With only one week for comment the Senate Economics Legislation Committee called for submissions on the Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017. In our submission we expressed support for governance reform and the move to increase the number of independent directors on superannuation trustee boards. However, consistent with our submissions in response to the Murray Financial System Inquiry and the Fraser governance review, we restated our preference for a majority of independent directors on the boards of superannuation funds, with appropriate election and accountability requirements.
We recommended adoption of Option 2 outlined in the explanatory memorandum: that the government legislate for superannuation boards to have a majority of independent directors with an independent chair with a five-year transitional period. Notwithstanding our preference for a majority of independent directors, we acknowledged that a one-third requirement is a pragmatic, initial step in ensuring board effectiveness which would assist in improving board renewal, as it will introduce new skills onto boards.
The bill also contains a definition of independence. We continue to advocate for a non-prescriptive approach to independence. Our long-held view is that a better solution is to take a principles-based approach and establish a superannuation industry–led body to collectively develop guidance on governance matters, similar to that for listed companies under the ASX Corporate Governance Council Corporate Governance Principles and Recommendations. Our recommendation is that the approach to independence for superannuation boards takes a similar approach and set out criteria for assessing independence, rather than a definition of independence.
Governance Institute also recommended that:
- members of superannuation entities should have the right to elect directors via direct voting, but that the decision-making (voting) should not be connected to a statutory meeting
- employers, unions and employer organisations should not vote, control the voting process or set the rules for voting without approval by members
- the rules concerning voting should be set out in the constitution of the superannuation fund and made available to members in an easily accessible corporate governance section of the website
- constitutional amendment should be subject to member approval.
Governance Institute will continue to keep members updated on this matter.
Section 169 CA outcome — inclusion of members’ email addresses on register
The Senate Economics Legislation Committee has released its report on the Corporations Amendment (Modernisation of Members Registration) Bill 2017, following on from Senator Nick Xenophon’s private members bill to amend s 169 of the Corporations Act 2001 (Corporations Act) to require companies to include members’ email addresses on their share register. As reported to members in our August 2017 issue Governance Institute made a submission on the bill and appeared before the Committee. In our submission and our evidence we expressed our concern that the proposed change would impact all companies covered by the Corporations Act: public companies limited by guarantee (including membership organisations, charities, sporting associations and registered clubs for example), proprietary companies and public companies (both listed and unlisted) and millions of Australians holding shares directly in listed and unlisted companies