The Australian Institute of Company Directors (AICD) has backed legislation for independent directors to be appointed to super funds, but wants the definition to be consistent with other APRA-regulated entities.
In a submission to the Senate Economic Legislation Committee, AICD chief executive, John Brogden, said the definition proposed in the Superannuation Legislation Amendment (Trustee Governance) Bill 2015, was overly “prescriptive”.
“As noted in our previous submission to Treasury the exposure draft the Superannuation Legislation Amendment (Trustee Governance) Bill 2015, 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,” he said.
“Our submission recommended 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, namely: ‘an independent director is a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with — or could reasonably be perceived to materially interfere with — the independent exercise of their judgement.
“We would again ask that consideration be given to including a broader definition in the Bill and that specific examples of the relationships that will be considered by APRA to impact a director’s independence be included in the relevant Prudential Standard.
“Not only would this approach be consistent with the approach taken for all other financial entities regulated by APRA, including the detail in the Prudential Standard will mean that they can be more easily changed as corporate governance practice evolves, as opposed to legislation.”
