Wisdom shouts: “Above all else, guard your heart, for everything you do flows from it.” And so it is with compliance legislation (King IV Corporate Compulsory Governance). In the old days, tick box exercises were legal. But no longer can a business hide behind a tick box. The rule is: “Substance takes precedence over legal form”. Even uncle or auntie Google knows what “substance” means, so don’t be the last to read of yourself in the newspaper … Let us call it “the rule of substance”.
Dr Mervyn King is one of the people we can thank for the rule of substance. We call him the king of standards because he is Professor Extraordinaire in several local and international universities and has consulted in over 60 countries. Dr King is responsible for codifying several sets of proper local and global business guidelines. Dr King produced reports called King reports, which govern some of the “softer rules” on your BEE score card. The words we use to describe these soft rules are Corporate Governance.
Currently, all BEE verification agencies expect a degree of sound Corporate Governance. If you fail to comply with what seems reasonable on the verification day, you may have committed a crime. But before you smirk, the law says: “ignorance of the law is no excuse”. But not only that, the law seems to say that you always have intricate knowledge of governance irregularities – “Mea Culpa” always describes you. Why? Because the definition of knowing reads as follows:
“knowing”, “knowingly”, or “knows” when used concerning a person, and in relation to a particular matter, means that the person either –
had actual knowledge of that matter; or
was in a position in which the person reasonably ought to have:
had actual knowledge
investigated the matter to an extent that would have provided the person with actual knowledge; or
taken other measures which, if taken, would reasonably be expected to have provided the person with actual knowledge of the matter
To the owner of the business: Go and Google the term “Mea Culpa“ and heed your consultant’s guidance before anyone in your Company gives birth to a governance concern. Will a compliance contravention exact a 10M fine or ten years in prison from you? Well, no one knows, but have you not heard and have you not read about “Mea Culpa”?