The Australian Prudential Regulation Authority (APRA) has issued amended proposals to change the prudential framework on governance for banks, insurers and superannuation trustees. Background.

APRA will make three material changes to its original proposals:

• Tenure limit: Instead of a lifetime default tenure limit of 10 years for non-executive directors at a regulated entity, APRA now proposes a tenure limit of 12 years with a short extension in limited circumstances. These limits apply only to a director’s tenure at a specific regulated entity. They do not apply to a director’s total time served across different APRA-regulated entities.

• Independent directors: A proposal for banks and insurers to have at least two independent directors (including the chair) who are not members of any other board within the group will not proceed. Instead, APRA intends to remove the presumption of independence for directors on multiple group boards . APRA also proposes that intra-group conflicts be explicitly addressed as part of conflicts management and board performance reviews.

• Consultation on potential appointments: A proposal to require significant financial institutions and non-SFIs under heightened supervision to engage proactively with APRA on potential appointments will also not proceed as a legal requirement.

APRA will also clarify or adjust proposals relating to individual director skills, perceived conflicts of interest, and registers of relevant interests and duties by banks and insurers.

If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.

Author: David Jacobson
Principal, Bright Corporate Law
Email:
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.