Is the King 4 code an exquisite and progressive piece of corporate finery or is it a case of new clothes for the emperor?

If you’re searching for a definitive answer to that question, don’t bother trawling through the 130 or so submissions responding to the King 4 draft edition. The answer you’ll find there vacillates between effusive support for a code that is "breaking new ground at the forefront of corporate governance" and almost outright rejection of a jargon-filled document that is self-referential, represents no improvement on the King 3 code and is out of touch with reality.

But if you’re not looking for a definitive answer and have even a passing interest in the King code industry, be sure to trawl through the submissions. They are an extremely useful accompaniment to the draft report and say as much about the code as they do about the source of the submission. Almost everybody is talking to their book. (No-one from the media made a submission asking about the unmentioned role of the media in promoting transparency, just as there were no submissions from labour asking why there were so few references to employee stakeholders.)

The big audit firms (PwC, EY, KPMG) have taken it very seriously — as they should, given the huge fees that corporate governance matters generate for them. There’s discussion of whether there are three or five levels of assurances, as well as deep concerns about the prospect of members of the social &ethics committee having some input on remuneration. (Some of these committee members aren’t even directors! What is the King committee thinking?) And, sharing the view of about 90% of those who expressed any view on the matter, the audit firms approved the decision to remove the prescriptive nine years used to help decide if an independent director is still independent.

As King 4 sees it, independence is a subjective rather than an objective state, which means mates on the board (or "governing bodies", in King-code speak) get to look deep into their hearts and decide whether or not someone with nine years-plus of board service is independent.

Well done to analyst David Couldridge for even mentioning nine years as a useful pointer.

In a similar vein, there was a lot of support for taking a softer approach on auditor rotation — no-one mentioned five years. Disclosing the date of the audit firm’s first appointment seemed to get close to the edge of a comfort zone.

In contrast to the audit firms, submissions from individual companies focused on the dangers of overregulation.

Naspers thought it important not to stifle entrepreneurship and innovation, and asked for a more detailed explanation of the need for King 4. The most useful submission in the entrepreneurial vein came from Afrimat chairman Marthinus von Wielligh, who seemed determined to drag the King committee into the real world, where not all stakeholders are equal.

Capital providers have to get a return, said Von Wielligh, and if they’re not given a strong say in how a company is regulated, they can invest elsewhere. The possibility that, as he described it, "shareholders are often short-term opportunists who can go anywhere", threatens an anchor pillar in the code’s aspirational construction, which requires everyone to play nice.

Another reality check came from someone new to the King code community. Tracey Davies, of the Centre for Environmental Rights, said the code was of "unquestionable value". But she promptly went on to point out a potentially fatal flaw: the King codes assume "company directors automatically act with goodwill when approaching corporate governance, and that they are automatically committed to transparency and sustainability."

Davies reckons, on the basis of quite extensive research by her centre, that this is a flawed assumption. She says many companies claim compliance with the King code to enhance their reputations while, in fact, undertaking actions that are at best unsustainable and at worst unlawful. "Our findings are that many companies that have regularly been hailed as shining examples for their approach to managing environmental, social and governance factors have in fact committed serious breaches of environmental laws."

Almost as damning was Tom Wixley’s stated belief that institutional shareholders only pay attention to the King code when it suits them. Wixley, a former chairman of EY, agrees with Von Wielligh on the issue of shareholders being more important than other stakeholders: "Ultimately the buck stops with shareholders and they deserve to be recognised as the primary stakeholders."

Given his extensive experience on boards, Wixley’s view on institutional shareholders’ attitudes needs to be taken very seriously — in particular his chilling remarks relating to remuneration. "[Institutional shareholders] use the remuneration vote as a means of forcing boards into actions that will promote their own short-term objectives," he said.

Wixley also warned of the effect of King 4 substantially downgrading the emphasis given to financial aspects of governance: "We will see many more African Bank scenarios in future unless attention is given to this."

The King committee’s power grab hasn’t gone down too well with the former auditor. The committee, a self-appointed entity, wants the code to apply to all organisations and sectors. Listed companies are the entities in need of corporate governance guidance, said Wixley, and the code should concentrate on them.

It may be in recognition of this that the JSE has made adherence to King 3 a listings requirement. This is the only regulatory backing the code has.

"Government entities are subject to a host of laws and regulations and do not need the conflicting requirements of King 4, and nonprofits already have a perfectly sound code of their own," said Wixley.

As for small businesses, Wixley said they don’t have the same issues as large ones and any attempt to include them in the King code will merely dilute the benefits of the code.

The empire building, based out of the Institute of Directors, might not go down well with the swathes of economic actors that have been excluded, or have excluded themselves, from the drafting process.

In his comment on the draft, Daniel Malan criticised King 4 for being too self-reflective and self-referential. For those planning a rushed read ahead of the November 1 launch he also describes the overall structure as "very confusing".