APRA intends to further strengthen its independence
requirements for RSE licensees, following new
guidance issued by the regulator last week. As we have
previously reported, APRA is consulting with industry about
significant amendments to SPS 510 Governance and a new
prudential standard, SPS 512 Governance Transition with a
view to these changes taking effect from 1 July 2016.
APRA's proposed changes will further strengthen governance
requirements for RSE licensees, with APRA now proposing to require
that RSE licensees:
establish a policy to determine the materiality threshold for
when a director has, or has had, a "material business
relationship" with the RSE licensee. This policy will then be
applied to determine the independence of current or potential
where a director or executive officer of a large employer
sponsor is appointed as an independent director, to assess whether
changes to the number of employees of a large employee sponsor
affect that director's independence.
APRA's guidance has also clarified industry concern that
existing RSE directors can be reclassified as independent directors
(provided, of course, that director meets the independence
requirements) and that, for entities who decide to cease operating
rather than comply with the new independence requirements, that
APRA may, on a case by case basis, extend that entity's time to
cease operating by the end of the transition period.
Consultation on APRA's governance reforms closes 23 October
2015. Please see our
previous article for an overview of the proposed changes to the
governance regime and for links through to APRA's consultation
If you have any questions as to how these standards will impact
your business, or would like to make a submission to the
consultation, please contact a member of our team.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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