Banking (prudential standard) determination No. 2 of 2007 Variation to Prudential Standard APS 510 Governance (Cth)

Banking (prudential standard) determination No. 2 of 2007

Variation to Prudential Standard APS 510 Governance

Banking Act 1959

I, John Francis Laker, Chair of APRA, under subsection 11AF(3) of the Banking Act 1959 (the Act), VARY prudential standard APS 510 in the manner set out in the Schedule.

This instrument takes effect on 1 January 2008 or the date of registration on the Federal Register of Legislative Instruments, whichever is the later.

Dated   22 November 2007

[Signed]

John Francis Laker

Chair

Interpretation

In this Determination

APRA means the Australian Prudential Regulation Authority.

APS 510 means APS 510 Governance, determined by Banking (prudential standard) determination No.2 of 2006, as varied by Banking (prudential standard) determination No.15 of 2006.

Schedule

Variation to Prudential Standard APS 510

a.   Paragraph 1 – Delete the paragraph and replace it with “This Prudential Standard is made under s11AF of the Banking Act 1959 (Banking Act).”.

b.   Paragraph 2 –  Insert, at the beginning of the paragraph, a new sentence “This Prudential Standard applies to all authorised deposit-taking institutions (ADIs) and authorised non-operating holding companies (authorised NOHCs) under the Banking Act. ADIs and authorised NOHCs are collectively referred to as regulated institutions in this Prudential Standard”.

c.   Paragraph 11 – Delete the second sentence and replace with a new sentence “The circumstances that will not meet this test of independence include, but are not limited to, those set out in Attachment A.”.

d.   Footnote 2, page 4 – Insert the word ‘to’ after the word ‘refer’.

e.   Paragraph 38 – in line 3, delete the words “Professional Statement F1 Professional Independence” and replace with the words “APES 110 Code of Ethics for Professional Accountants”.

f.    Footnote 8 – delete the footnote and replace with a new footnote that reads “APES 110 Code of Ethics for Professional Accountants was issued by the Accounting Professional and Ethical Standards Board with effect from 1 July 2006.”.

g.   Paragraph 57 – Insert a new sentence at the end of the existing paragraph that reads “The policy must give consideration to whether directors have served on the Board for a period which could, or could reasonably be perceived to, materially interfere with their ability to act in the best interests of the ADI.”.

h.   Delete paragraph 61.

1. Delete paragraph 62.

j.    Insert a note after paragraph 60 that reads “Note : Paragraphs 61 and 62 have been deleted.”.

k.   Attachment A – replace the existing words with those in the document headed “Attachment A” on the following page, including footnotes:

Attachment A[16]

[16]          The following circumstances are adapted from the guidance on “Relationships affecting independent status” to be considered by a Board when determining the independent status of a director set out in Box 2.1 of the ASX Corporate Governance Principles and Recommendations (2^nd Edition).

A director is not independent if the director:

1. is a substantial shareholder[17] of the regulated institution or an officer of, or otherwise associated directly with, a substantial shareholder of the regulated institution

   [17]          For the purpose of this Attachment, a “substantial shareholder” is a person with a substantial holding as defined in section 9 of the Corporations Act.

1. is employed, or has previously been employed in an executive capacity by the regulated institution or another group member, and there has not been a period of at least three years between ceasing such employment and serving on the Board

1. has within the last three years been a principal of a material professional adviser or a material consultant to the regulated institution or another group member, or an employee materially associated with the service provided

1. is a material supplier or customer of the regulated institution or other group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer

1. has a material contractual relationship with the regulated institution or another group member other than as a director