Banks Act: Draft Directive on Board Independence Issued

Posted 07 August 2025 Written by Acts Online
Category Financial Sector

Brought to you by SA Legal Academy: The Prudential Authority has invited stakeholders to comment on a draft directive concerning board independence requirements for banks and controlling companies.

In terms of the Banks Act, No. 94 of 1990, the Prudential Authority (PA) has called for input by 19 September 2025 on a draft directive that requires banks and controlling companies to establish and implement a formal policy promoting the principle of board independence. The directive aims to ensure that governance structures remain robust and free from undue influence.

The draft directive envisages that the internal policy must explicitly state that both the board’s chairperson and the chairs of its various sub-committees must be independent non-executive directors. These individuals must meet a specific set of requirements outlined in the directive, which are informed by:

  • Provisions contained within the Banks Act, No. 94 of 1990;
  • Governance and independence standards set out in the Companies Act, No. 71 of 2008; and
  • International best practices for financial institutional oversight.

The PA emphasizes that the policy must provide clear criteria for assessing independence and must be reviewed regularly to maintain alignment with regulatory expectations. Stakeholders and regulated entities are encouraged to review the proposed requirements to ensure future compliance with the mandated board structures.

What this means for you, your business, or your clients

  • For yourself: No direct individual obligations; impact is channelled through firm-level compliance and the specific eligibility criteria for those serving as independent non-executive directors.
  • For your business: Regulated banks and controlling companies must review their existing board and sub-committee structures to identify if any chairpersons fail to meet the proposed independence criteria before the directive is finalised.
  • For your clients: Advise banking sector clients to prepare formal submissions to the Prudential Authority regarding the draft directive by the 19 September 2025 deadline and to begin drafting the required board independence policies.

Originally published at https://legalacademy.co.za/news/read/banks-act-input-sought-on-board-independence-draft-directive

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