The
Australian Prudential Regulation Authority (APRA) has released revised
prudential standards on governance for authorised deposit-taking
institutions (ADIs) (APS 510)and life insurers (including friendly societies)(LPS
510).

The
amendments to the prudential standards result from recent changes to the Australian Securities Exchange (ASX)
Corporate Governance Council’s Corporate Governance Principles and
Recommendations.

The key amendments to the governance standards are that:

• in
  addition to the principle of independence of directors set out in the
  standards, APRA has incorporated the ‘relationships affecting
  independent status’ in the ASX Corporate Governance Council’s
  Principles as circumstances that would preclude a director from being
  treated as independent on the Board of an ADI or life insurer. The circumstances are identical to the five “relationships affecting
  independent status” in the 2nd edition of the ASX Corporate Governance
  Council Principles. They represent a non-exhaustive list of specific
  circumstances that would preclude a director from being regarded as
  independent for the purposes of serving on the Board of an
  APRA-regulated institution. A director in any of these circumstances
  would still be able to serve on such a Board, but not as an independent; and
• a Board should give consideration to the length of service of directors as part of its Board renewal policy.

The revised standards will take effect from 1 January 2008.

The
revised prudential standard on governance for general insurers (GPS
510) are a result of the Financial Sector Legislation Amendment (Simplifying
Regulation and Review) Act 2007.