SME Success Toolkit: You mean King V is for us too?

Let’s be honest — when you’re running an SME, “corporate governance” probably isn’t the first thing on your mind. Most business owners wake up thinking about customers, cash flow, and keeping the team moving — not whether they’ve “applied King V.”  Survival focus comes before structure.

👉 But here’s the truth: good governance isn’t a corporate luxury — it’s a business survival tool. No structure, no scale.

First, what is King V

The King V Code on Corporate Governance for South Africa, released by the Institute of Directors South Africa (IoDSA) on 31 October 2025 (as an update to King IV, published in 2016), is a governance framework that sets out guiding principles and leading practices for ethical and effective leadership. While the application of King V is not mandatory for SMEs and non-profit organisations, it remains a globally respected framework that companies can adopt in proportion to their size, complexity, and purpose.

Governance, in plain language

King V defines corporate governance as “The exercise of ethical and effective leadership by the governing body towards the realisation of the following governance outcomes for the organisation within its economic, social and environmental context: Ethical Culture; Performance and Value Creation; Conformance and Prudent Control; Legitimacy.”

While “corporate governance” can often sound to SMEs like a stack of policies, boardrooms, and minutes, at its heart, it’s really about ethical and effective leadership. As King V reminds us, effective leadership always considers context — applying governance principles in a way that fits your organisation’s size, structure, and complexity.

For your SME, that could mean:

• Having fit-for-purpose risk controls when your team isn’t large enough for full segregation of duties.
• Making sure your finances tell the real story, not the hopeful one.
• Keeping proper records so funders, banks, or investors don’t walk away.
• Acting with transparency — even when no one’s watching.

👉 These are governance actions — whether or not you have a board, and whether or not you’re a for-profit company or an NPO.

So why should SMEs and NPOs care about King V?

Because King V isn’t about red tape — it’s about how you lead. You can apply King V’s 13 principles in a way that fits your size, structure, and resources. That’s called the proportionality principle, and it’s been carried forward from King IV.

So no, King V isn’t suggesting a “copy-and-paste” approach to governance. It’s about being deliberate — leading your organisation in a way that creates sustainable value.

The link between governance and growth

• Cash flow stress: Good governance strengthens your internal controls — ensuring payments are appropriately approved and expenses are accurately tracked. This level of discipline reduces the risk of fraud, overspending, or those “surprise” cash flow requirements that throw a business off track.
• Funding rejection: Lenders, investors, and donors look for reliability and proper documentation before releasing funds. Governance builds that trust by ensuring your financial reports are credible, decisions are well-documented, and your leadership is accountable — not ad hoc.
• Over-dependence on the founder: Governance creates systems and delegation so the business can function even when the owner steps away. For example, succession planning for SMEs doesn’t have to be complex — it can be as simple as establishing a structured, responsible process for handing over key tasks to appropriate team members within clear timelines.
• Lack of credibility: Transparent governance signals professionalism and reliability. It shows clients, partners, and donors that your business is well-run, ethical, and sustainable — qualities that often determine whether you win (or lose) opportunities.
• Strategic confusion: Governance encourages rhythm — regular reviews, reflection, and recalibration. It helps you pause, measure progress, and make intentional decisions that keep your business focused on long-term goals instead of short-term firefighting.

👉 Governance doesn’t compete with growth — it enables it. It’s your invisible anchor for longevity.

What if I don’t have a Board?

That’s okay. King V talks about a “governing body” — it doesn’t have to be a formal board. In an SME, that might be:

• The founder and a trusted advisor or mentor,
• A small management team that meets monthly to review finances and risks, or
• An external accountant or CoSec helping ensure oversight.

👉 The point isn’t who sits around the table — it’s that the table exists for regular and honest conversations about the business, to build ethically for the long term. Even if, for now, those conversations are with yourself, what matters is that you make time for them — to steer your business with a sense of purpose and clarity. And that’s what makes King V still a relevant leadership tool for SMEs – this principle of “proportional governance”. It encourages discipline and reflection — not titles or formality for their own sake.

Governance made simple

For organisations that want to claim compliance with King V, the expectation is not that you must “comply” with every King V recommended practice as set out in the Code. What’s expected is that you:

• Apply each principle in a way that makes sense for your business.
• Explain your approach honestly where you have had to deviate from the recommended practice.
• Provide a statement by the governing body that concludes on the governance outcomes — in line with the “apply and explain” principle outlined in King V.

King V also introduces a Disclosure Framework, designed for organisations that claim application of King V. For those not yet ready to make that claim, the framework still serves as a practical guide to strengthen your governance foundation. Its purpose isn’t to judge, but to help you tell your leadership story — showing how your governance practices support ethics, accountability, and sustainable value creation.

Reflection for SME Leaders: the mindset shift

Good governance isn’t paperwork — it’s a deliberate and strong signal that your business can be trusted. It’s how you show funders, partners, and employees that your business is anchored in ethical and effective leadership.

You don’t need a boardroom to practise King V. You just need the courage to lead with integrity and the discipline to record how you do it. That’s how small businesses mature — and move from good to great.

🔖 References:

• Institute of Directors in South Africa (IoDSA). King V Code on Corporate Governance for South Africa (2025).
• Institute of Directors in South Africa (IoDSA). King V Disclosure Framework (2025)