Members of embattled super fund EISS could be forced to pay penalties levied against its board of directors, after the industry fund’s union and employer shareholders decided not to use their own money to pay any future fines.

The Australian Prudential Regulation Authority launched an investigation into spending at the Energy Industry Super Scheme (EISS) last year, amid media scrutiny of sponsorship arrangements entered into by its former chief executive, Alexander Hutchison.

APRA declined to confirm this week whether it was still investigating the $6.2 billion fund, which the regulator last year found administered the nation’s second-worst default superannuation product.

Last November, APRA took the unprecedented step of telling EISS to merge, demanding the fund review its expenditure and stop engaging in sponsorship arrangements that were not in its 20,000 members’ best interests.

EISS is the latest superannuation fund to seek court approval to use members’ money to pay fines levied against its directors, appearing at the NSW Supreme Court on Tuesday to seek judicial advice on amending its trust deed.

The move was in response to changes made by the Morrison government, known as the ‘‘Section 56 amendment’’, designed to prevent super funds from using members’ money to pay fines for any wrongdoing. The measure came into effect on January 1, and EISS filed documents in February.

Super funds including Australian-Super and Cbus fronted up to court late last year warning their trustee boards could become insolvent as a result of the change, since fund trustees generally have less than $100 in capital and would not be able to pay multimillion-dollar fines.

In its statement of facts, EISS said it had only $8 in capital and its insurance policy could not prevent it from going insolvent if it copped a non-indemnified liability.

Instead, the fund wants the power to use members’ money to cover fines by charging a ‘‘reasonable’’ fee on EISS’ $6.2 billion pool of retirement savings.

EISS said its seven shareholders had refused to dip into their own pockets to pay any fines the fund may incur.

EISS’ shareholders include energy companies Ausgrid, Transgrid, Endeavour Energy and Essential Energy, alongside the NSW branch of the Electrical Trades Union, the United Services Union and nominees of Unions NSW.

The document notes the cost of an ‘‘unplanned insolvency’’ of EISS ‘‘materially outweighs the cost of the new trustee fee’’, which is the pot of members’ money the fund wants to earmark for paying fines.

‘‘The amount of that fee must be an amount which the trustee determines is reasonable,’’ the document says.

EISS was named and shamed last August by APRA as managing one of the 13 worst-performing MySuper default funds, which triggered a focus on several of the fund’s sponsorship arrangements.

The sponsorship arrangements that have come under scrutiny include a community housing provider with links to a former chairman, Terry Downing, a multimillion-dollar deal with the National Rugby League (NRL), and sponsorship of Ronald McDonald House, where former chief Mr Hutchison’s wife had been employed.

The fund also supported two surf-lifesaving clubs in Maroubra.

APRA has not made any public findings about specific arrangements, but the regulator has told EISS to stop engaging in sponsorships that were not in members’ best interests.

Mr Hutchison resigned in September, along with multiple board directors and chairman Warren Mundy.

EISS has been in merger talks with Cbus since APRA said in November it needed to join forces with a better fund.

A spokesman for EISS said the fund ‘‘continues to work towards a merger with Cbus Super and are finalising a merger implementation plan’’.