A new governance lexicon: From status to capability
Section 5 of King V codifies a new standard for independence,1  replacing vague thresholds with clearer, more prescriptive rules. These reforms not only align South Africa with global best practice, but seek to rebuild market trust in the wake of recent governance failures. Four areas are particularly notable: tenure, cooling-off periods, related party scrutiny, and remuneration.

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1.    Tenure: The end of discretion
King V introduces a hard cap on director tenure: beyond nine years, independence status is automatically lost (Principle 5, Practice 25(h)). This represents a decisive departure from King IV’s flexible approach, which permitted boards to override the threshold with annual evaluations. King V removes this discretion, aligning South Africa with standards such as Provision 10 of the UK Corporate Governance Code. The rationale is clear: independence must not only exist, but must also be manifestly perceived to exist, as the prolonged tenure of directors risks entrenching them within the company’s affairs, and gradually diminishing the objectivity and incisiveness that underpin true independent judgment.

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That said, the fixed cap may oversimplify a complex issue. South Africa’s concentrated ownership structures, transformation imperatives and limited pool of experienced, demographically representative directors present a unique context. While the nine-year limit promotes global alignment and reduces ambiguity, it also closes the door on a more nuanced calibration that might better reflect domestic realities.

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2.     Cooling-off periods: Codifying distance
King V replaces board discretion with fixed cooling-off periods to reduce the risk of informal influence. Former executives must now observe a dual regime: three years out of management, plus two additional years without any significant involvement in the company (Practices 25(c) and (d)). A three-year cooling-off period also applies to former audit partners, material service providers and advisers (Practices 25(e) and (f)).

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These boundaries reflect international best practice and behavioural insight. They are long enough to allow detachment, yet short enough to preserve access to talent. 

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3.    Related party influence: Expanding the risk perimeter
The current definition of “independence” includes, as a key consideration, the potential for “relationships” to influence or compromise objective judgement and decision-making. King V proposes an amendment to Principle 25, introducing the concept of a “related party” in relation to non-executive directors, with “related party” defined in accordance with section 2(1) of the Companies Act 71 of 2008. This refinement provides welcome clarity, offering a more precise delineation in terms of which relationships are encompassed within the ambit of “relationships”, thereby enhancing the rigour and transparency of the independence assessment.

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4.    Remuneration: Incentivised, not captured
In a commercially pragmatic shift, King V clarifies that share-based or performance-linked remuneration does not automatically disqualify a director from being classified as independent, unless the remuneration is also material to their personal wealth (Practice 25(d)). This reflects modern compensation practices, particularly in equity-heavy sectors. It enables companies to recruit investment-savvy directors without losing their independence classification. Still, boards must assess both structure and scale with rigour – alignment with shareholder value is permissible; dependency on it is not.

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5.    Transactional risk and strategic implications
The implications for dealmakers and governance professionals are immediate. Independence is no longer a static designation; it is a moving part of the deal process. Directors crossing the tenure threshold mid-transaction or becoming conflicted through related-party developments could compromise quorum, regulatory clearance or shareholder approval. This elevates independence to a transactional risk factor.

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Hard caps and broader exclusions also constrain board composition. In niche, technical or transformation-sensitive sectors, the pool of eligible independent directors narrows. Boards must therefore approach succession planning with strategic intent, making use of advisory panels, board observers, and staggered rotations to preserve governance continuity.

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Legal risk is also heightened. Where independence underpins audit committee functioning or board approval, challenges to a director’s status can become grounds for litigation or regulatory scrutiny. Boards should adopt well-documented, defensible assessment protocols, and engage proactively with investors to build confidence in governance practices.

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6.    A call to action: Embedding independence by design
To remain ahead of the governance curve, boards should institutionalise independence oversight as a strategic function. This means auditing independence against transaction calendars, maintaining real-time dashboards that track tenure and related-party ties, and embedding reviews into board evaluations. These should be supported by robust documentation capable of withstanding legal and regulatory challenge. Above all, independence must become part of a board’s operating culture, not just a compliance checklist.

In summary

As the finalisation of King V nears, boards face a defining moment. Independence has become a proxy for governance maturity, deal credibility and investor trust. King V is not merely a tightening of rules. It is an invitation to governance leadership. For CEOs, CFOs, general counsel and board chairs, the imperative is not to do the minimum, but to hardwire independence into the DNA of board oversight.

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Boards that rise to this challenge will not only align with regulatory expectations. They will also earn the confidence of the market and the freedom to lead with speed, clarity and integrity. In governance, as in dealmaking, credibility is the ultimate currency. And in the age of King V, independence is how it is earned.  

Fenyane is an Executive, Raniga a Senior Associate and Mdingi a Candidate Legal Practitioner | ENS

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1    King Code IV at Part 1.