Legal status of King IV

The legal status of King IV, as with its predecessors, is that of a set of voluntary principles
and leading practices. Corporate governance could apply on a statutory basis as rules, as a
voluntary code of principles and practices, or as a combination of the two. In South Africa, as
in many jurisdictions around the world, a hybrid system of corporate governance has
developed as, over time, some practices of good governance have been legislated in parallel
with the voluntary King codes of governance. If there is a conflict between legislation and
King IV, now or in the future, the law prevails.

Stakeholder inclusivity
An approach in which the governing body takes into account the legitimate and reasonable
needs, interests and expectations of all material stakeholders in the execution of its duties in
the best interests of the organisation over time.
By following this approach, instead of prioritising the interests of the providers of financial
capital, the governing body gives parity to all sources of value creation, including, among
others, social and relationship capital as embodied by stakeholders. Consequently, this is an
inclusive, stakeholder-centric approach which stands in contrast with a shareholder-centric
approach.

Sustainability Reporting
Sustainability reporting, in the context of King IV, refers to the practice of disclosing
information about an organization's economic, environmental, and social performance. It
involves reporting on the organization's impacts, risks, and opportunities related to
sustainable development. This type of reporting aims to provide stakeholders with a
comprehensive understanding of the organization's sustainability practices and performance.

Concern Mitigatory Action

Corporate power is concentrated in one Full, timely and transparent disclosure

person (the founder – Mary Chimi)
and this will impact negatively on focused,
effective and ethical corporate leadership
and
may result in corporate failure
The majority shareholders are involved in
the day to day running of the business as the
Chief Executive Officer and the Chief
Operating officer
should be made in the annual reports
regarding the
exercise of corporate power
A major or majority shareholder should not
be involved in the day-to-day management
of the
company, but if such involvement is
inevitable then, as may be appropriate, the
involvement should be regulated by a clear
agreement and, where applicable, the
agreement`s terms and

The minority Shareholders are not
represented in the board of SmarTech
The Board of SmarTec does not have a
majority of non-executive directors
All shareholders did not exercise power in
general meeting to make business decisions
concerning the company and to take any
action which they deem appropriate for the
protection and development of the company
The shareholders, the board and the
management of the company did not protect
and promote the
interests of the company and its
stakeholders in this case particularly the
employees of SmarTech
The board is only operating through an
Audit Commmitte and does not have other
essential committees which are the Risk and
Compliance Committee, Dispute Resolution
Committee and Remuneration Committee
The remuneration of the CEO and the
Senior Management was unfairly declared
at the expense of employees
conditions should be approved by
shareholders in a general meeting
Where minority shareholders are not
represented on the Board, they must be
given the right
to formally present their views on critical
issues for consideration by the Board
provided that
they cumulatively hold at least ten percent
of the company´s shares.
have an appropriate balance between
executive and non-executive directors and
not
less than sixty percent of board members
should be non-executive directors and the
majority of non-executive directors should
be independent.
The company must conduct its business in a
manner that best serves the interests of the
shareholders, including minority
shareholders and other stakeholders of the
company
The Board should, where appropriate,
operate through committees composed only
of
independent non-executive members or in
which such members are in the majority. It
should have in place properly formulated
terms of reference which include the scope
of authority,
composition, roles, responsibilities and
duties of the committees. The essential
committees
are Audit Committee, Nomination
Committee, Risk and Compliance
Committee, Dispute
Resolution Committee and Remuneration
Committee
The chief executive officer’s remuneration
should be based on individual company and
should also be performance and incentive
based, and such remuneration should be
approved by shareholders in a resolution
passed by a majority of the members present
at a meeting convened for that purpose