Board compositionBoard composition

Board composition

15. The Board of a regulated institution must have a minimum of five directors at all times.

16. The Board must have a majority of independent directors at all times. For regulated institutions that are subsidiaries[3] of other APRA-regulated institutions or overseas equivalents,[4] exceptions may apply as set out at paragraphs 27 to 29. For regulated institutions that are subsidiaries of a parent company that is not prudentially regulated, exceptions may apply as set out at paragraph 30.

17. The chairperson of the Board must be an independent director of the regulated institution.

18. A majority of directors present and eligible to vote at all Board meetings must be non-executives.

19. The chairperson of the Board cannot have been the Chief Executive Officer (CEO) of the 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.

20. The chairperson must be available to meet with APRA on request.

21. For locally-owned and incorporated regulated institutions, a majority of directors must be ordinarily resident in Australia.

22. For foreign-owned locally incorporated regulated institutions, at least two of the directors must be ordinarily resident in Australia, at least one of whom must also be independent.

23. For foreign ADIs, in addition to the requirement to have a senior officer outside Australia with delegated authority from the Board who is responsible for overseeing the Australian branch operation, there must be a senior manager[5] in Australia responsible for the local operation who is ordinarily resident in Australia.

24. Board representation must be consistent with a regulated institution’s shareholding. Where a shareholding constitutes not more than 15% of a 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 clause, 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 clause as if subparagraph (1)(l) of that definition were omitted.