APRA issues revised standards
The Australian Prudential Regulation Authority (APRA) has issued a revised set of corporate governance draft standards covering the institutions it administers.
The chairman of APRA, John Laker announced the regulator’s intention to release the revised governance standard when addressing a conference earlier this week saying they would set out the key principles which regulated institutions should have regard to in their governance arrangements.
He said they would establish minimum standards on matters such as independence and board composition but that a key proposal contained in the new standard would be that each board have a policy on board renewal that “ensures that the board remains open to new ideas and independent thinking, while retaining adequate expertise”.
“We will not stipulate any specific requirements in these policies and we will not be setting a limit on tenure, as we had originally proposed,” Laker said. “Rather, as part of our normal supervision, we will be reviewing the approach each board takes to provide regularly for fresh insight and general reinvigoration of the board while ensuring continuity and experience at board level.”
He said APRA would also be proposing that each board have procedures for assessing its performance and that of individual directors (as well as senior managers) relative to its objectives.
“Again, we will not be stipulating any specific requirements but let me offer some guidance on how boards might go about this task,” Laker said. “We would expect each board to consider and document the objectives that it sets for the board collectively and for individual directors.”
He said objectives for the board could include establishing the overall strategy for the institution and ensuring reporting against this strategy; determining the risk appetite for the institution and approving its risk management strategy; assessing operating and financial conditions against forecasts; probing management on performance against plan and on the effectiveness of risk controls; and making key decisions in a timely manner.
“Objectives for individual directors could be set in terms of expertise and whether it is being demonstrated; attendance at board meetings; and contribution to board deliberations and the overall direction of the institution,” Laker said.
“We would expect assessments against these various objectives to take place on a regular basis (at least annually), either through an appraisal by the board itself or assessment by an external consultant.
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
