Icon IconOur Corporate Governance Culture

The Manager aspires to the highest standards of corporate governance. The Manager is committed to ongoing improvement in corporate governance. It has developed and, on an ongoing basis, maintains sound and transparent policies and practices to meet the specific business needs of Ascott Reit and to provide a firm foundation for a trusted and respected business enterprise. The Manager remains focused on complying with the substance and spirit of the principles of the Code of Corporate Governance 2012 (Code) while achieving operational excellence and delivering Ascott Reit’s long-term strategic objectives. The Board of Directors (Board) is responsible for the Manager’s corporate governance standards and policies, underscoring their importance to the Manager.

The Manager has received accolades from the investment community for excellence in corporate governance. More details can be found on page 95 of this Annual Report.

This report sets out the corporate governance practices for the financial year (FY) 2015 with reference to the Code. Where there are deviations from the principles and guidelines of the Code, an explanation has been provided within this Annual Report.

(A) Board Matters

The Board's Conduct of Affairs
Principle 1:
Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board.

The Manager is led by the Board which presently comprises a majority of non-executive independent Directors (IDs). This exceeds the requirements in the Code. Each Director brings to the Board skills, experience, insights and sound judgement which, together with his strategic networking relationships, serve to further the interests of Ascott Reit.

The Board oversees the affairs of the Manager in furtherance of the Manager’s primary responsibility to manage the assets and liabilities of Ascott Reit for the benefit of Unitholders. The Board provides leadership to the Chief Executive Officer (CEO) and the management team (Management) and sets the strategic vision, direction and long-term objectives for Ascott Reit. The CEO, assisted by Management, is responsible for the execution of the strategy for Ascott Reit and the day-to-day operations of Ascott Reit’s business.

The Board provides leadership to Management, sets strategic directions and oversees the management of Ascott Reit. The Board establishes goals for Management and monitors the achievement of these goals. It ensures that proper and effective controls are in place to assess and manage business risks and compliance with requirements under the Listing Manual, the Property Funds Appendix, as well as any other applicable guidelines prescribed by the SGX-ST, MAS or other relevant authorities, and applicable laws. It also sets the disclosure and transparency standards for Ascott Reit and ensures that obligations to Unitholders and other stakeholders are understood and met.

The Board has reserved authority to approve certain matters and these include:

  1. material acquisitions, investments, disposals and divestments;

  2. issue of new units in Ascott Reit (Units);

  3. income distributions and other returns to Unitholders; and

  4. matters which involve a conflict of interest for a controlling Unitholder or a Director.

The Board has established various Board Committees to assist it in the discharge of its functions. These Board Committees are the Audit Committee (AC), the Corporate Disclosure Committee (CDC) and the Executive Committee (EC). The composition of the various Board Committees is set out on page 47 of this Annual Report.

Each of these Board Committees operates under delegated authority from the Board, with the Board retaining overall oversight. The Board may form other Board Committees as dictated by business imperatives. Membership of the various Board Committees is managed to ensure an equitable distribution of responsibilities among Board members, to maximise the effectiveness of the Board and to foster active participation and contribution from Board members. Diversity of experience and appropriate skills are considered in the composition of the respective Board Committees.

The Board has adopted a set of internal controls which establishes approval limits for capital expenditure, investments, divestments, bank borrowings and issuance of debt instruments. Apart from matters that specifically require the Board’s approval, the Board delegates authority for transactions below those limits to Board Committees and Management. Approval sub-limits are also provided at Management level to optimise operational efficiency.

The Board meets at least once every quarter, and as required by business imperatives. Where exigencies prevent a Director from attending a Board meeting in person, the Constitution of the Manager permits the Director to participate via teleconferencing or video conferencing. The Board and Board Committees may also make decisions by way of resolutions in writing.

A total of six Board meetings were held in FY 2015. A table showing the attendance record of the Directors at meetings of the Board and Board Committees during FY 2015 is set out on page 47 of this Annual Report. The Manager believes in the manifest contribution of its Directors beyond attendance at formal Board and Board Committee meetings. To judge a Director’s contributions based on his attendance at formal meetings alone would not do justice to his overall contributions, which include being accessible to Management for guidance or exchange of views outside the formal environment of Board and Board Committee meetings.

The Manager provides suitable training for Directors. Upon appointment, each Director is provided with a formal letter of appointment and a copy of Directors’ Manual (which includes information on a broad range of matters relating to the role and responsibilities of a director). All Directors on appointment also undergo an induction programme to familiarise themselves with matters relating to the business activities of Ascott Reit, its strategic directions and policies, the regulatory environment in which Ascott Reit operates and the Manager’s corporate governance practices.

Following their appointment, Directors are provided with opportunities for continuing education in areas such as directors’ duties and responsibilities, changes to regulations and accounting standards and industry-related matters, so as to be updated on matters that affect or may enhance their performance as Directors or Board Committee members.

At all times, the Directors are collectively and individually obliged to act honestly and with diligence, and to consider the best interests of Unitholders. In addition to disclosure of any interest a Director may have in a matter under consideration by the Board, any Director who is in a conflict of interest situation is also required to abstain from participating in discussions on the matter.

Board Composition and Guidance
Principle 2:
There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders. No individual or small group of individuals should be allowed to dominate the Board's decision making.

The Board reviews from time to time the size and composition of the Board with a view to ensuring that the size of the Board is appropriate in facilitating effective decision making, taking into account the scope and nature of the operations of Ascott Reit and its subsidiaries (Ascott Reit Group), and that the Board has a strong independent element.

The Board presently comprises seven Directors, of which four are IDs. The Chairman of the Board is an ID. Profiles of the Directors are provided on pages 19 to 23 of this Annual Report.

The Board assesses the independence of each Director in accordance with the guidance in the Code. An ID is one who has no relationship with the Manager, its related corporations, its shareholders who hold 10% or more of the voting shares of the Manager, or Unitholders who hold 10% or more of the Units in issue of Ascott Reit or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgement. The relevant non-executive Directors had provided declarations of their independence which have been deliberated upon by the Board. The Board has also examined the different relationships identified by the Code that might impair the Director’s independence and objectivity.

Mr Lim Jit Poh and Mr Ku Moon Lun have served on the Board for more than nine years. The Code recommends that the independence of any director who has served beyond nine years be subject to rigorous review. The Board has accordingly reviewed and determined that Mr Lim and Mr Ku have continuously demonstrated strong independence in character and judgement in the discharge of their responsibilities as Directors of the Manager during FY 2015. Mr Lim and Mr Ku have been forthcoming in expressing their individual viewpoints, active in their debate over issues concerning Ascott Reit, and objective in their scrutiny of and challenges to Management. They have actively sought clarification and amplification of board affairs as necessary, including through direct access to the Management and external advisors.

The Board has also considered whether each of Mr Tan Beng Hai, Bob and Mr Zulkifli Bin Baharudin had demonstrated independence of character and judgement in the discharge of his responsibilities as a Director of the Manager in FY 2015, and is satisfied that each of Mr Tan and Mr Zulkifli has acted with independent judgement.

On the bases of the declarations of independence provided by the Directors and guidance in the Code, the Board has determined that Mr Lim Jit Poh, Mr Ku Moon Lun, Mr Tan Beng Hai, Bob and Mr Zulkifli Bin Baharudin are independent directors, as defined under the Code. Each member of the Board had recused himself from deliberations on his own independence.

Chairman and Chief Executive Officer
Principle 3:
There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company's business. No one individual should represent a considerable concentration of power.

To maintain an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making, the roles and responsibilities of the Chairman and the CEO are held by separate individuals.

The non-executive independent Chairman, Mr Lim Jit Poh, is responsible for leading the Board and ensuring that the Board is effective in all aspects of its role. The CEO, Mr Tay Boon Hwee, Ronald has full executive responsibilities over the business directions and operational decisions of Ascott Reit and is responsible for implementing Ascott Reit’s strategies and policies and conducting Ascott Reit’s business.

The Chairman is responsible for leadership of the Board and for creating the conditions for overall effectiveness of the Board, Board Committee and individual Director. This includes setting the agenda of the Board in consultation with the CEO and promoting constructive engagement among the Directors as well as between the Board and the CEO on strategic issues.

The Chairman plays a significant leadership role by providing clear oversight, advice and guidance to the CEO and Management on strategies and business operations.

The Chairman and the CEO are not immediate family members. The separation of the roles of the Chairman and the CEO and the resulting clarity of roles provide a healthy professional relationship between the Board and Management, and facilitate robust deliberations on the business activities of Ascott Reit and the exchange of ideas and views to help shape Ascott Reit’s strategic process.

Board Membership
Principle 4:
There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

The Board undertakes the function of a nominating committee and therefore, the Manager does not have a nominating committee. The Board performs the functions that such a committee would otherwise perform, namely, it administers nominations to the Board, reviews the structure, size and composition of the Board, and reviews the performance and independence of Board members. The Board seeks to ensure that the composition of the Board provides an appropriate balance and diversity of skills, experience and knowledge of the industry and that the Directors, as a group, have the necessary core competencies relevant to Ascott Reit’s business. The current Board comprises individuals who are business leaders and professionals with financial, banking, fund management, real estate, investment and accounting backgrounds. The varied backgrounds of the Directors enable Management to benefit from their respective expertise and diverse background.

As part of its commitment towards improving its corporate governance, the Board recently undertook a review of the matter and has determined that it shall continue to undertake the functions of a nominating committee. The following considerations were taken into account:

  1. the Manager is a dedicated manager to only Ascott Reit and in general, REITs (including Ascott Reit) have a more focused scope and scale of business compared to those of listed companies. For this reason, the Board's capacity would not be unduly stretched if the responsibilities of a nominating committee were also undertaken by the Board as the Board would be able to give adequate attention to such issues;

  2. the focused scope of the business of Ascott Reit also means a manageable competency requirement for the Board such that the Board is able to manage the duties of a nominating committee; and

  3. that IDs form at least half of the Board and the Chairman is an ID demonstrate that the IDs play a substantive role and assures the objectivity and independence of the decision making process concerning nomination. This also mitigates any concerns of conflict which can be managed by having the conflicted directors abstain from the decision making process. Further, conflict situations are less likely to arise in matters of nomination.

In terms of the criteria and process put in place for selecting, appointing and reappointing Directors and for reviewing the performance of Directors, the Board has adopted the following for FY 2016 and after:

  1. The Board will at least annually carry out a review of the Board composition as well as on each occasion when an existing ID gives notice of his intention to retire or resign. This is to assess the collective skills, knowledge and experience of Directors represented on the Board to determine whether the Board, as a whole, has the skills, knowledge and experience required to achieve the Manager's objectives for Ascott Reit.

  2. The Board will review the suitability of any candidates put forward by any Director for appointment, having regard to the skills required and the skills represented on the Board and whether a candidate's skills, knowledge and experience will complement the existing Board and whether he has sufficient time available to commit to his responsibilities as a director, and whether he is a fit and proper person for the office in accordance with the Guidelines on Fit and Proper Criteria issued by MAS (which require the candidate to be, among other things, competent, honest, to have integrity and be financially sound).

  3. External consultants may be engaged from time to time to access a wide base of potential directors.

  4. No member of the Board will be involved in any decision of the Board relating to his own appointment, reappointment or assessment of independence.

  5. A newly appointed Director will receive a formal appointment letter and a copy of Directors' Manual (which includes information on a broad range of matters relating to the role and responsibilities of a director).

  6. All directors on appointment will undergo an induction programme to help familiarise them with matters relating to Ascott Reit's business and the Manager's strategy for Ascott Reit.

  7. The performance of the Board, Board Committees and Directors will be reviewed annually.

  8. The Board will proactively address any issues identified in the board performance evaluation.

The adopted process takes into account the requirements in the Code that the composition of the Board, including the selection of candidates for new appointments to the Board as part of the Board's renewal process, be determined using the following principles:

  1. the Board should comprise Directors with a broad range of commercial experience, including expertise in fund management, the property industry, banking and legal fields; and

  2. at least one-third of the Board should comprise IDs. Where, among other things, the Chairman of the Board is not an ID, at least half of the Board should comprise IDs.

As at least half of the Board comprises IDs, the Manager will not be voluntarily subjecting any appointment or reappointment of directors to voting by Unitholders. The Chairman of the Board is presently an ID. The Board intends to continue with the principle that at least half of the Board shall comprise IDs.

On Board renewal, the Manager believes that Board renewal is a necessary and continual process, for good governance and ensuring that the Board has the skills, expertise and experience which are relevant to the evolving needs of Ascott Reit's business; renewal or replacement of a Director therefore does not necessarily reflect his performance or contributions to date. In reviewing its Board composition, the Board will, with effect from FY 2016, also consider the guidelines that an ID should serve for no more than a maximum of two three-year terms and any extension of his appointment after he has served for six years could be on a yearly basis up to a period of nine years (inclusive of the initial two three-year terms served).

Guideline 4.4 of the Code recommends that the Board determine the maximum number of listed company board representations which any director may hold, and disclose this in the annual report. The Board is of the view that the limit on the number of listed company directorships that an individual may hold should be considered on a case-by-case basis, as a person's available time and attention may be affected by many different factors such as whether he is in full-time employment and his other responsibilities. A director with multiple directorships is expected to ensure that sufficient attention can be and is given to the affairs of the Manager in managing the assets and liabilities of Ascott Reit for the benefit of Unitholders. The Board believes that each Director is best placed to determine and ensure that he is able to devote sufficient time and attention to discharge his duties and responsibilities as a Director of the Manager, bearing in mind his other commitments. In considering the nomination of an individual for appointment, the Board will take into account, among other things, the competing time commitments faced by any such individual with multiple Board memberships as well as his other principal commitments. All Directors had confirmed that notwithstanding the number of their individual listed company board representations and other principal commitments, which each of them held, they were able to devote sufficient time and attention to the affairs of the Manager in managing the assets and liabilities of Ascott Reit for the benefit of Unitholders. The Board also notes that, as at the date of this Annual Report, none of the IDs serves on more than three listed company boards. Taking into account also the attendance record of the Directors at meetings of the Board and Board Committees during FY 2015 (set out on page 47 of the Annual Report), the Board is of the view that the current commitments of each of its Directors are reasonable and each of the Directors is able to and has been adequately carrying out his duties.

Board Performance
Principle 5:
There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.

The Manager believes that Board performance is ultimately reflected in the long-term performance of Ascott Reit.

The Board strives to ensure that there is an optimal blend in the Board of background, experience and knowledge in business, finance and management skills critical to Ascott Reit's business and that each Director can bring to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made in the interests of Ascott Reit. Contributions by an individual Board member can also take other forms, including providing objective perspectives on issues, facilitating business opportunities and strategic relationships, and accessibility to Management outside of the formal environment of Board and/or Board Committee meetings.

Reviews of Board performance were carried out on an informal basis for FY 2015. The Manager believes that collective Board performance and that of individual Board members are better reflected in, and evidenced by, its and their proper guidance, diligent oversight and able leadership, and the support that it lends to Management in steering Ascott Reit in the appropriate direction, and the long-term performance of Ascott Reit whether under favourable or challenging market conditions. The Board was also able to assess the Board Committees through their regular reports to the Board on their activities.

Access to Information
Principle 6:
In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

The Manager recognises the importance of providing the Board with relevant information on a timely basis prior to Board meetings, and on an ongoing basis to enable the Directors to make informed decisions to discharge their duties and responsibilities. Reports on Ascott Reit's performance are also provided to the Board on a regular basis.

The Board meets regularly and Board meetings, in general last up to half a day. At each Board meeting, the CEO provides update on Ascott Reit's business and operations as well as financial performance. Presentations in relation to specific business areas are also made by key executives and external consultants or experts; this allows the Board to develop a good understanding of the progress of Ascott Reit's business as well as the issues and challenges facing Ascott Reit, and also promotes active engagement between the Board and the key executives of the Manager.

As a general rule, Board papers are sent to Board members at least five working days prior to each Board meeting to allow members of the Board to prepare for the Board meetings and to enable discussions to focus on any questions that they may have.

In line with the Manager's commitment to limit paper wastage and reduce its carbon footprint, the Manager no longer provides printed copies of Board papers and Directors are instead provided with tablet devices to enable them to access and read Board and Board Committee papers prior to and at meetings. This initiative also enhances information security as the papers are downloaded to tablet devices through an encrypted channel.

In addition to providing complete, adequate and timely information to the Board on Board affairs and issues requiring the Board's decision, Management also provides ongoing reports relating to the operational and financial performance of the Manager, such as monthly management reports.

Where appropriate, informal meetings are also held for Management to brief Directors on prospective deals and potential developments in the early stages before formal Board approval is sought.

The Board has separate and independent access to Management including the company secretary of the Manager (Company Secretary) at all times. The Company Secretary attends to corporate secretarial administration matters and is the corporate governance advisor on corporate matters to the Board and Management. The Company Secretary attends Board meetings. The Board, whether as individual Director or as a group, is also entitled to have access to independent professional advice where required, at the Manager's expense.

The AC also meets the internal and external auditors separately at least once a year, without the presence of the CEO and Management and has unfettered access to any information that it may require.

(B) Remuneration Matters

Procedures for Developing Remuneration Policies
Principle 7:
There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Level and Mix of Remuneration
Principle 8:
The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

Disclosure on Remuneration
Principle 9:
Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

The Manager is a subsidiary of CL. For FY 2015 and before, the Manager adhered to the remuneration policies and practices of CL; this was after careful consideration of the remuneration policies and practices of CL and being satisfied that such policies and practices would provide the Manager with a suitable remuneration policy. The Manager therefore did not have a remuneration committee. In its decision to adhere to the remuneration policies and practices of CL, the Manager also took into account the belief that a framework of remuneration for the Board and key executives should not be taken in isolation; it should be linked to the building of management bench strength and the development of key executives. This would ensure continual development of talent and renewal of strong and sound leadership for a sustainable business and an enduring company in the best interests of Ascott Reit. The other additional factors the Manager also considered were:

  1. by tapping on the compensation framework of CL, the Manager is placed in a better position to attract better qualified management talent, who may otherwise not be attracted to a standalone REIT manager; and

  2. the Manager being a subsidiary of CL provides an intangible benefit of allowing its employees to associate themselves with an established corporate group which can offer them depth and breadth of experience and a career horizon and this enables the Manager to attract and retain qualified individuals.

As part of its commitment towards improving its corporate governance, the Board recently undertook a review of the matter and has determined that it shall undertake the functions of a remuneration committee. The following considerations were taken into account:

  1. the Manager is a dedicated manager to only Ascott Reit and in general, REITs (including Ascott Reit) have a more focused scope and scale of business compared to those of listed companies. For this reason, the Board's capacity would not be unduly stretched by reason of it undertaking the responsibilities of a remuneration committee and the Board would be able to give adequate attention to such issues relating to remuneration; and

  2. that IDs form at least half of the Board and the Chairman is an ID demonstrate that the IDs play a substantive role and assures the objectivity and independence of the decision making process concerning remuneration. This also mitigates any concerns of conflict which can be managed by having the conflicted directors abstain from the decision making process. Further, conflict situations are less likely to arise in matters of remuneration.

Therefore, with effect from FY 2016, the Board will undertake the functions of a remuneration committee and the Manager will continue to not have a separate remuneration committee. The Board will perform the functions that such a committee would otherwise perform, namely, to oversee the design and implementation of the remuneration policy and the specific remuneration packages for each Director and senior executives including the CEO. No member of the Board will be involved in any decision of the Board relating to his own remuneration.

In terms of the process to be put in place by the Manager for developing policies on remuneration and determining the remuneration packages for Directors and executive officers, the Manager will, through an independent remuneration consultant, take into account benchmarking within the industry, as appropriate. It may also consider the compensation framework of CL as a point of reference. The Manager is a subsidiary of CL which also holds a significant stake in Ascott Reit. The association with the CL Group puts the Manager in a better position to attract and retain better qualified management talent; it provides an intangible benefit to the Manager such that it allows its employees to associate themselves with an established corporate group which can offer them depth and breadth of experience and a career horizon. Following the issuance of new MAS directions and guidelines relating to the remuneration of its key executives, the Manager has begun the process of reviewing its remuneration policy with a view to adopting a policy which is in line with the new MAS directions and guidelines.

The principles governing the Manager's key management personnel remuneration policy are as follows:

personnel remuneration

The fixed component comprises the base salary, fixed allowances and compulsory employer contribution to an employee's Central Provident Fund. The variable cash component comprises an annual bonus plan which is linked to the achievement of annual performance targets for each key executive. Annual performance targets are in the form of both quantitative and qualitative measures and are aligned to the business strategy for Ascott Reit Group and linked to the performance of Ascott Reit. The market-related benefits provided are comparable with local market practices.

For FY 2015, remuneration for key management personnel comprises a fixed component, a variable cash component, an equity-based component and market-related benefits. For the equity-based component, for FY 2015, shares of CL were awarded pursuant to the share plans of CL. With effect from FY 2016, Units will be awarded in place of CL shares, so as to better align the interest of key management personnel with the long term interest of Unitholders.

The Code requires an issuer to disclose the names and remuneration of the directors, CEO and at least the top five key management personnel (who are not also directors or the CEO) of the Manager. In this regard, as the Manager is currently in the midst of reviewing the remuneration policy, with a view to adopt a new remuneration policy in line with the new directions and guidelines of MAS for FY 2016, the Manager is not making any disclosures in this Annual Report as the remuneration figures for FY 2015 will not be meaningful or useful, from an information perspective, to Unitholders with respect to FY 2016 and beyond. There were no employees of the Manager who were immediate family members of a Director or the CEO during FY 2015. "Immediate family member" refers to the spouse, child, adopted child, step-child, sibling or parent of the individual.

The Directors' fees for FY 2015 are shown in the table below. The CEO as an executive director does not receive any fees in his capacity as a Director. Directors' fees are a fixed sum and generally comprise a basic retainer fee as a Director, an additional fee for serving on any of the Board Committees and an attendance fee for participation in meetings of the Board and any of the Board Committees, project meetings and verification meetings.

Non-executive Directors (save for Directors who are employees of CL) receive Directors' fees which are payable by way of cash and Units. The Manager believes that the payment of a portion of the Directors' fees in Units will serve to align the interests of such Directors with that of Unitholders and Ascott Reit's long-term growth and value.

directors' fees

(C) Accountability and Audit

Accountability
Principle 10:
The Board should present a balanced and understandable assessment of the company's performance, position and prospects.

The Manager provides Unitholders with quarterly and annual financial statements. In presenting the annual and quarterly financial statements to Unitholders, the Board aims to provide Unitholders with a balanced, clear and understandable assessment of Ascott Reit's performance, position and prospects. In order to achieve this, Management provides the Board with management accounts on a monthly basis and such explanation and information as any Director may require, to enable the Directors to keep abreast, and make a balanced and informed assessment, of Ascott Reit's financial performance, position and prospects.

The Manager believes in conducting itself in ways that seek to deliver maximum sustainable value to Unitholders. Best practices are promoted as a means to build an excellent business for Unitholders and the Manager is accountable to Unitholders for Ascott Reit's performance. Prompt fulfilment of statutory and regulatory reporting requirements is but one way to maintaining Unitholders' confidence and trust in the capability and integrity of the Manager.

Risk Management and Internal Controls
Principle 11:
The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders' interests and the company's assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The Manager has in place an adequate and effective system of internal controls addressing material financial, operational, compliance and information technology risks to safeguard Unitholders' interests and Ascott Reit's assets. The Board has overall responsibility for the governance of risk and oversees the Manager in the design,

implementation and monitoring of the risk management and internal controls system. The AC assists the Board in carrying out the Board's responsibility of overseeing the risk management framework and policies of Ascott Reit Group.

The AC is guided by its terms of reference, in particular, the AC:

  1. makes recommendations to the Board on Risk Appetite Statement (RAS) for Ascott Reit Group;

  2. assesses the adequacy and effectiveness of the risk management and internal controls system established by the Manager to manage risks;

  3. oversees Management in the formulation, updating and maintenance of an adequate and effective risk management framework, policies and strategies for managing risks that are consistent with Ascott Reit Group's risk appetite and reports to the Board on its decisions on any material matters concerning the aforementioned;

  4. makes the necessary recommendations to the Board such that an opinion relating to the adequacy and effectiveness of the risk management and internal controls system can be made by the Board in the annual report of Ascott Reit in accordance with the Listing Manual and the Code; and

  5. considers and advises on risk matters referred to it by Management or the Board including reviewing and reporting to the Board on any material breaches of the RAS, any material non-compliance with the approved framework and policies and the adequacy of any proposed action.

The Manager adopts an Enterprise Risk Management (ERM) Framework which sets out the required environmental and organisational components for managing risk in an integrated, systematic and consistent manner. The ERM Framework and related policies are reviewed annually.

The Manager consistently seeks to improve and strengthen Ascott Reit Group's ERM Framework. As part of the ERM Framework, the Manager, among other things, undertakes and performs a Risk and Control Self- Assessment (RCSA) process. As a result of the RCSA process, the Manager produces and maintains a risk register which identifies the material risks Ascott Reit Group faces and the corresponding internal controls it has in place to manage or mitigate those risks. The material risks are reviewed annually by the AC and the Board. The AC also reviews the approach of identifying and assessing risks and internal controls in the risk register. The system of risk management and internal controls is reviewed and, where appropriate, refined regularly by the Manager, the AC and the Board. Where relevant, reference is made to the best practices and guidance in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council.

The Manager has established an approach on how risk appetite is defined, monitored and reviewed for Ascott Reit Group. Approved by the Board, Ascott Reit Group's RAS addresses the management of material risks faced by Ascott Reit Group. Alignment of Ascott Reit Group's risk profile to the RAS is achieved through various communication and monitoring mechanisms put in place across the various functions within the Manager.

More information on Ascott Reit Group's ERM Framework can be found in the Enterprise Risk Management section on pages 48 to 50 of this Annual Report.

Internal and external auditors conduct audits that involve testing the effectiveness of the material internal controls for Ascott Reit Group addressing financial, operational, compliance and information technology risks. This includes testing, where practical, material internal controls in areas managed by external service providers. Any material non-compliance or lapses in internal controls together with corrective measures recommended by the internal and external auditors are reported to and reviewed by the AC. The adequacy and effectiveness of the measures taken by the Manager in response to the recommendations made by the internal and external auditors are also reviewed by the AC.

The Board has received assurance from the CEO and the Vice President, Finance (VP Finance) of the Manager that:

  1. the financial records for Ascott Reit Group have been properly maintained and the financial statements for the year ended 31 December 2015 give a true and fair view of Ascott Reit Group's operations and finances; and

  2. the system of risk management and internal controls in place for Ascott Reit Group is adequate and effective in addressing the material risks faced by Ascott Reit Group in its current business environment including material financial, operational, compliance and information technology risks. The CEO and VP Finance of the Manager have obtained similar assurance from the respective risk and control owners.

In addition, in FY 2015, the Board has received quarterly certification by Management on the integrity of financial reporting and the Board has provided a negative assurance confirmation to Unitholders as required by the Listing Manual.

Based on the ERM Framework established and the reviews conducted by Management and both the internal and external auditors, as well as the assurance from the CEO and VP Finance of the Manager, the Board concurs with the recommendation of the AC and is of the opinion, that the system of risk management and internal controls addressing material financial, operational, compliance and information technology risks established by the Manager is adequate and effective to meet the needs of Ascott Reit Group in its current business environment as at 31 December 2015.

The Board notes that the system of risk management and internal controls established by the Manager provides reasonable, but not absolute, assurance that Ascott Reit Group, as it strives to achieve its business objectives, will not be significantly affected by any event that can be reasonably foreseen or anticipated. The Board notes that no system of risk management and internal controls can provide absolute assurance in this regard, or absolute assurance against poor judgement in decision making, human error, losses, fraud or other irregularities.

Audit Committee
Principle 12:
The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

All the members of the AC, including the Chairman of the AC, are IDs. The members bring with them invaluable recent and relevant managerial and professional expertise in accounting and related financial management domains.

The AC has explicit authority to investigate any matter within its terms of reference. The Management is required to provide the fullest co-operation in providing information and resources, and in implementing or carrying out all requests made by the AC. The AC has direct access to the internal and external auditors and full discretion to invite any Director or executive officer to attend its meetings. Similarly, both the internal and external auditors are given unrestricted access to the AC.

The AC is guided by its terms of reference, in particular, the AC:

  1. reviews the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of Ascott Reit Group and any announcements relating to Ascott Reit Group's financial performance;

  2. reviews and reports to the Board at least annually the adequacy and effectiveness of the Manager's internal controls, including financial, operational, compliance and information technology controls, and risk management systems;

  3. reviews the effectiveness of the Manager's internal audit and compliance functions;

  4. reviews the scope and results of the external audit and independence and objectivity of the external auditors;

  5. makes recommendations to the Board on the proposals to Unitholders on the appointment, reappointment and removal of the external auditors, and approving the remuneration of the external auditors;

  6. reviews and approves processes to regulate transactions involving an Interested Person (as defined in Chapter 9 of the Listing Manual) and/or Interested Party (as defined in the Property Funds Appendix) (each, an Interested Person) and Ascott Reit and/or its subsidiaries (Interested Person Transactions), to ensure compliance with the applicable regulations, in particular, the requirements that the transactions are on normal commercial terms and are not prejudicial to the interests of Ascott Reit and its minority Unitholders; and

  7. reviews the policy and arrangements by which employees of the Manager and any other persons may, in confidence, report suspected fraud or irregularity or suspected infringement of any laws or regulations or rules or, raise concerns about possible improprieties in matters of financial reporting or other matters with a view to ensuring that arrangements are in place for such concerns to be raised and independently investigated, and for appropriate follow up action to be taken.

The AC has reviewed the nature and extent of non-audit services provided by the external auditors during FY 2015 and the fees paid for such services. The AC is satisfied that the independence of the external auditors has not been impaired by the provision of those services. The external auditors have also provided confirmation of their independence to the AC. The aggregate amount of fees paid and payable to the external auditors for FY 2015 was approximately S$2,578,000, of which audit fees amounted to approximately S$2,365,000 and non-audit fees amounted to approximately S$213,000.

In FY 2015, the AC also met with the internal and external auditors, without Management's presence, to discuss the reasonableness of the financial reporting process, the system of internal controls, and the significant comments and recommendations by the auditors. Where relevant, the AC makes reference to the best practices and guidance in the Guidebook for Audit Committees in Singapore and the practice directions issued from time to time in relation to the Financial Reporting Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of Singapore.

The Manager confirms, on behalf of Ascott Reit, that Ascott Reit complies with Rule 712 and Rule 715 of the Listing Manual.

Internal Audit
Principle 13:
The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

The Manager has in place an internal audit function supported by CL's Internal Audit Department (CL IA) which reports directly to the AC and administratively to the CEO. CL IA plans its internal audit schedules in consultation with, but independently of, Management and its plan is submitted to the AC for approval prior to the beginning of each year. The AC also meets with CL IA at least once a year without the presence of Management. CL IA has unfettered access to the Manager's documents, records, properties and employees, including access to the AC.

CL IA is a corporate member of the Singapore branch of the Institute of Internal Auditors Inc. (IIA), which has its headquarters in the United States of America. CL IA subscribes to, and is guided by, the International Standards for the Professional Practice of Internal Auditing (Standards) developed by the IIA and has incorporated these Standards into its audit practices.

To ensure that internal audits are performed by competent professionals, CL IA recruits and employs suitably qualified professional staff with the requisite skill sets and experience.

CL IA identifies and provides training and development opportunities for its staff to ensure their technical knowledge and skill sets remain current and relevant.

(D) SHAREHOLDER RIGHTS AND RESPONSIBILITIES

Shareholder Rights
Principle 14:
Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders' rights, and continually review and update such governance arrangements.

The Manager is committed to treating all Unitholders fairly and equitably. All Unitholders enjoy specific rights under the Trust Deed and the relevant laws and regulations. These rights include, among other things, the right to participate in profit distributions. They are also entitled to attend general meetings and are accorded the opportunity to participate effectively and vote at general meetings.

Communication with Shareholders
Principle 15:
Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

The Manager is committed to keeping all its Unitholders and other stakeholders and analysts informed of the performance and changes in Ascott Reit or its business which would be likely to materially affect the price or value of the Units, on a timely and consistent basis, so as to assist Unitholders and investors in their investment decisions.

The Manager has in place an Investor Relations & Communications department which facilitates effective

communication with Unitholders, analysts, fund managers and the media. The Manager actively engages with Unitholders and has put in place an Investor Relations Policy (Policy) to promote regular, effective and fair communications with Unitholders. The Policy is uploaded on Ascott Reit's website at www.ascottreit.com.

The Board has established the CDC which is guided by its terms of reference, in particular, the CDC:

  1. reviews the promptness and comprehensiveness of corporate disclosures and announcements made to the SGX-ST;

  2. ensures the adoption of good corporate governance and best practices in terms of transparency to Unitholders and investing community; and

  3. ensures the Manager complies with all applicable legal and regulatory disclosure requirements in relation to Ascott Reit.

The views and approvals of the CDC were sought throughout the year via emails on various announcements and news releases issued.

More information on the Manager's investor relations with Unitholders can be found in the Investor Relations section on pages 51 to 53 of this Annual Report and the Policy which is available on Ascott Reit's website.

Ascott Reit's distribution policy is to distribute at least 90.0% of its taxable income (other than gains on the sale of real properties or shares by Ascott Reit which are determined to be trading gains), with the actual level of distribution to be determined at the Manager's discretion.

Conduct of Shareholder Meetings
Principle 16:
Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

The Manager supports the principle of encouraging Unitholders' participation and voting at general meetings. Unitholders receive a CD containing the Ascott Reit annual report (printed copies are available upon request) and notice of the annual general meeting. As and when an extraordinary general meeting is to be held, Unitholders will receive a copy of the circular which contains details of the matters to be proposed for Unitholders' consideration and approval. Notices of the general meetings are also advertised in the press and issued on SGXNet.

At general meetings, Unitholders are encouraged to communicate their views and discuss with the Board and Management matters affecting Ascott Reit. Representatives of the Trustee, Directors (including the chairpersons of the Board and the AC), the Manager's senior management and the external auditors of Ascott Reit, would usually be present at general meetings to address any queries that the Unitholders may have.

To safeguard Unitholders' interests and rights, a separate resolution is proposed for each substantially separate issue at general meetings. To ensure transparency in the voting process and better reflect Unitholders' interest, the Manager conducts electronic poll voting for all the resolutions proposed at the general meetings. Voting and vote tabulation procedures are disclosed at the general meetings. Votes cast, for or against and the respective percentages, on each resolution are tallied and displayed "live-on-screen" to Unitholders immediately at the general meetings. The total number of votes cast for or against the resolutions and the respective percentages are also announced on SGXNet after the general meetings. Voting in absentia and by email which are currently not permitted may only be possible following careful study to ensure that the integrity of information and authentication of the identity of Unitholders through the web are not compromised, and legislative changes are effected to recognise remote voting.

Minutes of the general meetings are taken and are available to Unitholders for their inspection upon request. Since 2015, minutes of annual general meetings are also uploaded on Ascott Reit's website.

Unitholders also have the opportunity to communicate their views and discuss with the Board and Management matters affecting Ascott Reit after the general meetings.

(E) Additional Information

Executive Committee
Apart from the AC and CDC, the Board has also established an EC.

The EC oversees the day-to-day activities of the Manager and that of Ascott Reit, on behalf of the Board. The EC is guided by its terms of reference, in particular, the EC:

  1. reviews, endorses and recommends to the Board strategic directions and management policies of the Manager in respect of Ascott Reit;

  2. oversees operational, investment and divestment matters within approved financial limits; and

  3. reviews management reports and operating budgets.

The members of the EC also meet informally during the course of the year.

Dealings with Interested Persons
Review Procedures for Interested Person Transactions

The Manager has established internal control procedures to ensure that all Interested Person Transactions are undertaken on an arm's length basis and on normal commercial terms, which are generally no more favourable than those extended to unrelated third parties, and are not prejudicial to the interests of Ascott Reit and Unitholders. In respect of such transactions, the Manager would have to demonstrate to the AC that such transactions are undertaken on normal commercial terms and are not prejudicial to the interests of Ascott Reit and Unitholders which may include obtaining (where practicable) third party quotations or obtaining valuations from independent valuers (in accordance with applicable provisions of the Listing Manual and the Property Funds Appendix). The internal control procedures also ensure compliance with Chapter 9 of the Listing Manual and the Property Funds Appendix.

In particular, the procedures in place include the following:

Interested Person Transactions1


Role of the Audit Committee for Interested Person Transactions
The Manager's internal control procedures are intended to ensure that Interested Person Transactions are conducted at arm's length and on normal commercial terms, and are not prejudicial to Ascott Reit and Unitholders' interests.

The Manager maintains a register to record all Interested Person Transactions which are entered into by Ascott Reit (and the basis on which they are entered into, including the quotations obtained to support such basis). All Interested Person Transactions are subject to regular periodic reviews by the AC, which in turn obtains advice from CL IA, to ascertain that the guidelines and procedures established to monitor Interested Person Transactions, including the relevant provisions of the Listing Manual and the Property Funds Appendix, as well as any other guidelines which may from time to time be prescribed by the SGX-ST, MAS or other relevant authorities, have been complied with. The review includes an examination of the nature of the transaction and its supporting documents or such other information deemed necessary by the AC. If a member of the AC has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction.

Details of all Interested Person Transactions (equal to or exceeding S$100,000 each in value) entered into by Ascott Reit during FY 2015 are disclosed on page 218 of the Annual Report.

Dealing with Conflicts of Interest
The following principles and procedures have been established to deal with potential conflicts of interest which the Manager (including its Directors, executive officers and employees) may encounter in managing Ascott Reit:

  1. the Manager is a dedicated manager to Ascott Reit and will not manage any other REIT or be involved in any other real property business;

  2. all resolutions at meetings of the Board in relation to matters concerning Ascott Reit must be decided by a majority vote of the Directors, including at least one ID;

  3. in respect of matters in which CL and/or its subsidiaries have an interest, whether direct or indirect, any nominees appointed by CL and/or its subsidiaries to the Board will abstain from voting. In such matters, the quorum must comprise a majority of IDs and shall exclude such nominee Directors of CL and/or its subsidiaries;

  4. in respect of matters in which a Director or his associates have an interest, whether direct or indirect, such interested Director will abstain from voting. In such matters, the quorum must comprise a majority of the Directors and shall exclude such interested Director(s);

  5. if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of Ascott Reit with an affiliate of the Manager, the Manager is obliged to consult with a reputable law firm (acceptable to the Trustee) which shall provide legal advice on the matter. If the said law firm is of the opinion that the Trustee, on behalf of Ascott Reit, has a prima facie case against the party allegedly in breach under such agreement, the Manager is obliged to pursue the appropriate remedies under such agreement; and

  6. at least one-third of the Board shall comprise IDs.

Ascott Reit's properties are located in Europe as well as in the Pan-Asian region and its strategy is to acquire serviced residences, rental housing properties and other hospitality assets located in any part of the world that are generating revenue and are yield accretive. The Ascott Limited (Ascott) owns and manages serviced residences and rental housing properties in Europe, the Pan-Asian region and the Gulf region. Potential conflicts of interests between Ascott and Ascott Reit may arise in respect of the serviced residence industry in Europe and the Pan-Asian region, where Ascott Reit's properties are located and in any country where Ascott Reit's investment strategy is to acquire serviced residences, rental housing properties and other hospitality assets located therein.

In order to mitigate conflict of interests between Ascott and Ascott Reit in Europe and the Pan-Asian region, the Trustee has been granted a right of first refusal by Ascott over the proposed disposal of (a) any properties that are used, or predominantly used, as serviced residences or rental housing properties in Europe and the Pan-Asian region (including those under the "Ascott", "Somerset" and "Citadines" brands) and (b) any shares or equity interests in single-purpose corporations which hold such properties (each a Relevant Asset), by Ascott, its related fund or any of its wholly owned subsidiaries (each an Ascott entity), for so long as the Manager remains the manager of Ascott Reit and Ascott and/or any of its related corporations remain a shareholder of the Manager. Consequently, if an Ascott entity proposes to dispose of a Relevant Asset to an unrelated third party, or if a proposed offer of a Relevant Asset is made to an Ascott entity, Ascott is required to grant to the Trustee the first right to acquire the Relevant Asset for the benefit of Ascott Reit.

In respect of voting rights where the Manager would face a conflict between its own interests and that of Unitholders, the Manager shall cause such voting rights to be exercised according to the discretion of the Trustee.

Dealings in Securities
The Manager has devised and adopted a securities dealing policy for the Manager's officers and employees which applies the best practice recommendations in the Listing Manual. To this end, the Manager has issued guidelines to its Directors and employees as well as certain relevant executives of the CL Group, which set out prohibitions against dealings in Ascott Reit Group's securities (i) while in possession of material unpublished price sensitive information, (ii) during the two weeks immediately preceding, and up to the time of the announcement of, Ascott Reit's financial statements for each of the first three quarters of Ascott Reit's financial year, and, (iii) during the one month immediately preceding, and up to the time of the announcement of, Ascott Reit's financial statements for the full financial year. Prior to the commencement of each relevant period, an email would be sent out to all Directors and employees of the Manager as well as certain relevant executives of the CL Group to inform them of the duration of the period. The Manager will also not deal in Ascott Reit Group's securities during the same period.

Directors and employees of the Manager as well as certain relevant executives of the CL Group are also prohibited from dealing in securities of Ascott Reit Group if they are in possession of unpublished price sensitive information of Ascott Reit Group. As and when appropriate, they would be issued an advisory to refrain from dealing in Ascott Reit Group's securities.

Under the policy, Directors and employees of the Manager as well as certain relevant executives of the CL Group are also discouraged to trade on short-term or speculative considerations. They are also prohibited from using any information with respect to other companies or entities obtained in the course of their employment in connection with securities transactions of such companies or entities.

Fees payable to the Manager
Under the revised CIS Code issued by MAS which came into effect on 1 January 2016, where fees are payable out of the deposited property of a property fund, the methodology and justifications for each type of fees payable should be disclosed. The methodology for computing the fees is disclosed under the Notes to Financial Statements.

The Manager's management fees, which are contained in Clause 15.1 of the Trust Deed, are annual fees earned by the Manager for the management of Ascott Reit's portfolio. Pursuant to Clause 15.1.1 and Clause 15.1.2 of the Trust Deed, the management fees are payable quarterly in arrears. The Manager's management fees should be viewed holistically as a whole which comprise two components, namely the Base Fee and the Performance Fee, which are elaborated further below:

Base Fee
The Base Fee enables the Manager to cover operational and administrative overheads incurred in the management of the portfolio. The Base Fee is calculated at a percentage of asset value as the asset value provides an appropriate metric to determine the resources for managing the assets.

Performance Fee
The Performance Fee is based on objective benchmarks that are aligned with the interests of Unitholders as a whole – in this case, Gross Profit. This serves as motivation for and provides the Manager with the incentive to enhance Gross Profit on a long-term and sustainable basis through efficient portfolio management, astute cost management and effective use of debt and equity. This can be achieved by proactive organic and external growth strategies such as asset enhancement initiatives, acquisitions, developments and divestments to continually refresh the portfolio and sustain income accretions. Taking on short-term risks of deferring asset enhancement initiatives or repairs and maintenance is deterred as the Manager strives to achieve sustainability.

The pegging of the Performance Fees to Gross Profit also aligns the Manager with the interests of Unitholders as the Manager's compensation is commensurate with the value the Manager delivers to Unitholders as a whole in the form of distributable income which is also derived from the net income and as evidenced by the Manager achieving an optimal percentage of the overall fees to total assets of 0.4%.

In addition, the Manager is also paid an Acquisition Fee or a Divestment Fee upon the successful completion of an acquisition or divestment respectively. Further details on the Acquisition Fee and the Divestment Fee are provided below:

Acquisition Fee
The Acquisition Fee, which is contained in Clause 15.2.1 of the Trust Deed, is earned by the Manager upon the successful completion of an acquisition. This fee seeks to motivate and compensate the Manager for its efforts expended to continually seek out and acquire distribution per Unit accretive assets to increase longer term returns for Unitholders. In addition, the Acquisition Fee allows the Manager to recover the additional costs and resources incurred by the Manager in the course of seeking out new acquisition opportunities, including but not limited to, due diligence efforts and man hours spent in evaluating the transaction.

As required by the Property Funds Appendix, where Acquisition Fee is to be paid to the Manager for the acquisition of assets from an Interested Party, the Acquisition Fee is to be paid in the form of Units at the prevailing market price, which should not be sold for a period of one year from their date of issuance. As the Manager's interest is closely tied to the performance of Ascott Reit, in this regard, this helps to ensure that any acquisitions from Interested Parties perform and contribute to Unitholders' returns.

Divestment Fee
The Divestment Fee, which is contained in Clause 15.2.1 of the Trust Deed, is earned by the Manager upon the successful completion of a divestment. This fee seeks to motivate and compensate the Manager for its efforts expended to continually rebalance the portfolio and maximise value received by Ascott Reit in the divestment. In addition, the Divestment Fee allows the Manager to recover the additional costs and resources incurred by the Manager for the divestment, including but not limited to due diligence efforts and man hours spent in marketing and maximising the divestment price.

As required by the Property Funds Appendix, where Divestment Fee is to be paid to the Manager for the divestment of assets to an Interested Party, the Divestment Fee is to be paid in the form of Units at the prevailing market price, which should not be sold for a period of one year from their date of issuance.

(F) CODE OF BUSINESS CONDUCT

The Manager adheres to an ethics and code of business conduct policy which deals with issues such as confidentiality, conduct and work discipline, corporate gifts and concessionary offers. Clear policies and guidelines on how to handle workplace harassment and grievances are also in place.

The policies and guidelines are published on CL's Intranet, which is accessible to all employees of the Manager.

The policies that the Manager has implemented aim to help to detect and prevent occupational fraud in mainly three ways.

First, the Manager offers fair compensation packages, based on practices of pay-for-performance and promotion based on merit to its employees. The Manager also provides various healthcare subsidies and financial assistance schemes to alleviate the common financial pressures its employees face.

Second, clearly documented policies and work procedures incorporate internal controls which ensure that adequate checks and balances are in place. Periodic audits are also conducted to evaluate the efficacy of these internal controls.

Finally, the Manager seeks to build and maintain the right organisational culture through its core values, educating its employees on good business conduct and ethical values.

Bribery and Corruption Prevention Policy
The Manager adopts a strong stance against bribery and corruption. In addition to clear guidelines and procedures for the giving and receipt of corporate gifts and concessionary offers, all employees of the Manager are required to make a declaration on an annual basis where they pledge to uphold the Manager's core values and not to engage in any corrupt or unethical practices. This serves as a reminder to all employees to maintain the highest standards of integrity in their work and business dealings.

The Manager's zero tolerance policy towards bribery and corruption extends to its business dealings with third parties. Pursuant to this policy, the Manager requires that certain agreements incorporate anti-bribery and anticorruption provisions.

Whistle-Blowing Policy
A whistle-blowing policy and other procedures are put in place to provide employees of the Manager and parties who have dealings with the Manager with well defined, accessible and trusted channels to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace, and for the independent investigation of any reported incidents and appropriate follow up action. The objective of the whistle-blowing policy is to encourage the reporting of such matters so that employees or external parties making any reports in good faith will be able to do so with the confidence that they will be treated fairly and, to the fullest extent possible, be protected from reprisal.

Anti-Money Laundering and Countering the Financing of Terrorism Measures
As a holder of a Capital Markets Services licence issued by MAS, the Manager abides by the MAS' guidelines on the prevention of money laundering and countering the financing of terrorism. Under these guidelines, the main obligations of the Manager are:

  1. evaluation of risk;

  2. customer due diligence;

  3. suspicious transaction reporting;

  4. record keeping;

  5. employee screening and representative screening; and

  6. training.

The Manager has developed and implemented a policy on the prevention of money laundering and terrorist financing and is alert at all times to suspicious transactions. Where there is a suspicion of money laundering or terrorist financing, the Manager performs due diligence checks on its counterparties in order to ensure that it does not enter into business transactions with terrorist suspects or other high risk persons or entities. Suspicious transactions are also reported to the Suspicious Transaction Reporting Office of the Commercial Affairs Department.

Under this policy, the Manager must retain all relevant records or documents relating to business relations with its customers or transactions entered into for a period of at least five years following the termination of such business relations or the completion of such transactions.

All prospective employees, officers and representatives of the Manager are also screened against various lists of terrorist suspects issued by MAS. Periodic training is provided by the Manager to its Directors, employees and representatives to ensure that they are updated and aware of applicable anti-money laundering and terrorist financing regulations, the prevailing techniques and trends in money laundering and terrorist financing and the measures adopted by the Manager to combat money laundering and terrorist financing.

Composition and Attendance Record of Meetings of the Board and Board Committees