At a time when South Africa is conflicted by its own dichotomy between its First World associations with the likes of the euro zone, versus the country’s problematic labour, health, education and security in a struggling emerging market environment, one has to think that the announcement of a new “updated” King III is unimportant and irrelevant.

According to a press statement last week by the Institute of Directors (IoD), the updated corporate governance standards will take the form of a new King IV report. The new standard will be revised by a team convened by the King Committee on Corporate Governance, and the current King III report will be improved to assist with “accessibility and implementation, particularly for smaller entities and non-profits”.

The World Economic Forum’s (WEF) Global Competitiveness Report 2013-2014 has ranked South Africa number one for the strength of auditing and reporting standards out of 148 countries. South Africa also achieved number one ranking for Efficacy of Corporate Boards, Protection of Minority Shareholders’ Interests, Regulation of Securities Exchanges and Legal Rights Index.

It is a well-known fact that South Africa’s legal, financial reporting and corporate governance standards are of a superior standard and it is encouraging that the WEF report acknowledges this leading position each year. But, it is difficult to understand how more corporate governance regulations and greater compliance requirements are going to aid our economy or resolve some of our more pressing macro-economic concerns.

There are some positive items to be expected from King IV, though. In the institute’s press statement last week, Mervyn King, the chairman of the King Committee, stated that the “revised report will contain… fewer principles and more succinct, specific practice recommendations”.

Reducing the existing 75 principles would certainly be welcomed because the current list can become cumbersome and complex.

Grant Thornton’s International Business Report (IBR), which provides benchmarked quarterly tracker insights, reveals that South African businesses are lamenting over-regulation and excessive red tape as the principal constraints to growth.

According to the research, when executives were asked to list constraints according to their impact on business expansion, 38 percent stated over-regulation and red tape as a major cause for limited growth while 36 percent stated that the lack of skills was constraining their expansion (Q1 IBR 2014 to March).

In no way does King IV even begins to resolve any of South Africa’s critical business concerns. Other than to generate activity for the task team as they work to create a new set of regulations, it seems that this process is really not going to help South Africans out much at all.

The new King IV is expected to provide ease of accessibility and implementation for smaller entities. If the IoD is referring to non-listed entities, then one has to question how this will be enforced. Currently companies listed on the JSE are required by the rules to comply with King III, but without the JSE to wield a regulatory “stick” on non-listed companies, what will the sanction be?

How does one enforce the “disclosure of remuneration principle” for example, onto an organisation in the private sector – surely this would attract the criminal element of society to target high-net worth individuals making them more vulnerable to crime?

South Africa is a nation of entrepreneurs. Today, we face a time when we need to build, educate and cultivate a skilled and sustainable labour force while simultaneously creating sufficient long-term growth and employment opportunities.

Overwhelming labour issues continue to impact on the country.

Foreign investors have no interest in countries with unstable economies and unreliable labour relations. Poor labour relations are much more damaging than the points we could earn for more corporate governance requirements, regulations and updates.

Finally, restricting expansion by adding complex red tape is concerning – particularly for smaller businesses – and this is something companies, governments and trade associations need to try and resolve.

* Andrew Hannington is chief executive of Grant Thornton Johannesburg