On 23 July 2015, AICD lodged a submission in response to the exposure draft of the Superannuation Legislation (Governance) Bill 2015: Governance arrangements for APRA regulated superannuation funds (the Exposure Draft).
In summary, our comments were as follows:
- It is our long-held view that greater independence on the boards of superannuation trustee companies should be encouraged, consistent with internationally recognised principles of good governance. The AICD welcomes the Government’s commitment to improving superannuation governance and encouraging greater independence through the introduction of the Exposure Draft
- To the extent possible, all APRA-regulated entities (including superannuation funds) should be held to the same standards of governance
- Given the current board composition of the boards of most industry superannuation fund trustees, the proposal under the Exposure Draft to introduce a requirement that at least one-third of the board be independent and allowing a three-year transition period to comply is supported
- We endorse changes to introduce an “if not, why not” disclosure of whether there is at least a majority of independent directors on the trustee board
- We endorse that the requirement that the Chair of a superannuation trustee company’s board be independent
- We recommend that a broader definition of “independent” be adopted under the Superannuation Industry (Supervision) Act 1993 (SIS Act) for directors of superannuation trustee companies, similar to the one that is used for the purposes of Principle 2 under the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles and Recommendations). Guidance by way of specific examples of relationships that are likely to indicate that a director is not independent (similar to those provided in Box 2.3 of the Principles and Recommendations but adapted to reflect the unique relationship between some directors of a superannuation trustee and employer or employee groups) should be included in the relevant prudential standard and not in the SIS Act itself.
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