The Australian Prudential Regulation Authority (APRA) has set the corporate governance bar too high for many small, unlisted companies, according to Chartered Secretaries Australia (CSA).
CSA, which represents company secretaries and governance professionals, has accused APRA of adopting a “one size fits all” approach which fails to take account of the financial constraints of most smaller entities and will not necessarily lead to better governance.
CSA chief executive, Tim Sheehy said that APRA had proposed a Rolls Royce solution which might be appropriate for the big end of town but, for a host of smaller entities such as community banks, friendly societies and trustees of superannuation funds represented overkill.
He said that the APRA draft standards required all APRA-regulated entities (with limited exceptions) to establish boards comprising a major of non-executive directors and to appoint an independent non-executive as chairperson.
“While we strongly support the role that director independence plays, this requirement will add enormous and, in our view, unnecessary compliance costs for smaller entities,” Sheehy said.
He said that with APRA proposing that the new governance standards be implemented by January next year, CSA was supporting an extension of time to allow smaller companies to implement the changes.
