Document ID: chunk:federal_register_of_legislation:F2023L01535:body:0:p6
Version: federal_register_of_legislation:F2023L01535
Segment Type: other
Provision Reference: 
Character Range: 13914–17018

complies with the group governance arrangements.[3]

   A.      Governance arrangements – locally incorporated APRA-regulated institutions

The Board and senior management
16.         The Board of directors (the Board) of a locally-incorporated APRA-regulated institution is ultimately responsible for oversight of the sound and prudent management of that institution.
17.         The Board must have a formal charter that sets out the roles and responsibilities of the Board.
18.         The Board, in fulfilling its functions, may delegate authority to management to act on behalf of the Board with respect to certain matters, as decided by the Board. This delegation of authority must be clearly set out and documented. The Board must have mechanisms in place for monitoring the exercise of delegated authority. The Board cannot abrogate its responsibility for oversight of the functions delegated to management.
19.         The Board must ensure that directors and senior management of the institution collectively have the full range of skills needed for the effective and prudent operation of the institution, and that each director has skills that allow them to make an effective contribution to Board deliberations and processes. This includes the requirement for directors, collectively, to have the necessary skills, knowledge and experience to understand the risks of the institution, including its legal and prudential obligations, and to ensure that the institution is managed in an appropriate way taking into account these risks. This does not preclude the Board from supplementing its skills and knowledge by engaging external consultants and experts.
20.         Senior management of a locally incorporated APRA-regulated institution, with responsibilities relating to the business in Australia, must be ordinarily resident in Australia.
21.         Directors and senior management of a locally incorporated APRA-regulated institution must be available to meet with APRA on request.
22.         The Board must provide the auditor and the Appointed Actuary of the institution, as relevant, with the opportunity to raise matters directly with the Board.

Independence
23.         For the purposes of this Prudential Standard, an 'independent director' is a non-executive director who is free from any business or other association — including those arising out of a substantial shareholding, involvement in past management or as a supplier, customer or adviser — that could materially interfere with the exercise of their independent judgement. The circumstances that will not meet this test of independence include, but are not limited to, those set out in Attachment A.
24.         If the Board of a locally incorporated APRA-regulated institution is in doubt about a director's independence for the purposes of this Prudential Standard, the APRA-regulated institution may refer the matter to APRA for guidance.

Definition of non-executive director
25.         For the purposes of this Prudential Standard, a reference to a 'non-executive director' is interpreted as meaning a reference