Document ID: chunk:federal_register_of_legislation:F2020L01591:body:0:p3
Version: federal_register_of_legislation:F2020L01591
Segment Type: other
Provision Reference: 
Character Range: 5670–8537

require an ADI to treat an entity as a related entity;
(g)          related individual of an ADI means a senior manager of the ADI, an individual who is a Board member of the ADI or any other individual that is likely to have direct or indirect control over the ADI, the ADI's senior management or the ADI's Board;
(h)          step-in risk entity means an entity to which an ADI is likely to provide support beyond any legal or contractual obligation to do so; and
(i)            substantial shareholder means a person or entity which has a substantial holding in the ADI, where 'substantial holding' has the meaning given in section 9 of the Corporations Act but is read as if it referred to 10 per cent or more of the total number of votes attached to voting shares instead of 5 per cent or more.
9.             A dealing with a related entity includes, but is not limited to, on- and off-balance sheet credit transactions, support arrangements, asset purchases and sales, service contracts, leasing agreements, derivatives transactions, acquisition of real property, provisions, restructuring and write-offs.

Adjustments and exclusions
10.         APRA may adjust or exclude a specific prudential requirement in this Prudential Standard in relation to one or more specified ADIs.[3]

Previous exercise of discretion
11.         An ADI must contact APRA if it seeks to place reliance, for the purposes of complying with this Prudential Standard, on a previous exemption or other exercise of discretion by APRA under a previous version of this Prudential Standard.

The role of the Board
12.         The Board of an ADI is ultimately responsible for oversight of the ADI's associations with its related entities and for approving policies governing the ADI's dealings and associations with its related entities. The Board must ensure these policies are reviewed at least annually and that they remain adequate and appropriate for the ADI's risk appetite, risk profile, capital, balance sheet size and the complexity of the ADI's group.

Control of risks arising from related entities
13.         An ADI's policies on dealings and associations with related entities must consider contagion risks to the ADI that arise from its group structure and related entities, and form part of the ADI's risk management strategy and risk management framework required under Prudential Standard CPS 220 Risk Management. An ADI must assess contagion risks to the ADI on a regular basis, at least annually, taking into consideration:
(a)          the number and size of entities within its group and the complexity of the group structure;
(b)          the adequacy of systems, controls and risk management across the group;
(c)          the level of financial and operational interdependence across the group;
(d)          whether other members of the group are regulated entities