Manager Of Starhill Global REIT
YTL Starhill Global REIT Management Limited was appointed the Manager of Starhill Global REIT in accordance with the terms of the Starhill Global REIT Trust Deed dated 8 August 2005 (as amended, supplemented or restated from time to time) (“Trust Deed”).
The Manager of Starhill Global REIT has general power of management over the assets of Starhill Global REIT. The primary role of the Manager is to set the strategic direction of Starhill Global REIT and to make recommendations to HSBC Institutional Trust Services (Singapore) Limited, as trustee of Starhill Global REIT (“Trustee”), on acquisitions, divestments and enhancement of the assets of Starhill Global REIT, in accordance with its stated business strategy and the terms of the Trust Deed. Other important functions and responsibilities of the Manager include:
- using its best endeavours to ensure that the business of Starhill Global REIT is carried out and conducted in a proper and efficient manner and to conduct all transactions with or for Starhill Global REIT at arm’s length;
- preparing property business plans on a regular basis, which may contain proposals and forecasts on net income, capital expenditure, sales and valuations, explanations of major variances to previous forecasts, written commentary on key issues and underlying assumptions on rental rates, occupancy costs and any other relevant assumptions (the purpose of these plans is to manage the performance of Starhill Global REIT’s assets);
- ensuring compliance with applicable laws and regulations and the Trust Deed;
- attending to all communications with Unitholders; and
- supervising the property managers in performing the day-to-day property management functions (such as leasing, marketing, maintenance, promotion and accounting) for the properties, pursuant to the property management agreements.
Starhill Global REIT, which is constituted as a trust, has no direct staff of its own (other than the staff of its China subsidiary). It is externally managed by the Manager, who appoints experienced and well-qualified management staff to run its operations. All Directors and employees of the Manager are remunerated by the Manager and not by Starhill Global REIT.
The Trust Deed provides inter alia for the removal of the Manager in certain situations, including by way of resolution passed by a simple majority of Unitholders present and voting at a general meeting duly convened, with no Unitholder being disenfranchised.
On 16 September 2010, the Manager obtained a capital markets services licence from the Monetary Authority of Singapore (“MAS”) to conduct REIT management activities under the Securities and Futures Act 2001 (“SFA”).
Corporate Governance Culture
The Manager believes that strong and effective corporate governance is essential in protecting the interests of the Unitholders, and is critical to the success of its performance as the Manager.
The Manager is committed to the highest standards of corporate governance and transparency in the management of Starhill Global REIT and operates in the spirit of the Code of Corporate Governance 2018 (“Code”) in the discharge of its responsibilities as Manager.
The following sections describe the Manager’s primary corporate governance policies and practices with specific references to the Code, which incorporate measures for avoiding conflicts of interest, including prioritising the interests of Unitholders over those of the Manager. The Manager has complied with the principles and provisions of the Code in all material aspects. Where there are differences, an explanation has been provided in that section. These policies and practices also ensure that applicable laws and regulations including the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Code of Collective Investment Schemes (“CIS Code”) (including the Property Funds Appendix), written directions, notices, codes and other guidelines issued by the MAS, the SFA and the tax ruling dated 20 May 2005 issued by the Inland Revenue Authority of Singapore are complied with, and that the Manager’s obligations in the Trust Deed are honoured.
1. The Board's Conduct of Affairs
Principle 1:
The company is headed by an effective Board which is
collectively responsible and works with Management
for the long-term success of the company.
Board's Duties and Responsibilities
The Board of Directors of the Manager (“Board”) is
responsible for the overall management and corporate
governance of the Manager and Starhill Global REIT,
including establishing performance objectives, providing
leadership and setting strategic objectives for the
management team of the Manager (“Management”),
which is led by the Chief Executive Officer (“CEO”). In turn,
Management is responsible for executing the strategic objectives and day-to-day operations of the Manager
and is held accountable to the Board for its performance.
The Board oversees the achievement of all goals such as
Starhill Global REIT’s DPU targets and other long-term
targets that the Board sets for Management so as to
deliver long-term sustainable returns to Unitholders. All
Board members participate in matters relating to amongst
others, corporate governance, business operations and risk
management, financial performance and compliance with
requirements in the listing rules of the SGX-ST, the CIS Code
(including the Property Funds Appendix), written directions,
notices, codes and other guidelines issued by the MAS, the
SFA and other applicable rules and regulations.
The Board has adopted a set of internal controls with
approval limits for capital expenditure, investments and
divestments, bank borrowings and cheque signatories,
amongst others and this is clearly communicated to
Management in writing. Some matters that specifically
require Board approval include the issue of new Units in
Starhill Global REIT, income distributions and other returns
to Unitholders, acquisitions and divestments. Apart from
these matters which the Board has specifically reserved
authority, the Board approves transactions exceeding
certain threshold limits, while delegating authority for
matters below those limits to Management so as to
facilitate operational efficiency.
The Board has also established a system of internal
controls and an enterprise risk management framework.
The application of the policies and protocol under the
framework is further described on page 66.
Each Director is a fiduciary and must act honestly
and objectively in the best interests of Unitholders. In
furtherance of this principle, the Board has adopted a
code of conduct and ethics (“Board Charter”) by which all
Directors must comply. This sets the appropriate tone from
the top and desired organisational culture and ensures
proper accountability within the Manager.
The Board Charter holds Directors to high standards of
ethical conduct. This includes requiring Directors not
to allow themselves to be placed in a position of real or
apparent conflict of interest. In the event a Director faces
a real or apparent conflict of interest, he must disclose
this to the Board and recuse himself from meetings and
abstain from voting on decisions involving the matter. This
obligation ties in with the Manager’s prime responsibility in
managing the assets and liabilities of Starhill Global REIT for
the benefit of Unitholders. Decisions are taken objectively
in the interests of the Unitholders. The Manager has also
adopted guidelines, details of which are set out on pages
110 to 111, for related party transactions and dealing with
conflicts of interests.
Directors must also perform their duties with due care,
skill and diligence and must ensure that they possess
the relevant knowledge to do so. This includes having a
good understanding of their directorship duties (including
their roles as Executive, Non-Executive and Independent
Directors), the business of Starhill Global REIT and the
environment in which it operates.
A Director with multiple board representations is expected
to ensure sufficient time and attention is given to the
affairs of the Manager and Starhill Global REIT. A Director
must attend and actively participate in all meetings of
the Board or Board Committees (if applicable) unless their
attendance is impractical. The Manager believes that
putting a maximum limit on the number of directorships a
Director can hold is arbitrary, given that time requirements
and complexity for each vary and thus should not be
prescriptive. A sufficient safeguard is to require each
Director to confirm his ability to devote sufficient time and
attention to the affairs of the Manager and Starhill Global
REIT, having regard to all his other listed company board
representations and other principal commitments.
In addition, in cases where the Director(s) have multiple
listed board representations, the Board conducts an annual
review to ensure that they are able to and have been
devoting sufficient time and attention to discharge their
responsibilities adequately. Each Director confirmed his
ability to devote sufficient time and attention to the affairs
of the Manager and Starhill Global REIT, having regard to all
his other listed company board representations and other
principal commitments. Notwithstanding that some of
the Directors have multiple listed board representations,
the Board is satisfied that every Director is able to and
has been adequately carrying out his duties as a Director
of the Manager.
Directors' Development
Directors are provided with opportunities to develop and
maintain their skills and knowledge to ensure that they are
able to perform their duties to the best of their abilities. The
Manager bears the full costs of training and development.
The Manager has in place an orientation programme
aimed at familiarising new Directors with their directorship
duties, the business activities and strategic directions of
Starhill Global REIT, the corporate governance and risk
management structure and practices, as well as their
disclosure obligations as Directors. Newly appointed
Directors are briefed on their roles and responsibilities as
Directors of the Manager, and of the business activities
and strategic directions of Starhill Global REIT. Directors
who have no prior experience as a Director of an issuer
listed on SGX-ST will be provided training on the roles and
responsibilities of a Director of a listed issuer in accordance
with the listing rules of the SGX-ST. No new Directors were
appointed during FY 2021/22.
Upon appointment, Directors also receive a formal letter of
appointment setting out the Director’s duties, obligations
and responsibilities, together with the Trust Deed and latest
annual report of Starhill Global REIT and are acquainted
with Key Management Personnel (“KMP”) who have
authority and are responsible for executing the strategic
objectives and day-to-day operations of the Manager.
During their appointment, Directors are provided access
to programmes, courses and seminars including those
organised by the Singapore Institute of Directors (“SID”).
Changes to regulations, policies, accounting standards
and other relevant matters and their implications are also
monitored closely. Where those changes have a significant
impact on Starhill Global REIT and its obligations of
continuing disclosure, the Directors will be briefed during
Board meetings or by the circulation of Board papers so as
to ensure that the Directors are up to date on all matters
which may affect the performance of their duties.
The NRC (as defined below) and the Board has reviewed
the current training and professional development
programmes in place for all Directors and is satisfied that
they are adequate.
Board Committees
In the discharge of its functions, the Board is supported by an Audit Committee (“AC”) that provides independent oversight of Management and which also serves to ensure that there are appropriate checks and balances. With effect from 1 August 2021, the Nominating and Remuneration Committee (“NRC”) was established and will be responsible to make recommendations to the Board on the nomination, appointment/re-appointment of Directors and members of the Board Committees, as well as remuneration matters of the Directors and executive officers, that have been undertaken by the Board before 1 August 2021. All Board Committees have clear written terms of reference setting out its composition, authorities and duties including reporting back to the Board. The names of the committee members, their terms of reference, any delegation of the Board’s authority to make decisions and their duties and responsibilities are set out on pages 102 to 108.
Meetings of the Board and Board Committees
Board meetings are scheduled and held at least once every
quarter. In addition to scheduled meetings, the Board
and Board Committees may also hold ad hoc meetings
wherever required. If physical meetings cannot be held, the
Constitution of the Manager permits the Board and Board
Committee meetings to be held by way of teleconference
and video conference and decisions may also be made by
way of a written resolution.
Directors attend and actively participate in Board and
Board Committee meetings. Four Board and AC meetings
were held in FY 2021/22 and all Directors were present.
Prior to Board and Board Committee meetings and on
an ongoing basis, Management provides Directors with
complete, adequate and timely information so as to enable
them to make informed decisions to discharge their
duties and responsibilities. Board and Board Committee
papers and agenda are provided to each Director in
advance of Board and Board Committee meetings so
that Directors can review and consider the matters being
tabled beforehand. The management accounts of Starhill
Global REIT are also provided to the Board on a quarterly
basis to enable the Board to keep abreast of Starhill Global
REIT’s financial performance. In addition, as and when any
significant matter arises, Management promptly brings
these matters to the Board’s attention and provides the
Board with the relevant financial information.
In the year under review, the number of Board and AC
meetings held and attended by each Board member
is as follows:
During Board meetings, Management provides the Board
with regular updates on financial results, market and
business developments and business and operational
information. The Board also reviews and approves the
release of Starhill Global REIT’s financial results. The Board
may also meet to discuss and review the strategies
and policies of Starhill Global REIT, including any significant
matters pertaining to acquisitions and disposals,
the annual budget, and the financial performance of
Starhill Global REIT measured against a previously
approved budget. The Board will generally review
matters which have an impact on the business risks and
management of liability of Starhill Global REIT, and acts
on comments and recommendations from the auditors
of Starhill Global REIT.
Where necessary, senior members of Management
participate in Board and Board Committee meetings to
provide additional insights and to respond to any queries
from Directors. Directors have separate and independent access to senior members of Management and the
company secretary at all times. Directors also have access
to independent professional advice (legal, financial or
otherwise) where appropriate or necessary, with the cost
borne by the Manager or Starhill Global REIT, as appropriate.
The company secretary of the Manager will render
necessary assistance to Directors and will ensure
that the Board and Board Committee procedures are
followed and that applicable laws and regulations are
complied with. Under the direction of the Chairman, the
company secretary’s responsibilities include ensuring
good information flow between the Board and the Board
Committees, and between Management and Non-Executive
Directors and advising the Board and Board Committees on
all governance matters. The company secretary also attends
all Board and Board Committee meetings of the Manager
to take minutes, which record the key issues discussed and
decisions made thereon. The appointment and removal of
the company secretary is a Board reserved matter.
2. Board Composition and Guidance
Principle 2:
The Board has an appropriate level of independence and diversity of thought and background in its composition to
enable it to make decisions in the best interests of the company.
Board Independence
The composition of the Board and the Board Committees as at 30 June 2022 is set out below:
The Board is satisfied that there is a strong independent
element on the Board that allows it to make decisions
in the best interests of the Unitholders notwithstanding
Independent Directors do not make up a majority of the
Board. This is because the Board comprises six members,
three of whom are Independent Directors. This means that
to attain a majority for any resolution to be passed, the
approval of at least one of the Independent Directors would
first have to be obtained.
In addition, Mr Tan Bong Lin has been appointed as the Lead
Independent Director. He has, among others, the discretion
to hold meetings with the other two Independent
Directors (without the presence of Management) as he deems appropriate or necessary and provide feedback
to the Chairman. More importantly, he also has the duty
to provide leadership to the other Directors in situations
where the Chairman faces any real or apparent conflict of
interest. Independent Directors also hold meetings with the
auditors regularly without the presence of Management.
The Board assesses annually and as and when
circumstances require, the independence of each Director
in accordance with the requirements of the Code and
accompanying Practice Guidance, the Securities and
Futures (Licensing and Conduct of Business) Regulations
(“SFLCBR”), and the listing manual of the SGX-ST. A Director
is considered to be independent if he:
- is independent in conduct, character and judgment;
- has no relationship with the Manager, its related corporations, its substantial shareholders being shareholders who have interests in voting shares with 5.0% or more of the total votes attached to all voting shares, Starhill Global REIT’s substantial Unitholders being Unitholders who have interests in voting Units with 5.0% or more of the total votes attached to all voting Units of Starhill Global REIT, or the Manager’s officers that could interfere, or be reasonably perceived to interfere, with the exercise of that Director’s independent business judgment in the best interests of the Unitholders;
- is independent from any management and business relationship with the Manager and Starhill Global REIT;
- is not a substantial shareholder of the Manager, or a substantial Unitholder;
- has not served on the Board for a continuous period of nine years or longer;
- is not employed by the Manager, any of its related corporations, or the Trustee for the current or any of the past three financial years; and
- does not have an immediate family member who is employed or has been employed by the Manager, any of its related corporations, or the Trustee for the past three financial years.
Mr Ching Yew Chye has disclosed that he is the Independent
Non-Executive Chairman of AIA General Berhad and AIA
Berhad. AIA General Berhad is a subsidiary of AIA Berhad,
which is in turn a wholly-owned subsidiary of AIA Group
Limited, which was a substantial Unitholder prior to 23
November 2021. Despite the foregoing, the Board has
assessed Mr Ching’s independence and has taken the view
that his independent business judgment and ability to act
in the best interests of all Unitholders as a whole will not
be impeded, given that Mr Ching is not an Executive but an
Independent Director of AIA General Berhad and AIA Berhad
and is not appointed on the Board as a nominee of any AIA
entities. He is also not a Director of AIA Group Limited, which
was a substantial Unitholder prior to 23 November 2021, and
the businesses of Starhill Global REIT and each of AIA General
Berhad, AIA Berhad or AIA Group Limited are distinctly
different and there are unlikely to be any competing
interests. In any event, AIA Group Limited ceased to be a
substantial Unitholder on 23 November 2021.
Mr Tan Woon Hum has disclosed that he is a partner
of M/s Shook Lin & Bok LLP (“SLB”), which provides services
to the Trustee from time to time. As there were no legal
fees paid to SLB by Starhill Global REIT in FY 2020/21 and
FY 2021/22, and Mr Tan will not be personally involved in legal services to be provided by SLB for Starhill Global REIT,
the Board has assessed Mr Tan Woon Hum’s independence
and has taken the view that his independent business
judgment and ability to act in the best interests of all
Unitholders as a whole will not be impeded.
Mr Tan Bong Lin is an Independent Non-Executive
Director of APAC Realty Limited (“APAC Realty”). APAC
Realty provides real estate brokerage services, franchise
arrangements, and training, valuation and other ancillary
services. The aggregate amount of fees paid by
YTL Starhill Global Property Management Pte. Ltd., a
related company of the Manager, to APAC Realty for leasing
agency services and training courses in FY 2020/21 and
FY 2021/22 is insignificant, and is also insubstantial, relative
to the revenue of APAC Realty, and the total amount of
leasing agency fees paid by Starhill Global REIT. Mr Tan’s
directorship in APAC Realty is Non-Executive in nature and
he is not involved in its day-to-day management. He will
also recuse himself from any issues and/or matters arising
from the provision of any of the above services by APAC
Realty to Starhill Global REIT. Based on the above, the Board
has assessed Mr Tan Bong Lin’s independence and has
taken the view that his independent business judgment
and ability to act in the best interests of all Unitholders
as a whole will not be impeded.
As such, none of the Independent Directors have any
relationships which are likely to affect his independent
business judgment and ability to act in the best interests
of all Unitholders as a whole.
The Board has, on the recommendation of the NRC,
formally adopted a Board Diversity Policy. The Board’s
policy is to embrace diversity so as to ensure that the
Board is consistently comprised of experienced and well
qualified Directors who possess an appropriate balance
and mix of skills, knowledge, experience and other aspects
of diversity such as independence, age and gender to
avoid groupthink and foster constructive debate. This
allows Management to benefit from the diverse and
objective perspectives on issues that are brought before
the Board with a healthy exchange of ideas and views
between the Board and Management.
Consistent with the Board’s policy to embrace diversity,
the composition of the Board (including the selection of
candidates for new appointments as part of the Board’s
renewal process) is determined in accordance with the
following principles:
- the Board should comprise of Directors with a broad range of commercial experience, including expertise in fund management and experience in all facets of the property or real estate industry;
- at least one Board member should be of female gender; and
- at least half of the Board should comprise of Independent Directors.
While the Board is presently composed of Directors of the same gender, gender diversity among KMP ensures that alternative and constructive views are provided to the Board during the decision-making process. Please refer to pages 24 to 25. In order to advance gender diversity, the NRC has agreed to the following:
- if external search consultants are used to search for candidates for Board appointments, they will be required to field female candidates;
- when seeking to identify a new Director for appointment to the Board, the NRC will consider female candidates; and
- a target is set for at least one female Director to be appointed to the Board by FY 2023/24.
In relation to the above plans, external search consultants,
including the SID and board diversity organisations such
as the Council for Board Diversity, have been engaged to
propose female candidates for appointment to the Board
during FY 2021/22, and recommendations from contacts
and industry professionals have also been sought. The
profiles of the Directors are set out on pages 22 to 23.
The size of the Board and core competencies of its
members in various fields of accounting, finance, business
management and legal, together with their relevant
industry knowledge and strategic planning experience,
effectively serve Starhill Global REIT and the Manager. In
terms of age diversity, half of the Directors are 65 and
below, while half are above 65. The Board is of the view
that its current composition comprises persons who, as
a group, provide an appropriate balance and mix of skills,
knowledge, experience and other aspects of diversity such
as independence and age and that the current Board size is
appropriate, taking into consideration the scale, nature and
scope of Starhill Global REIT’s operations, subject to the
achievement of the gender diversity target as described
above. The composition of the Board is also reviewed
regularly to ensure that it has the appropriate mix of
expertise and experience.
The Non-Executive Directors participate in setting and
developing strategies and goals for Management and
reviewing and assessing Management’s performance.
The Independent Directors led by Mr Tan Bong Lin
meet regularly without the presence of Management.
Mr Tan Bong Lin provides feedback to the Board where
appropriate enabling Management to benefit from the
Independent Directors’ external and objective perspective
of issues that are brought before the Board. It also
enables the Board to interact and work with Management
through a healthy exchange of ideas and views to help
shape the strategic process.
3. Chairman and Chief Executive Officer
Principle 3:
There is a clear division of responsibilities between the
leadership of the Board and Management, and no one
individual has unfettered powers of decision-making.
The positions of Chairman and CEO are held by separate
persons in order to maintain an effective segregation of
duties so as to ensure an appropriate balance of power,
increased accountability and greater capacity of the
Board for independent decision-making. The Chairman, Tan
Sri (Sir) Francis Yeoh, and the CEO, Mr Ho Sing, are
not immediate family members.
The clear separation of the roles and responsibilities
between the Chairman and the CEO are set out in writing.
The Chairman facilitates active Board discussion on
matters concerning the business of Starhill Global REIT
and ensures that the Board satisfactorily oversees and
evaluates the implementation of Starhill Global REIT’s
strategy, policies, business plans and Board decisions. In
addition, the Chairman ensures that the members of the
Board receive complete, adequate and timely information,
facilitates the effective contribution of the Non-Executive
Directors, encourages constructive relations within the
Board and between the Board and Management, ensures
effective communication with Unitholders and promotes
a high standard of corporate governance. The CEO
works with the Chairman and the Board in formulating
and executing strategies for Starhill Global REIT and is
responsible for executing the day-to-day operations
of Starhill Global REIT.
As Mr Tan Bong Lin has been appointed as Lead
Independent Director, he has the discretion to hold
meetings with the other two Independent Directors
(without the presence of Management) as he deems
necessary and he will provide feedback to the Non-Executive Chairman, where appropriate. He also has
the duty to provide leadership in situations where the
Chairman faces any real or apparent conflict of interest.
The Lead Independent Director is also available to
shareholders of the Manager and Unitholders where they
have concerns and for which contact through the normal
channels of the Chairman or Management has failed to
resolve or is inappropriate.
4. Board Membership
Principle 4:
The Board has a formal and transparent process for the
appointment and reappointment of directors, taking into
account the need for progressive renewal of the Board.
The NRC makes recommendations to the Board on matters relating to:
- the review of succession plans for Directors including the appointment or replacement of the Chairman, the CEO and the Chief Financial Officer (“CFO”);
- the process and criteria for evaluation of the performance of the Board, its Board Committees and Directors;
- the review of training and professional development programmes for the Board and its Directors; and
- the appointment of Directors (including alternate Directors, if any).
The NRC comprises five members, out of whom a majority
are Independent Directors. The members of the NRC as at
30 June 2022 are Mr Tan Woon Hum (Chairman), Tan Sri (Sir)
Francis Yeoh, Dato’ Yeoh Seok Kian, Mr Tan Bong Lin and
Mr Ching Yew Chye.
Unitholders were given the right to endorse the
appointment of the Directors of the Manager by
way of ordinary resolution passed at the AGMs of
Unitholders pursuant to an undertaking given by YTL
Corporation Berhad to the Trustee dated 21 August 2020
(“Undertaking”). Accordingly, the Directors were put forth
for Unitholders’ endorsement of appointment at SG REIT’s
AGM held on 28 October 2020. Succession of Directors is
therefore carried out when a Director indicates his desire to
retire or resign or when the Director’s appointment has not
been endorsed or re-endorsed (whichever applicable) by
the Unitholders at the relevant AGM. Notwithstanding that
the appointments of Dato’ Yeoh Seok Kian and Mr Tan Bong
Lin were endorsed by Unitholders on 28 October 2020 and
the Undertaking requires the Manager to seek Unitholders’
re-endorsement for the appointment of each Director
no later than every third AGM of Starhill Global REIT after
the relevant general meeting at which such Director’s
appointment was last endorsed, the Manager is seeking the
re-endorsement of the appointments of Dato’ Yeoh Seok
Kian and Mr Tan Bong Lin at the AGM to be held in 2022
so that eventually at any one AGM, only one-third of the
Directors will seek re-endorsement. Pursuant to Rule 720(6)
of the listing manual of the SGX-ST, information relating to
the Directors to be re-endorsed is provided on pages 114
to 116 of this Annual Report.
All Board appointments are approved by the Board and
selection and appointment is based on merit. The NRC will
make recommendations to the Board on these matters.
The criteria used by the Manager to identify and evaluate
potential new Directors include:
- integrity;
- relevant expertise (sector and functional) and the degree to which his or her skill set complements the skill set of the other Board members;
- reputation and standing in the market;
- in the case of prospective Independent Directors, independence based on the criteria in the Code, the SFLCBR and the listing manual of the SGX-ST;
- the fit and proper criteria issued by MAS;
- at least one Board member should be of female gender; and
- the Director should have adequate time to discharge his duties.
Any Director may source for and nominate new Directors
to be appointed by the Board, through their extensive
network and contacts. If necessary, the Board or NRC may
seek advice from the SID or external search consultants.
During FY 2021/22, new potential female Directors were
sourced through contacts and recommendations, including
recommendations from the SID, the Council for Board
Diversity, contacts from Directors, and recommendations
from relevant industry professionals.
No new Directors or alternate Directors were appointed
during FY 2021/22. The independence of the Independent
Directors is assessed by the NRC on an annual basis
and as and when circumstances require. Directors are
also required to report to the Board any addition to or
change in their other appointments, their relationships
with the Manager, its related corporations, its substantial
shareholders, substantial Unitholders or the Manager’s
officers, if any, or any other change in circumstances
which may affect their independence or judgment and
ability to act in the interests of all Unitholders as a whole.
In the event the NRC, determines that such Directors
are independent notwithstanding the existence of such
relationships, the Manager will disclose the relationships
and its reasons in the Annual Report.
The NRC ensures that new Directors are aware of their
duties and obligations (1. “The Board’s Conduct of Affairs”)
and decides if a Director is able to and has been adequately
carrying out his or her duties (5. “Board Performance”). The
listed company Directorships and principal commitments
of each Director are disclosed on pages 22 to 23.
5. Board Performance
Principle 5:
The Board undertakes a formal annual assessment of its
effectiveness as a whole, and that of each of its board
committees and individual directors.
The Manager believes that the performance of the Manager
and the Board, is reflected in the long-term success
of Starhill Global REIT. Reviews of Board performance
are conducted once a year. Directors are required to
complete a questionnaire evaluating the Board and the
Board Committees. The NRC recommends for the Board’s
approval the objective performance criteria and process
for the evaluation of the effectiveness of the Board, the
Board Committees and the contributions by each individual
Director to the Board’s effectiveness.
The questionnaire covers objective performance criteria
for the evaluation of the Board as a whole, the Board
Committees and the contribution by the Chairman and
each individual Director in areas such as Board composition,
access to information, Board processes, risk management,
Board training and development, understanding of the
business, strategic planning and any specific areas where
improvements may be made. The company secretary
compiles Directors’ responses to the questionnaire into a
consolidated report and the NRC will evaluate and discuss
the results of the annual Board performance review with
a view towards improving the effectiveness of the Board.
Pursuant to the Board evaluation process, the Board is
satisfied that it has achieved its performance objectives for
FY 2021/22. No external facilitators have been engaged.
In conducting the review of the performance of the Board,
the Board Committees and each Director, the Manager
believes that contributions from each Director go beyond
his attendance at Board and committee meetings.
Contributions by an individual Board member take other
forms, which includes providing objective perspectives of
issues, facilitating business opportunities and strategic
relationships, and accessibility to Management outside of a
formal environment of Board or Board Committee meetings.
1. Procedures for Developing Remuneration Policies
Principle 6:
The Board has a formal and transparent procedure for
developing policies on director and executive remuneration,
and for fixing the remuneration packages of individual
directors and key management personnel. No director is
involved in deciding his or her own remuneration.
2. Level and Mix of Remuneration
Principle 7:
The level and structure of remuneration of the Board
and key management personnel are appropriate and proportionate to the sustained performance and value
creation of the company, taking into account the strategic
objectives of the company.
3. Disclosure on Remuneration
Principle 8:
The company is transparent on its remuneration policies,
level and mix of remuneration, the procedure for setting
remuneration, and the relationships between remuneration,
performance and value creation.
Following the establishment of the NRC with effect from
1 August 2021, the NRC supports the Board in the remuneration
matters of the Manager in accordance with the NRC’s terms of
reference. The NRC’s terms of reference, among other matters,
set out the scope and authority in performing the functions of a
remuneration committee. This includes, the NRC reviewing and
making recommendations to the Board on the remuneration
policy of the Manager for the Board and employees of the
Manager including the specific packages for each Director,
the CEO and the CFO, the total bonus amount payable to all
employees and the corporate performance targets for payment
of bonus and other aspects of remuneration of the CEO and
the CFO including termination terms to ensure they are fair.
Such matters will also require approval by at least a majority
of the Independent Directors. The CEO recuses himself from
Board deliberations relating to his remuneration. Directors’
fees are subject to approval by the Board of Directors and the
shareholders of the Manager. Each Director abstains from voting
in respect of the fees payable to their respective selves.
The Board or NRC seeks expert advice on remuneration
and governance matters from external consultants, where
necessary. The Board or NRC will ensure that existing
relationships between the group and its appointed
remuneration consultants, if any, will not affect the
independence and objectivity of the external remuneration
consultants.
During FY 2021/22, the Manager did not engage any
remuneration consultant. The remuneration of Directors
and staff of the Manager is paid by the Manager from the
fees it receives from Starhill Global REIT and not by Starhill
Global REIT itself.
To support the business growth and aspirations, the Manager
is committed to strengthen its leadership capability and
organisational effectiveness through talent management. It
ensures that a significant and appropriate proportion of the
Executive Director’s and KMP’s remuneration is structured
by linking total compensation directly to the achievement of
organisational and individual performance goals, while giving
consideration to the equitability and market competitiveness
of its remuneration practices so as to align performance-based
remuneration with the interests of Unitholders and other
stakeholders and promote the long-term success of Starhill
Global REIT.
In determining the mix of different forms of remuneration
for executive officers, the NRC and the Board seeks
to ensure that the level and mix of remuneration is
competitive, relevant and appropriate in finding a balance
between fixed and performance-related components.
Total remuneration comprises the following components:
- fixed remuneration comprises base salary, Central Provident Fund contributions, Annual Wage Supplement and benefits and allowances;
- variable bonus payments, paid wholly in cash, incentivise and reward individuals for their performance, efforts and achievement. The payment of variable bonus is subject to achievement of Starhill Global REIT’s DPU, the Manager’s profit after tax targets and other long-term targets approved by the Board, with substantial emphasis on the performance of Starhill Global REIT to align employee interests with the interests of Unitholders. In approving the variable bonus for FY 2021/22, the NRC and the Board had taken into account the extent to which the performance targets such as the achievement of sustainability targets as set out in the sustainability report have been met, and is of the view that remuneration is aligned to performance during FY 2021/22; and
- a long-term deferred bonus scheme, awarded wholly in cash, is put in place to retain selected management executives and talent who are key in the business operations. The scheme focuses on strengthening its organisational capability and leadership core, with the objective of encouraging loyalty and ensuring that decisions are taken with a long-term view in mind.
No share/unit option schemes or share/unit schemes
have been implemented. The NRC and the Board has
reviewed the remuneration components above and
is satisfied that there is reasonable mitigation of any
potential misalignment of interests, taking into account:
(i) the NRC’s and the Board’s discretion (including the
requirement for approval by not less than a majority
of Independent Directors) to determine whether the
remuneration payable is in line with the remuneration
policy; (ii) the substantial emphasis placed on the
performance of Starhill Global REIT; and (iii) the absence
of any remuneration payment in the form of shares or
interest in the controlling Unitholder or its related entities.
The remuneration of the Non-Executive Directors is
appropriate to their level of contribution, taking into
account factors such as effort, time spent, and their
responsibilities. For FY 2021/22, remuneration of Non-Executive Directors comprised entirely of Directors’ fees
payable in cash. The Directors’ fees take into account
industry practices and norms on remuneration. Each
Director is paid a basic fee and the Chairman of the
Board, AC and NRC are paid a higher fee in view of the
greater responsibility carried by that office. The CEO
does not receive Directors’ fees as he receives employee
remuneration from the Manager. Each Director will be
remunerated based on their level of responsibilities on
the Board, the AC and NRC, in accordance with the
following framework for FY 2021/22:
The total amount of Directors’ fees (gross before netting off withholding tax) payable to the Non-Executive Directors for FY 2021/22 are as follows:
The Manager is cognisant of the requirement to disclose
(i) the CEO’s remuneration, (ii) the remuneration of at least
the top five KMP (who are not the CEO or Directors), in
bands no wider than S$250,000 and (iii) the aggregate total
remuneration paid to the top five KMP. The NRC and the
Board have assessed and decided against the disclosure of
(i) the remuneration of the CEO in exact quantum and (ii) the
remuneration of at least its top five KMP (who are not the CEO
or Directors) on a named basis, whether in exact quantum or
in bands of S$250,000 because it is not in the Manager’s best
interest to do so, taking into account inter alia the commercial
sensitivity and confidential nature of remuneration matters,
the presence of highly competitive conditions for talent in the
industry, which is relatively small, the importance of ensuring
stability and continuity of business operations of Starhill
Global REIT with a competent and experienced management
team in place and the negative impact which such disclosure
may have on the Manager in attracting and retaining talent
on a long-term basis. The Manager is making available,
however, the CEO’s remuneration amount in a band of
S$250,000 and the aggregate of the total remuneration of the
top five KMP (excluding the CEO) together with a breakdown
of their respective remuneration components in percentage
terms, in the table above. The Manager is of the view that its
disclosure is consistent with the intent of Principle 8 of the
Code and provides sufficient information and transparency to
the Unitholders on the Manager’s remuneration policies and
the level and mix of remuneration, the procedure for setting
remuneration and the relationship between remuneration,
performance and value creation.
As such, the Manager adopts a remuneration philosophy that
is directed towards the attraction, retention and motivation
of competent employees, key talents and the Directors
to provide good stewardship of the Manager and KMP to
successfully manage Starhill Global REIT for the long term.
There was no employee of the Manager who was a substantial
shareholder of the Manager, a substantial Unitholder or
are immediate family members of a Director, the CEO, a substantial shareholder of the Manager or a substantial
Unitholder and whose remuneration exceeds S$100,000
during FY 2021/22. “Immediate family member” refers to
the spouse, child, adopted child, step-child, sibling or parent
of the individual.
1. Risk Management and Internal Controls
Principle 9:
The Board is responsible for the governance of risk and
ensures that Management maintains a sound system of
risk management and internal controls, to safeguard the
interests of the company and its shareholders.
Effective risk management is a fundamental part of Starhill
Global REIT’s business strategy. Recognising and managing
risk is central to the business and to protecting Unitholders’
interests and value and it is the responsibility of the Board
to determine the nature and extent of the significant risks
which the company is willing to take in achieving its strategic
objectives and value creation.
In furtherance of this objective, Management has in
place an enterprise risk management (“ERM”) framework
and policies, which have been approved by the Board,
that provide a structured approach to identifying and
managing the material risks that could arise in the course
of managing Starhill Global REIT. The ERM framework and
policies are monitored and reviewed by the Board as and
when appropriate, and major developments and significant
revisions to the ERM framework or policies will be submitted
to the Board for approval. An independent consultant also
reviews the ERM framework and the identified risks and
control activities, and provides a report to the Board once
every two years. Material risks at both the Manager and
Starhill Global REIT levels are managed through this ERM
framework. Application of the policies and protocol under
the ERM framework in respect of Starhill Global REIT assets
and operations is further described on page 66.
The Manager has also put in place a system of internal
controls, compliance procedures and processes to
safeguard Starhill Global REIT’s assets and Unitholders’
interests, manage risks and ensure compliance with high
standards of corporate governance.
The AC has been tasked by the Board to include risk
management within its oversight role. This includes
the review of material risks identified by Management
with respect to the business operations of the Manager,
Starhill Global REIT and the assets of Starhill Global REIT.
Financial risk management is exercised in accordance
with a robust policy. The AC and the Board, with the
assistance of the internal and external auditors, review the
adequacy and effectiveness of Starhill Global REIT’s system
of risk management and internal controls that address
material risks, including material financial, operational,
compliance and information technology risks. Any
material non-compliance or failures in internal controls
and recommendations for improvements are reported
to the AC. The AC also reviewed the measures taken by
Management on the recommendations made by the
internal and external auditors.
The Board has received assurance from the CEO and CFO
of the Manager that the financial records of Starhill Global
REIT have been properly maintained and the consolidated
financial statements give a true and fair view of Starhill
Global REIT’s operations and finances.
In addition, the Board has also received assurance from
the CEO and other KMP who are responsible for various
aspects of risk management and internal controls that
Starhill Global REIT’s system of risk management and
internal controls in place within the Group were adequate
and effective as at 30 June 2022 in addressing the material
risks in the Group, including material financial, operational,
compliance and information technology risks.
Based on the system of risk management and internal
controls established and maintained by the Manager,
work performed by the internal and external auditors,
reviews performed by Management, and the assurance
from the CEO and CFO of the Manager, the Board with the
concurrence of the AC is of the opinion that Starhill Global
REIT’s system of risk management and internal controls in
place within the Group were adequate and effective as at
30 June 2022 in addressing the material risks in the Group,
including material financial, operational, compliance and
information technology risks. The CEO and the CFO of
the Manager have obtained similar assurances from the
function heads of the Manager. No material weaknesses in
the systems of risk management and internal controls were
identified by the Board or the AC for FY 2021/22.
The Board notes that the system of risk management
and internal controls provides reasonable, but not absolute assurance that Starhill Global REIT will not be
adversely affected by any event that could be reasonably
foreseen as it works to achieve its business objectives. In
this regard, the Board also notes that no system of risk
management and internal controls can provide absolute
assurance against the occurrence of material errors, poor
judgment in decision making, human error, losses, fraud
or other irregularities.
2. Audit Committee
Principle 10:
The Board has an Audit Committee which discharges its
duties objectively.
The AC is established by the Board from among the
Directors of the Manager and currently comprises
three members, all of whom are Independent Directors.
The members of the AC as at 30 June 2022 are
Mr Tan Bong Lin (Chairman), Mr Ching Yew Chye and
Mr Tan Woon Hum. The members of the AC, collectively,
have recent and relevant accounting and financial
management expertise or experience and are qualified
to discharge the AC’s responsibilities. No former partner or
Director of the Manager’s existing auditing firm or
audit corporation is a member of the AC within a period
of two years commencing on the date of his ceasing to
be a partner of the auditing firm or Director of the auditing
corporation, or for as long as he has any financial interest in
the auditing firm or auditing corporation.
The AC assists the Board in overseeing the ERM framework
and any matters of significance affecting financial reporting
and internal controls of Starhill Global REIT.
The terms of reference for the AC include:
- reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of Starhill Global REIT and any announcements relating to Starhill Global REIT’s financial performance;
- reviewing at least annually the adequacy and effectiveness of the Manager’s internal controls and risk management systems;
- reviewing the assurance from the CEO and the CFO on the financial records and financial statements;
- monitoring the procedures in place to ensure compliance with applicable legislation, the listing manual of the SGX-ST and the Property Funds Appendix;
- reviewing and making recommendations to the Board in relation to the financial statements and the audit report;
- monitoring the procedures established to regulate Related Party Transactions (as defined below), including ensuring compliance with the provisions of the relevant regulations;
- making recommendations to the Board on the appointment, re-appointment and removal of the external auditor, and approving the remuneration and terms of engagement of such auditors;
- ensuring that the internal audit function is adequately resourced through outsourcing the appointment to a reputable firm where appropriate and approving their appointment, removal and remuneration;
- reviewing the adequacy, effectiveness, independence, scope and results of the external audit and the outsourced internal audit function and ensuring that where deficiencies in internal controls have been identified, appropriate and prompt remedial action is taken by Management; and
- reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated and appropriately followed up on.
The Manager has put in place a whistleblowing policy which
sets out the procedures for a whistleblower to make a report
to the Manager on misconduct or wrongdoing relating to
Starhill Global REIT, the Manager and its officers. The AC is
responsible for ensuring the implementation, regular review
and updating of the Manager’s whistle blowing policy. The
policy is in place to ensure that employees of the Manager
and any other persons such as the vendors are provided with
well-defined and accessible channels to report on potential
or actual improprieties in financial or other operational
matters as well as serious wrongdoings or malpractice,
and breach of business conduct and ethics, in confidence,
and for the independent investigation of any reports by
employees and any other persons and appropriate follow-up action. Reports may be made to the compliance officer
and to the Chairman of the AC via email at whistleblowing@
ytlstarhill.com. All reports are made or marked “Strictly
Private & Confidential” and will be received and dealt with in
strictest confidence. The whistle-blowing policy objects to
and does not tolerate nor condone any retaliatory action
taken against the whistleblower who acts in good faith and
without malice. To protect the whistleblower against any
detrimental or unfair treatment, the Manager may institute
disciplinary action or assist the whistle-blower who is an
employee in taking a legal action, against any employee or
person found to have taken such retaliatory action. However,
the Manager does not condone frivolous, mischievous or
malicious allegations. The AC has absolute discretion to
determine how the whistleblowing report should be dealt
with or resolved (including without limitation, whether details
of the report need to be disclosed to the Board or other parties). The AC may, inter alia, conduct its own investigation
or review; engage any third parties to take remedial action,
to commence or conduct further investigations or review as
deemed appropriate; or take any other action as the AC may
determine in the best interests of the Manager and
the Group.
The AC is responsible for the nomination of external
auditors and internal auditors, and reviewing the adequacy
and effectiveness of existing audits in respect of cost,
scope and performance. The AC meets with the internal
auditor at least once a year and with the external auditor
at least once every quarter without the presence of
Management, to discuss any matters which the AC
or the auditors believe should be discussed privately
without the presence of Management.
The AC has appointed PricewaterhouseCoopers Risk
Services Pte. Ltd. to perform the internal audit functions.
The internal auditor subscribes to, and is guided by the
Standards for the Professional Practice of Internal Auditing
developed by the Institute of Internal Auditors, Inc (“IIA”)
and its standards are aligned with the standards set by
the IIA. For FY 2021/22, the AC has reviewed the adequacy
and effectiveness of the internal audit function and was
satisfied that the internal audit function was independent,
effective, adequately resourced and has appropriate
standing within Starhill Global REIT and the Manager.
The internal auditor reviews internal controls to ensure
they address related risks, and reports directly to the AC.
Management is responsible for addressing issues identified
by the internal auditor. The internal auditor will also audit
and report on the appropriateness and effectiveness
of processes for the management of interested person
transactions at least once a year. The internal auditor has
unrestricted access to the AC, and access to the Manager’s
and Starhill Global REIT’s documents, records, properties
and personnel, where relevant to their work.
The Trustee has a right to review internal audit reports
so as to ascertain that the Property Funds Appendix has
been complied with and the AC is authorised to investigate
any matters within its terms of reference. The AC has
unfettered access to and cooperation from Management
and to reasonable resources to enable it to discharge its
functions. The AC has also reviewed all non-audit services
provided by the external auditor and is satisfied that the
nature and extent of such services will not prejudice the
independence and objectivity of the external auditor. The
aggregate amount of fees paid and payable to the external
auditor for FY 2021/22 and the breakdown into audit fees
and non-audit fees are set out on page 159. Pursuant to
Rule 1207(6)(c) of the listing manual of the SGX-ST, the
Manager confirms that Starhill Global REIT has complied
with Rules 712 and 715 of the listing manual in relation
to the appointment of the external auditor.
During FY 2021/22, the AC performed independent reviews of the financial statements of Starhill Global REIT before the
announcement of Starhill Global REIT’s financial results, including key areas of management judgment.
The AC also reviewed and approved both the internal auditor’s and the external auditor’s audit plans of Starhill Global
REIT for FY 2021/22. The audit findings and recommendations put up by the internal auditor and the external auditor
were reported and discussed at the AC meetings.
The AC meets at least once every quarter. A total of four AC meetings were held in FY 2021/22.
As part of its oversight role over financial reporting, the AC has reviewed the following key audit matter identified by the external auditor:
1. Shareholder Rights and Conduct of General Meetings
Principle 11:
The company treats all shareholders fairly and equitably
in order to enable them to exercise shareholders’ rights
and have the opportunity to communicate their views
on matters affecting the company. The company gives
shareholders a balanced and understandable assessment
of its performance, position and prospects.
2. Engagement with Shareholders
Principle 12:
The company communicates regularly with its
shareholders and facilitates the participation of
shareholders during general meetings and other dialogues
to allow shareholders to communicate their views on
various matters affecting the company.
For FY 2021/22, the Manager provided Unitholders with
half-year and annual financial statements as well as first and
third quarter business updates. The Board, with the support
of Management, is responsible for providing a balanced and
informed assessment of Starhill Global REIT’s performance,
position and prospects, including interim and other price-sensitive public reports, and reports to regulators (if required).
Management provides the Board with management accounts
on a quarterly basis and as the Board may require from time to time to enable the Board to make a balanced and informed
assessment. Financial reports and other material information
are disseminated to Unitholders through announcements to
SGX-ST via SGXNET, Starhill Global REIT’s website and where
applicable, press releases, of the performance, position and
prospects of Starhill Global REIT.
All Unitholders can access the electronic copy of the
Starhill Global REIT Annual Report which is published via
SGXNET as well as Starhill Global REIT’s website. Prior to
an Annual General Meeting (“AGM”), all Unitholders will
receive a notice of AGM and an accompanying request
form containing instructions on accessing the Annual
Report online with the option of receiving a printed version.
As and when an Extraordinary General Meeting of the
Unitholders is to be held, each Unitholder is sent (where
possible, electronically) a copy of a circular to Unitholders
which contains details of the matters to be proposed
for Unitholders’ consideration and approval. Unitholders
are invited to attend these meetings to put forward any
questions they may have on the matters on the agenda.
Proxy forms containing voting rules and procedures are
provided to Unitholders. During the meeting, Unitholders
are also briefed on the detailed voting procedures and to
ensure transparency, the Manager conducts electronic poll
voting and all votes cast for or against and their respective
percentages will be displayed “live” immediately at the
meeting after the conduct of each poll. An independent scrutineer is also appointed to validate the vote tabulation
procedures. Detailed results showing the number of votes
cast for and against each resolution and the respective
percentages are announced on SGXNET.
Notices for the general meetings of Unitholders setting
out all items of business to be transacted at the general
meetings are also announced on SGXNET. The Manager
is in full support of Unitholder participation at AGMs. A
Unitholder is allowed to appoint one or two proxies to
attend and vote at the general meetings in his/her stead.
Where a Unitholder is a relevant intermediary (including but
not limited to, a nominee company, a custodian bank or a
CPF agent bank), such Unitholder may appoint more than
two proxies to vote on its behalf at the meeting through
proxy forms sent in advance, provided that each proxy
must be appointed to exercise the rights attached to a
different Unit or Units held by it.
All members of the Board, representatives of the Trustee,
the Manager’s senior management and the external auditor
of Starhill Global REIT are in attendance at such general
meetings. All Directors attended the general meetings held
during their tenure in FY 2021/22. Unitholders are given the
opportunity to air their views and ask questions regarding
the matters to be tabled at the general meetings or about
the conduct of audit and the preparation and content of
the auditors’ report. Resolutions put to the general meeting
are separate unless they are interdependent and linked
so as to form one significant proposal, and the reasons
and material implications are explained in the notice of
meeting. Minutes of general meetings record the key
issues discussed and decisions made thereon including
any substantial and relevant comments or queries from
Unitholders relating to the agenda of the general meeting
and the response from the Board and Management. These
Minutes are made available to Unitholders at their request.
As all Unitholders are entitled to receive these Minutes, the
Manager believes that this is consistent with the intent to
treat all Unitholders fairly and equitably.
The Manager is not implementing absentia voting methods
such as voting via mail, e-mail or fax until security, integrity
and other pertinent issues are satisfactorily resolved. Due
to the current COVID-19 situation in Singapore, the AGM
held in FY 2021/22 and the AGM to be held in FY 2022/23
was and will be, convened by electronic means pursuant
to the COVID-19 (Temporary Measures) (Alternative
Arrangements for Meetings for Companies, Variable Capital
Companies, Business Trusts, Unit Trusts and Debenture
Holders) Order 2020. Alternative arrangements relating to
attendance at the AGM, including:
- arrangements by which the AGM can be electronically accessed via live audio-visual webcast or live audio-only stream;
- submission of questions in advance of, or (in the case of the AGM in 2022) live at the AGM;
- addressing of substantial and relevant questions prior to or (in the case of the AGM in 2022) live at the AGM; and
- voting (i) live at the AGM in 2022 by the Unitholder or his/her/its duly appointed proxy(ies) (other than the Chairman of the AGM); or (ii) by appointing the Chairman of the AGM as proxy at the AGM),
are set out in the notice of AGM. Minutes of the AGM and
responses to relevant and substantial questions from
Unitholders were published on SGXNET and made available
on Starhill Global REIT’s website.
The Manager’s current distribution policy is to distribute
at least 90% of Starhill Global REIT’s taxable income to its
Unitholders or any other minimum level to qualify for tax
transparency, as allowed by IRAS (as may be updated from
time to time), with the actual level of distribution to be
determined at the discretion of the Manager, having regard
to funding requirements, operations and debt repayments,
other capital management considerations, and the overall
stability of distributions.
The Manager upholds a strong culture of continuous
disclosure and transparent communication with Unitholders
and the investing community. The Manager has in place
a dedicated team performing the investor relations
function and has developed an investor relations policy
(“Communications Policy”), the cornerstone of which
is delivery of timely and full disclosure of all material
information relating to Starhill Global REIT by way of
announcements via SGXNET in the first instance and then
including the announcements on Starhill Global REIT’s
website at www.starhillglobalreit.com. The Communications
Policy sets out the mechanism through which Unitholders
may contact the Manager with questions and through which
the Manager may respond to such questions. Unitholders
are welcome to engage the Manager beyond general
meetings by contacting the Investor Relations and
Corporate Communications department, whose contact
details are set out on Starhill Global REIT’s website at
www.starhillglobalreit.com. This allows for an ongoing
exchange of views so as to actively engage and promote
regular, effective and fair communication with Unitholders.
Where there is inadvertent disclosure of material
information made to a select group, the Manager will make
the same disclosure publicly to all others as promptly as
possible, where appropriate or necessary. More details on the
Manager’s investor relations activities and efforts are
set out on page 67.
Starhill Global REIT’s website contains recent
announcements, press releases, presentations, and past
and current reports to Unitholders. The website also provides visitors with the option of signing up for a free
email alert service on public materials released by the
Manager in relation to Starhill Global REIT.
The Manager also participates in investor conferences locally
and overseas as part of its efforts to cultivate and maintain
regular contact with investors and analysts and to build
interest in and strengthen the branding of Starhill Global REIT.
1. Engagement with Stakeholders
Principle 13:
The Board adopts an inclusive approach by considering
and balancing the needs and interests of material
stakeholders, as part of its overall responsibility to ensure
that the best interests of the company are served.
The Manager adopts an inclusive approach by considering
and balancing the needs and interests of material
stakeholders as part of its overall strategy to ensure that
the best interests of the Unitholders are served. In line with
this approach, the Manager’s key areas of focus in relation
to the management of stakeholder relationships include
sustainability and environmental and social responsibility in
the business and operations of Starhill Global REIT.
The Manager has arrangements in place to identify and
engage with its material stakeholder groups to gather
feedback and engage with its material stakeholder groups
on issues of sustainability and environmental and social
responsibility that are significant and material to them.
This includes maintaining Starhill Global REIT’s website at
www.starhillglobalreit.com, which facilitates communication
and engagement with various stakeholders. The Board
has considered and reviewed sustainability issues in the
environment, social and governance aspects of the business
of Starhill Global REIT. More information on the material
sustainability issues of Starhill Global REIT are set out on
pages 68 to 95.
1. Dealing with Related Party Transactions
(i) Review procedures for related party transactions
The Manager has established internal control procedures to
ensure that transactions involving the Trustee, as trustee for
Starhill Global REIT, and any Interested Person or Interested
Party as defined in the listing manual of the SGX-ST and
the Property Funds Appendix respectively (“Related Party
Transactions”) are undertaken on normal commercial terms
and will not be prejudicial to the interests of Starhill Global
REIT or the Unitholders. As a general rule, the Manager
would have to demonstrate to the AC that such transactions
satisfy the foregoing criteria, which may entail obtaining
(where practicable) quotations from parties unrelated to
the Manager, or obtaining valuations from independent professional valuers (in accordance with the Property Funds
Appendix).
In addition, the following procedures are followed:
- transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party during the same financial year) below 3.0% of Starhill Global REIT’s latest audited net tangible assets will be subject to review by the AC;
- transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party during the same financial year) equal to or exceeding 3.0% but below 5.0% of Starhill Global REIT’s latest audited net tangible assets will be subject to the review and prior approval of the AC. Such approval shall only be given if the transactions are on normal commercial terms and consistent with similar types of transactions made by the Trustee, as trustee for Starhill Global REIT, with third parties which are unrelated to the Manager; and
- transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party during the same financial year) equal to or exceeding 5.0% of Starhill Global REIT’s latest audited net tangible assets will be subject to review and prior approval of the AC which may, as it deems fit, request advice on the transaction from independent sources or advisers, including obtaining valuations from professional valuers. Further, under the listing manual of the SGX-ST and the Property Funds Appendix, such transactions would have to be approved by Unitholders at a meeting of Unitholders.
Where matters concerning Starhill Global REIT relate to transactions entered into or to be entered into by the Trustee for and on behalf of Starhill Global REIT with a related party of the Manager or Starhill Global REIT, the Trustee is required to satisfy itself that such transactions are conducted on normal commercial terms and are not prejudicial to the interests of Starhill Global REIT or Unitholders and are in accordance with all applicable requirements of the Property Funds Appendix and/or the listing manual of the SGX-ST relating to the transaction in question. Further, the Trustee has the ultimate discretion under the Trust Deed to decide whether or not to enter into a transaction involving a related party of the Manager or Starhill Global REIT. If the Trustee is to sign any contract with a related party of the Manager or Starhill Global REIT, the Trustee will review the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Appendix and the provisions of the listing manual of the SGX-ST relating to interested person transactions as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST or other relevant authority to apply to real estate investment trusts.
(ii) Internal control procedures
The Manager’s internal control procedures are intended
to ensure that Related Party Transactions are conducted
on normal commercial terms and are not prejudicial to
Unitholders. The Manager maintains a register to record all
Related Party Transactions (and the basis, including, where
practicable, the quotations obtained to support such basis,
on which they are entered into) which are entered into by
Starhill Global REIT. The Manager has incorporated into its
internal audit plan a review of all Related Party Transactions
entered into by Starhill Global REIT.
The AC reviews the internal audit reports to ascertain that
the guidelines and procedures established to monitor
Related Party Transactions have been complied with. The
AC periodically reviews all Related Party Transactions to
ensure compliance with the internal control procedures
and with the relevant provisions of the listing manual of
the SGX-ST and the Property Funds Appendix. The review
includes the examination of the nature of the transaction
and its supporting documents or such other data deemed
necessary by the AC. If a member of the AC or any Director
has an interest in a transaction, he is to abstain from
participating in the review and approval process in relation
to that transaction. The Manager discloses in Starhill Global
REIT’s Annual Report the aggregate value of Related Party
Transactions (equal to or exceeding S$100,000 each in value)
entered into during the relevant financial year.
2. Dealing with Conflicts of Interest
The Manager has instituted the following procedures to deal with potential conflicts of interest issues which may arise in managing Starhill Global REIT:
- the Manager will not manage any other real estate investment trust which invests in the same type of properties as Starhill Global REIT;
- executive officers will be employed by the Manager or measures will be put in place to mitigate any potential conflict;
- all resolutions in writing of the Directors of the Manager in relation to matters concerning Starhill Global REIT must be approved by a majority of the Directors, including at least one Independent Director;
- at least half of the Board shall comprise of Independent Directors;
- all Related Party Transactions must be reviewed by the AC and/or approved by a majority of the AC in accordance with the materiality thresholds and procedures outlined above. If a member of the AC has an interest in a transaction, he will abstain from voting;
- Directors disclose promptly all interests in a transaction or proposed transaction;
- in respect of matters in which a Director of the Manager or his Associates (as defined in the listing manual of the SGX-ST) have an interest, direct or indirect, such interested Director will abstain from voting. In such matters, the quorum must comprise a majority of the Directors of the Manager and must exclude such interested Director; and
- the Manager and its Associates are prohibited from being counted in a quorum for or voting at any meeting of Unitholders convened to approve any matter in which the Manager or any of its Associates have a material interest.
The Directors of the Manager are under a fiduciary duty to
Starhill Global REIT to act in its best interests in relation to
decisions affecting Starhill Global REIT when they are voting
as a member of the Board. In addition, the Directors and
executive officers of the Manager are expected to act with
integrity at all times. It is also provided in the Trust Deed
that 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 Starhill Global REIT with a related party
of the Manager, the Manager shall be obliged to consult
with a reputable law firm (acceptable to the Trustee) on
the matter. If the said law firm is of the opinion that the
Trustee has a prima facie case against the party allegedly
in breach under such agreement, the Manager shall be
obliged to take appropriate action in relation to such
agreement. The Directors of the Manager (including its
Independent Directors) have a duty to ensure that the
Manager so complies.
Notwithstanding the foregoing, the Manager shall inform
the Trustee as soon as it becomes aware of any breach
of any agreement entered into by the Trustee for and on
behalf of Starhill Global REIT with a related party of the
Manager and the Trustee may take such action as it
deems necessary to protect the rights of Unitholders and/
or which is in the interests of Unitholders. Any decision by
the Manager not to take action against a related party of
the Manager shall not constitute a waiver of the Trustee’s
right to take such action as it deems fit against such
related party.
Each Director of the Manager is required to give notice to
the Manager of his acquisition of units or of changes in
the number of Units which he holds or in which he has an
interest, within two business days after such acquisition or
changes in interest. All dealings in units by Directors of the
Manager are announced via SGXNET.
The Directors and employees of the Manager are
encouraged, as a matter of internal policy, to hold Units
but are prohibited from dealing in the Units during the
following periods:
- a one-month period preceding the announcement of the half year and full year financial statements;
- a two-week period preceding the announcement of Starhill Global REIT’s business updates for the first and third quarters; or
- any period when there exists any matter which constitutes non-public price-sensitive information in relation to the securities of Starhill Global REIT.
The Directors and employees of the Manager are advised
not to deal in the Units on short-term considerations.
In addition, the Manager will announce via SGXNET the
particulars of its holdings in the Units and any changes
thereto within one business day after the date on which it
acquires or disposes of any Units, as the case may be. The
Manager will also not deal in the Units during the period
commencing one month before the public announcement
of Starhill Global REIT’s annual and half-year financial
results and two weeks before the public announcement of
Starhill Global REIT’s business updates for the first and third
quarter, and ending on the date of announcement of the
relevant results.
4. Fees payable to the Manager
The Manager is entitled to the following fees:
(i) Base Fee
The Base Fee covers the operational and administrative
expenses incurred by the Manager in executing its
responsibilities to manage Starhill Global REIT’s portfolio.
The Manager is entitled to receive a base fee of 0.5% per
annum of the Value of Trust Property (excluding GST) as
defined on page 130 (“Base Fee”) or such higher percentage
as may be fixed by an Extraordinary Resolution of a
meeting of Unitholders. The Manager may opt to receive
the Base Fee in respect of its properties in cash or Units or
a combination of cash and Units (as it may determine). The
portion of the Base Fee payable in cash shall be payable
monthly in arrears and the portion of the Base Fee payable
in the form of Units shall be payable quarterly in arrears.
If a trigger event occurs, resulting in the Manager being
removed, the Manager is entitled to be paid the Base Fee
up to the day on which the trigger event occurs.
(ii) Performance Fee
The Manager is entitled to a performance fee
(“Performance Fee”) where the accumulated return
(comprising capital gains and accumulated distributions
and assuming all distributions are reinvested in the
Trust) of the Units (expressed as the “Trust Index”) in
any Financial Year exceeds the accumulated return
(comprising capital gains and accumulated distributions
and assuming reinvestment of all distributions) of a
benchmark index (“Benchmark Index”). The Performance
Fee is calculated in two tiers as follows:
- A Tier 1 Performance Fee equal to 5.0% of the amount by which the accumulated return of the Trust Index exceeds the accumulated return of the Benchmark Index, multiplied by the equity market capitalisation of the Trust; and
- A Tier 2 Performance Fee which is applicable only where the accumulated return of the Trust Index is in excess of 2.0% per annum above the accumulated return of the Benchmark Index. This tier of the fee is calculated at 15.0% of the amount by which the accumulated return of the Trust Index is in excess of 2.0% per annum above the accumulated return of the Benchmark Index, multiplied by the equity market capitalisation of the Trust.
The Performance Fee, whether payable in any
combination of cash and Units or solely in cash or Units,
will be payable annually in arrears within 30 days after
the last day of each financial year. Please refer to pages 130
to 131 for further details on the Performance Fee.
The Performance Fee is based on accumulated return
(comprising capital gains and accumulated distributions and
assuming all distributions are re-invested in the Trust) of the
Units, such that where the accumulated return for the Trust
Index exceeds the total return of the Benchmark Index, the
Manager will be paid a Performance Fee. The interests of
the Manager are therefore aligned with the interests of the
Unitholders as the Performance Fee would be commensurate
with the value that the Manager delivers to Unitholders
in the form of such accumulated return. In addition, the
Manager has to ensure that the Trust Index outperforms
the Benchmark Index. This motivates and incentivises the
Manager to grow the accumulated return to Unitholders
and outperform the Benchmark Index on a long-term and
sustainable basis through proactive asset management
strategies, asset enhancement initiatives, disciplined
investments and prudent capital and risk management.
By pegging performance fee to accumulated return, the
Manager will not take on excessive short-term risks that will
affect returns to Unitholders.
(iii) Acquisition Fee
The Manager is entitled to an Acquisition Fee as set out in
clause 15.2 of the Trust Deed. This is earned by the Manager
upon completion of an acquisition. The fee seeks to motivate
and compensate the Manager for the time and effort spent
in sourcing, evaluating and executing acquisitions that meet
Starhill Global REIT’s investment criteria and increase long-term
returns for Unitholders. Additional resources and costs incurred
by the Manager in the course of seeking out new acquisition
opportunities include, but are not limited to, due diligence
efforts and man-hours spent in evaluating the transactions.
The Manager provides these services over and above the
provision of ongoing management services with the aim
of enhancing long-term returns, income sustainability and
achieving the investment objectives of Starhill Global REIT.
The Acquisition Fee is calculated at 1.0% of the value of
the real estate acquired and subject to the Property Funds
Appendix, shall be paid to the Manager in the form of cash
and/or Units (as the Manager shall elect). The Acquisition Fee
is payable to the Manager 14 days after the completion of
the relevant acquisition. Please refer to page 131.
As required by the Property Funds Appendix, where an
acquisition constitutes an “interested party transaction”, the
Acquisition Fee payable to the Manager will be in the form of
Units which shall not be sold within one year from the date
of issuance. This motivates the Manager to ensure that any
acquisitions from interested parties perform and contribute
to Unitholders’ returns.
(iv) Divestment Fee
The Manager is entitled to a Divestment Fee as set out in
clause 15.3 of the Trust Deed. This is earned by the Manager
upon completion of a divestment. This fee seeks to motivate
and compensate the Manager for its efforts in maximising
value for Unitholders by selectively divesting properties that
have reached a stage which offers limited scope for further
income growth and to recycle capital and optimise Starhill
Global REIT’s portfolio. The fee covers additional costs and
resources incurred by the Manager, including but not limited
to, sourcing for buyers, due diligence efforts and man-hours
spent in the course of the transactions.
In accordance to clause 15.3 of the Trust Deed, the
Divestment Fee is calculated at 0.5% of the value of the real
estate divested and subject to the Property Funds Appendix,
shall be paid to the Manager in the form of cash and/or Units
(as the Manager may elect).
The Divestment Fee is payable as soon as practicable after the
completion of the relevant divestment. Please refer to page 131.
As required by the Property Funds Appendix, where a
divestment constitutes an “interested party transaction”, the
Divestment Fee payable to the Manager shall be in the form
of Units, which shall not be sold within one year from the
date of issuance.
The Divestment Fee is lower than the Acquisition Fee because
the sourcing, evaluating and executing of potential acquisition
opportunities generally require more resources, effort and
time on the part of the Manager as compared to divestments.
(v) Development Management Fee
The Manager is entitled to charge a development
management fee equivalent to 3.0% of the total project
costs incurred in development projects undertaken and
managed by the Manager on behalf of Starhill Global REIT
(the “Development Management Fee”), as set out in Clause
15.6 of the Trust Deed. In addition, when the estimated total
project costs are greater than S$200.0 million, the Trustee
and the Independent Directors of the Manager will first review and approve the quantum of the Development
Management Fee payable to the Manager, whereupon the
Manager may be directed by the Independent Directors to
reduce the Development Management Fee.
For the purpose of calculating the Development
Management Fee, “total project costs” means the sum of
the construction costs, principal consultants’ fees, cost
of obtaining all approvals for the development project
(including but not limited to any differential premium or
development charge payable), site staff costs, interest costs
and any other costs which meet the definition of total
project costs and can be capitalised to the development
project in accordance with generally accepted accounting
principles in Singapore. For the avoidance of doubt, total
project costs shall not include land costs.
A Development Management Fee is chargeable for
all development projects undertaken by the Manager
on behalf of Starhill Global REIT which include the
redevelopment of an existing property. However, the
Manager will not receive a Development Management
Fee for activities involving refurbishment, retrofitting
and renovations.
The Manager believes that having the ability to execute
a development strategy when an attractive opportunity
arises is beneficial to Unitholders as development
projects can potentially provide significant returns to
augment the income derived from the acquisitions and
thus also contribute to improving the net asset value of
Starhill Global REIT’s portfolio, as the case may be, and
provide growing distributions to Unitholders. Unlike
outright acquisitions of completed income-producing
properties, the process of property development is
more complex as it requires a longer gestation period
and involves the management and supervision of
significant construction activity. The services rendered
for a development project are significantly more than
the services rendered for an acquisition.
The Development Management Fee shall be payable in
the form of cash and/or Units (as the Manager may elect)
and in equal monthly instalments over the construction
period of each development project based on the
Manager’s best estimate of the total project costs and
construction period and, if necessary, a final payment of
the balance amount to be paid to the Manager or paid by
the Manager when the total project cost is finalised.
Development management may at times contain certain
aspects of project management. In order to ensure that
there is no double-payment of fees for the same services
provided, where Development Management Fees are
payable to the Manager, there will not be any additional
project management fees payable to the project manager
and vice-versa. Please refer to pages 131 to 132.
ADDITIONAL INFORMATION ON ENDORSEMENT OF APPOINTMENT OF DIRECTORS
(Information required pursuant to Appendix 7.4.1 of the Listing Manual)
For more details, please refer to pages 22 to 23 of this Annual Report on the Board of Directors.

