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REPORTS
Two in-house seminars were conducted by invited external speakers in 2016, the first
relating to a review of the Singapore Budget 2016 and the second being a Sustainability
Forum on the subject of global and local trends of sustainability integration to enhance
business value and long term growth. The Directors were also briefed on cyber-security
issues by ST Electronics (Info-Security) Pte Ltd, a company with expertise in the field of
info-security solutions, during the year. In addition to the training courses/programmes
and briefing updates, Directors are also at liberty to approach Management should they
require any further information or clarification concerning the Managers’ operations.
Guideline 2.1
Does the Company comply with
the guideline on the proportion of
independent directors on the Board?
If not, please state the reasons for
the deviation and the remedial action
taken by the Company.
Yes. Please refer to the paragraph
with the header “Board
Independence”.
Guideline 2.3
(a) Is there any director who is
deemed to be independent by the
Board, notwithstanding the existence
of a relationship as stated in the Code
that would otherwise deem him not
to be independent? If so, please
identify the director and specify the
nature of such relationship.
No.
Guideline 2.3
(b) What are the Board’s reasons for
considering him independent? Please
provide a detailed explanation.
Not applicable.
Principle 2: Board Composition and Guidance
Board Independence
The Boards of the H-REIT Manager and the HBT Trustee-Manager currently consist of
six members each. All members of the Boards, except for the CEO, are non-executive
Directors ("
NEDs
"). Of the five NEDs, the Managers’ NRCs have recommended and
the Managers’ Boards have determined four of them ("
4 IDs
"), being more than half of
the Boards, to be independent
(1)
directors, thus providing for a strong and independent
element on the Boards capable of exercising objective judgement on corporate affairs
of the H-REIT Group and the HBT Group. No individual or small group of individuals
dominates the Boards’ decision-making.
When reviewing the independence of the 4 IDs, the Managers’ NRCs had considered the
guidelines for independence set out in Guideline 2.3 of the 2012 Code and the Business
Trusts Regulations 2005. As part of the consideration, the NRCs took into account their
other directorships, annual declaration regarding their independence, their ability to
avoid any apparent conflicts of interests especially by abstaining from deliberation on
such transactions and their ability to maintain objectivity in their conduct as Directors of
the Managers. The 4 IDs are Ms Jenny Lim, Mr Ronald Seah, Dr Bill Foo and Mr Kenny
Kim. For purposes of determination of independence, the 4 IDs have also provided
confirmation that they are not related to the substantial shareholders of the Managers
or Stapled Security Holders of CDLHT. The NRCs are satisfied that there is no other
relationship which could affect their independence.
Guideline 2.4
Has any independent director
served on the Board for more than
nine years from the date of his
first appointment? If so, please
identify the director and set out the
Board’s reasons for considering him
independent.
Yes. The Director is identified in
paragraph 3 of the section under
the header “Board Independence”,
and the Boards’ reasons for
considering her independent are
set out in the same paragraph.
In considering the independence of Ms Jenny Lim, who has served on the H-REIT
Manager Board and the HBT Trustee-Manager Board for more than nine years, the NRCs
and the Boards have given due consideration to the recommendation under Guideline
2.4 of the 2012 Code that the independence of any director who has served on the Board
beyond nine years be subject to particularly rigorous review. Guided by relevant questions
provided by the Nominating Committee Guide issued by SID in 2015, the Boards noted
instances where Ms Lim had opined and commented on various acquisition deals, sought
Management’s clarification as well as challenged Management’s recommendations on
matters pertaining to her area of responsibilities, whether as a member on the Board or
on the ARCs, in order to make informed decisions.
The NRCs deliberated over Ms Lim’s independence and concurred that Ms Lim is
independent, notwithstanding she has served on the Board beyond nine years, as she
has continued to demonstrate strong independence in character and judgement in the
discharge of her responsibilities as a Director of the Managers. The Managers have also
benefited from her years of experience in finance, taxation and audit.
The Boards are cognisant of the new requirements introduced by MAS in relation to the
independence of Directors who have served on the Board of Directors for more than
nine years and have determined that Ms Lim will cease to be independent subsequent to
the 2017 Annual General Meetings.
(1)
The independence of the Directors in this context refers to their independence from management and business relationships with the
H-REIT Manager and the HBT Trustee-Manager and their independence from every substantial shareholder of the HBT Trustee-Manager,
except to the extent that the Directors of the H-REIT Manager and are the same as the Directors of the HBT Trustee-Manager.
CORPORATE GOVERNANCE
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Annual Report 2016