In what represents a substantial watering down of its original position, the Australian Prudential Regulation Authority (APRA) has stepped back from insisting that key superannuation fund board committees be dominated by independent directors.
In a discussion paper issued to the superannuation industry this week dealing with the Government's proposed changes to superannuation fund governance, APRA has accepted industry submissions that insisting on majority independent directors on Remuneration Committees and Audit Committees would be unworkable.
APRA's insistence on majority independent directors was spelled out in a letter to the industry sent in June, but yesterday it accepted the force of industry arguments.
It said that submissions it received had "highlighted significant concerns with this proposed approach".
"In particular, submissions argued that given that the proposed legislative changes require only one third independent directors on the Board, it would be logistically difficult for an Registrable Superannuation Entity (RSE) licensee to maintain a majority of independent directors on board committees and still maintain appropriate skills and experience on these committees," the APRA analysis said.
It said, instead, it would be requiring at least one third of the members of both the Board Audit Committee and Board Remuneration Committee to be independent directors and the chair of both the Board Audit Committee and Board Remuneration Committee be an independent director.
APRA said it would also be prohibiting the chairperson of the Board from acting as the chair of the Board Audit Committee.