The Australian Prudential Regulation Authority (APRA) has released draft standards and a discussion paper on proposed governance regulations for authorised deposit-taking institutions, general and life insurers and non-operating holding companies.

The proposals – which will apply to the boards of APRA-regulated institutions – include the need for boards to have a majority of independent non-executive directors, as well as having an independent, non-executive director as chairman.

Boards will also be required to meet APRA’s requirements for board size, the independence of directors, and having shareholder representation. They will also need to establish a board audit committee and a board risk committee and have a policy on board renewal.

The proposals also stipulate that companies need to have an internal audit function and apply independence provisions for external auditors, which are consistent with the CLERP 9 requirements in the Corporations Act.

APRA Chairman John Laker says the proposed standards meet standards that are considered good practice.

“The reforms also aim to ensure that board members have access to appropriate independent expertise and that the composition of boards of APRA-regulated institutions reflects a prudent balance of independent oversight and industry expertise,” he said.