Risk governance & control: financial markets & institutions / Volume 7, Issue 2, Spring 2017 67 PRACTICAL APPLICATION OF CORPORATE GOVERNANCE PRINCIPLES IN A DEVELOPING COUNTRY: A CASE STUDY Wanjiru Gachie*, Desmond Wesley Govender* * Discipline of Computer Science Education, University of KwaZulu-Natal, Pinetown, Durban, South Africa Abstract How to cite this paper: Gachie, W. Govender, D. W. (2017). Practical Application Of Corporate Governance Principles In A Developing Country: A Case Study. Risk governance & control: financial markets & institutions, 7(2), 67-75. http://dx.doi.org/10.22495/rgcv7i2art7 Copyright © 2017 The Authors This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). http://creativecommons.org/licenses/b y-nc/4.0/ ISSN Online: 2077-4303 ISSN Print: 2077-429X Received: 22.09.2016 Accepted: 19.01.2017 JEL Classification: G34, L81 DOI: 10.22495/rgcv7i2art7 The importance of examining corporate governance in organisations cannot be overemphasised. Corporate governance failure which has resulted from weak corporate governance systems has highlighted the need for research aimed at contributing to the improvement and reform of corporate governance at business, national and international level. A review of corporate governance mechanisms and their practical application in two retail companies in South Africa was undertaken. The research question that informed the study was: What is the nature of corporate governance mechanisms in the South African retail sector? The research design entailed analysis of secondary data, namely Annual Reports and other pertinent documents, and document analysis was used to show what is accessible to the ordinary share/stake-holder and what is not. Data analysis was conducted both qualitatively and quantitatively. With regard to corporate governance mechanisms, the results and discussion show that the two companies have not yet complied with the King II and III codes. Recommended strategies to strengthen corporate governance mechanisms in the South African retail sector should include a commitment to risk disclosure and revamping of the corporate governance structure of the ‘whole’ system. Keywords: Corporate Governance, Retail Companies, King II And III Codes 1. INTRODUCTION This article examines the concept of corporate governance principles in South Africa. The term ‘corporate governance’ has been the subject of some controversy, and was rarely used (for example, in discussion of common law) prior to the 1990s. How to ensure that the power of an organisation is harnessed for the agreed purpose rather than diverted in some other direction is a constant theme in corporate governance. Solomon and Solomon (2014) explain that the term ‘governance’ derives from the Latin gubernare, meaning ‘to steer’ (usually in relation to steering a ship); this implies that corporate governance involves the function of direction rather than of control. The objective of this article was to analyse the practical application of corporate governance in two retail companies in South Africa. Its purpose was to uncover differences and similarities and make recommendations as far as corporate governance is concerned. The focus question is ‘What is the nature of corporate governance mechanisms in the South African retail sector?’ 1.1. Problem statement According to Monks and Minow (2008) the global importance of corporate governance became dramatically clear in 2002 as a series of corporate meltdowns, frauds, and other catastrophes led to the destruction of shareholders’ wealth, loss of jobs, criminal investigation of dozens of executives, and record-breaking bankruptcy filings. Hence the importance of examining corporate governance in the nation’s companies cannot be overstated. Corporate governance failure which has resulted from weak corporate governance systems has highlighted the need for research aimed at contributing to the improvement and reform of corporate governance at business, national and international level. Not much company-specific research is being undertaken to establish the extent to which corporate governance reforms have been implemented in the country, although the subject has been given attention in Western countries such as the United States of America (USA) and the United Kingdom (UK). The paper identified a gap in research with regard to the nature of corporate