Trustee boards should be reviewing their policies around director selection, especially since passage of the recent Treasury Laws amendment, according to two BigLaw lawyers.
In a financial services alert aimed at trustees, Ashurst partners Meredith Bennett and Lisa Simmons have said that with themes of corporate culture and governance “pervading” Hayne’s royal commission, it was no surprise that proper fund governance was of “critical importance”.
Ms Bennett and Ms Simmons said that what Hayne considered as “the central issue” was what constitutes a board which is “skilled and efficient in the proper supervision of the funds in the best interest of members”.
As a result, boards should make provision for regular and orderly board renewal and replacement while avoiding “unexpected or wholesale turnover of trustees”.
Ms Bennett and Ms Simmons said “trustee boards should review their policies around director selection having regard to the commissioner’s comment as to the “central issue” and any long director tenures need to be considered carefully”.
They also warned that any decisions or non-actions taken by boards that raise queries around levels of influence provided by a sponsor, shareholder, or third party has on any directors has the potential to be closely examined by the regulators.
Trustee boards should note that APRA may change its prudential standards around governance, the partners cautioned, reflecting a requirement for an improved assessment of board skills, highlighted as a recommendation in a productivity commission report.
Lawyers Weekly recently reported on the recent passing of the law amendments to strengthen corporate and financial sector penalties in Australia.
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