Banking, Insurance and Life Insurance (prudential standards) determination No. 3 of 2011 - Prudential Standard CPS 510 - Governance
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Board representation
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Board representation must be consistent with a locally incorporated regulated institution’s shareholding. Where a shareholding constitutes not more than 15 per cent of the 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 in clause 4 of Schedule 1 of the Financial Sector (Shareholdings) Act 1998. That definition is to be applied for the purposes of this Prudential Standard as if subparagraph (1)(l) of that definition were omitted.
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Where an individual shareholding is greater than 15 per cent, as approved under the Financial Sector (Shareholdings) Act 1998, the Board representation of that shareholding may be greater than allowed in paragraph 26, although it must still be broadly proportionate to the shareholding concerned.[5]
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For an ADI that operates as a special service provider, the ADI may apply to APRA for approval for alternative Board composition arrangements that meet the objectives of this Prudential Standard. APRA may approve alternative arrangements for the ADI if satisfied that those arrangements will, in APRA’s opinion, achieve the objectives of this Prudential Standard.