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Issue 572, 26 June 2015 

Draft legislation on governance reforms released 

The government has today released draft legislation that will require boards of all APRA-regulated superannuation funds to have an independent chair and at least one-third independent directors. 

The definition of ‘independent’ is to include persons who do not have a substantial holding in the trustee or do not have (or have not had within the last three years) a material relationship with the trustee, including through their employer. 

In their annual reports, funds will also be required to disclose whether they have a majority of independent directors on an ‘if not, why not’ basis under similar rules that apply to Australian Securities Exchange-listed companies. 

A three-year transition period will apply for existing funds to comply with the new requirements after the royal assent of the relevant legislation. However, the requirements will apply immediately to any new fund established after 1 July 2016. 

From a good governance perspective, ASFA supports increasing the number of independent directors on the boards of superannuation funds and recognises that over the past few years many trustee boards have already moved down this path by appointing independent directors. 

ASFA also supports the government’s proposal to require trustee boards to appoint an independent chair. This proposal is consistent with contemporary governance standards and with the requirements of other prudentially regulated entities. 

ASFA will carefully consider the draft legislation and explanatory material to ensure the definitions and transition arrangements are workable and effective, and will provide a submission to the Treasury by the 23 July 2015 deadline for submissions. 

If you have any feedback on issues you would like ASFA to consider including in our submission, please provide your comments to Jon Echevarria by Friday, 10 July 2015. 

 

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