISO 26000, and management professionals need to align themselves to assist companies in meeting these requirements.

In terms of corporate governance, there are four pillars on which business are built; marketplace, workplace, society, and natural environment. No business can function outside these spheres of interaction.

An Organisational Compliance Practitioner needs to understand these aspects of business and be able to assist and advise a company and its directors on their social responsibilities in these areas, and how to develop a management system to ensure compliance to the spectrum of applicable rules.

ISO 26000 standardises social responsibility

The new ISO 26000 Guidance on Social Responsibility is a key corporate governance management tool. Corporate responsibility is defined as “The commitment of an organisation to incorporate social and environmental considerations in its decision-making, and be accountable for the impacts of its decisions and activities on society and the environment.”

Compliance requirements for each of the four aspects are:
1. Marketplace
a.       BBBEE promotion through procurement
b.      Economic development
c.       Prevention of Corruption, CMT Laws
2. Workplace
a.       Employment Equity
b.      Quality Work-life
c.       Employee Health and Safety
d.      Employee Education and development
3. Social Environment
a.       Community Development
b.      Donations and Sponsorships
c.       Public Health and Safety
d.      Consumer Protection
e.      Consumer Relations (Buyer loyalty)
4. Natural Environment
a.       Environmental Impact
b.      Investment and support of Renewable Energy
c.       Carbon Footprint
d.      Aesthetics in design (Built Environment).

The National Institute for Organisational Compliance Consultants (NIOCCSA) is developing an Occupational Curriculum Standard for the profession and will present this to SAQA’s QCTO by the end of 2013.

Health and safety practice aligned to corporate governance

There are two professions closely aligned to compliance consulting; advanced HSE practice, and human resources generalists. Additional training via CPD over a five year period would qualify these professionals as Organisational Compliance Practitioners.

Interested parties are invited to submit proposals and suggestions on the proposed Occupational Curriculum, and practitioners are invited to participate in the development of this emerging profession.

• Sources; Ethics South Africa; Social and Ethics Committee Handbook. ISO 26000.

• Rudy Maritz is the NIOCCSA Verification Standards Committee director.

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5 thoughts on “Companies Act enforce corporate governance, King III, ISO 26000

  1. Thank you for this. We must not forget the Standards Act. SANAS is the registering body for companies to be able to give certification, and in some case will accept international certification bodies. So it would be a legal requirement that in order to confer ISO 26000 in terms of the King report, you would have to be SANAS registered. I confirmed this yesterday with them for my own company. It also includes all the others, ISO 14000 etc -Regards, Shane

  2. Hi Shane, companies cannot be certified ISO 26000 compliant. See extract from the ISO website on the standard; “ISO 26000: 2010 provides guidance rather than requirements, so it cannot be certified to, unlike some other well-known ISO standards. Instead, it helps clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility, globally. It is aimed at all types of organizations regardless of their activity, size or location.

    The standard was launched in 2010 following five years of negotiations between many different stakeholders across the world. Representatives from government, NGOs, industry, consumer groups and labour organizations around the world were involved in its development, which means it represents an international consensus.”

    The same would also apply to ISO 31000 for Risk Management.

    However, if certification is required, the certification body has to be SANAS accredited as you correctly stated.

      1. Let me know the outcome please. It would be great if a company could be certified Socially Responsible. ISO standards that aim to “standardise” are the only ones that can be used for certification purposes. It would be up to individual employers to require adherence to best practice standards like ISO 26000. The only issue would be to validate it in the absence of formal certification. Cheers

  3. Where could we register our company to be certified as a Medical Waste collector only. The disposal would then be done by a big contracted company.

    Editor resonds; Ask the Institute of Waste Management of Southern Africa, and their Health Care Waste Forum. And the DOH. Also register with the provincial DOH, and on the waste information system, WIS, online. Your legal register, signage etc must include bio haz waste transport legislation and standards. Specific packaging is required by disposers. Ensure tracking to a relevantly registered disposal service.

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