The Government has released its exposure draft legislation to improve governance arrangements in superannuation. The exposure draft takes into account feedback received on the governance reforms in response to a discussion paper released by the Government in 2013 entitled ‘Better regulation and governance, enhanced transparency and improved competition in superannuation‘.  

The Bill proposes to amend the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) to include provisions that:

1. All Australian Prudential Regulation Authority (APRA) regulated superannuation funds be required to have a minimum of one third independent directors on their trustee board, and an independent chair;
2. The definition of ‘independent’ is to include persons who do not have a substantial holding in the trustee or do not have (or have not had within the last three years) a material relationship with the trustee, including through their employer;
3. Trustees of funds that do not have a majority of independent directors be required to report on an ‘if not, why not basis’; and
4. A three year transition period to apply for existing funds.

The new governance rules will not apply to self-managed superannuation funds and will be in force from 1 July 2016.

For more information please contact ERA Legal.