Document ID: chunk:federal_register_of_legislation:F2023L01535:body:0:p7
Version: federal_register_of_legislation:F2023L01535
Segment Type: other
Provision Reference: 
Character Range: 16731–19731

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 to a director who is not a member of the APRA-regulated institution's management. Non-executive directors may include Board members or senior managers of the parent company of the locally incorporated APRA-regulated institution or of the parent company's subsidiaries, but not executives of the APRA-regulated institution or its subsidiaries.

Board composition
26.         The Board of a locally incorporated APRA-regulated institution must have a minimum of five directors at all times.
27.         The Board must have a majority of independent directors at all times. For a locally incorporated APRA-regulated institution that is a subsidiary[4] of another APRA-regulated institution or overseas equivalent,[5] exceptions may apply as set out at paragraphs 37 to 39. For a locally incorporated APRA-regulated institution that is a subsidiary of a parent company that is not prudentially regulated, exceptions may apply as set out at paragraph 40.
28.         The chairperson of the Board must be an independent director of the APRA-regulated institution.
29.         A majority of directors present and eligible to vote at all Board meetings must be non-executive directors.
30.         The chairperson of the Board cannot have been the Chief Executive Officer (CEO) of the APRA-regulated institution at any time during the previous three years. If the position of the CEO is unexpectedly vacated, the chairperson may serve as an interim CEO. After a period of 90 days, approval must be sought from APRA to allow this arrangement to continue.
31.         The chairperson must be available to meet with APRA on request.
32.         For a locally owned and incorporated APRA-regulated institution, a majority of directors must be ordinarily resident in Australia.
33.         For a foreign-owned, locally incorporated APRA-regulated institution, at least two of the directors must be ordinarily resident in Australia, at least one of whom must also be independent.

Board representation
34.         Board representation must be consistent with a locally incorporated APRA-regulated institution's shareholding. Where a shareholding constitutes not more than 15 per cent of the APRA-regulated institution's voting shares, there should not be more than one Board member who is an associate of the shareholder where the Board has up to six directors, and not more than two Board members who are associates of the shareholder where the Board has seven or more directors. A director is taken to be an associate of a shareholder for the purposes of this Prudential Standard if the director is an associate of the shareholder, or the shareholder is an associate of the director, according to the definition of associate