We, as the manager of CICT (Manager), set the strategic direction of CICT and its subsidiaries (CICT Group) and make recommendations to HSBC Institutional Trust Services (Singapore) Limited, in its capacity as trustee of CICT (Trustee), on any investment or divestment opportunities for CICT and the enhancement of the assets of CICT in accordance with the stated investment strategy for CICT. The research, evaluation and analysis required for this purpose are coordinated and carried out by us as the Manager.
As the Manager, we have general powers of management over the assets of CICT. Our primary responsibility is to manage the assets and liabilities of CICT for the benefit of the unitholders of CICT (Unitholders). We do this with a focus on generating rental income and enhancing asset value over time so as to maximise returns from the investments, and ultimately the distributions and total returns, to Unitholders.
Our other functions and responsibilities as the Manager include:
The Manager also considers sustainability issues (including environmental and social factors) as part of its responsibilities. CICT’s sustainability policies and programmes are set out in the Sustainability Report 2022 and pages 12 and 39 to 44 of Annual Report 2022.
CICT, constituted as a trust, is externally managed by the Manager. The Manager appoints experienced and well qualified personnel to run its day-to-day operations.
The Manager was appointed in accordance with the terms of the trust deed constituting CICT dated 29 October 2001 (as amended, varied or supplemented from time to time) (Trust Deed). The Trust Deed outlines certain circumstances under which the Manager can be removed, including by notice in writing given by the Trustee upon the occurrence of certain events, or by resolution passed by a simple majority of Unitholders present and voting at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed.
The Manager is a wholly owned subsidiary of CapitaLand Investment Limited (CLI) which holds a significant unitholding interest in CICT. CLI is a leading global real estate investment manager, with a vested interest in the long-term performance of CICT. CLI’s significant unitholding in CICT demonstrates its commitment to CICT and as a result, CLI’s interest is aligned with that of other Unitholders. The Manager’s association with CLI provides the following benefits, among other things, to CICT:
The Manager embraces the tenets of good corporate governance, including accountability, transparency and sustainability. It is committed to enhancing long-term Unitholder value and has appropriate people, processes and structure to direct and manage the business and affairs of the Manager with a view to achieving operational excellence and delivering the CICT Group’s long-term strategic objectives. The policies and practices it has developed to meet the specific business needs of the CICT Group provide a firm foundation for a trusted and respected business enterprise.
Our corporate governance framework as at the date of this Annual Report is set out below:
The Board of Directors (Board) sets the tone from the top and is responsible for the Manager’s corporate governance standards and policies, underscoring their importance to the CICT Group.
This corporate governance report (Report) sets out the corporate governance practices for the financial year (FY) 2022 with reference to the Code of Corporate Governance 2018 (Code).
Throughout FY 2022, the Manager has complied with the principles of corporate governance laid down by the Code and also, substantially, with the provisions underlying the principles of the Code. Where there are deviations from the provisions of the Code, appropriate explanations are provided in this Report. This Report also sets out additional policies and practices adopted by the Manager which are not provided in the Code.
CICT has received accolades from the investment community for excellence in corporate governance and corporate governance-related efforts.
In FY 2022, CICT was the winner of the Singapore Corporate Governance Award (SCGA) 2022 in the REITs and Business Trusts category at the SIAS Investors Choice Awards 2022. On both the Singapore Governance and Transparency Index (SGTI) and the Governance Index for Trusts (GIFT), CICT was ranked fourth in the REIT and Business Trust category. CICT also won Gold for Best Annual Report in the REITs and Business Trusts category at the Singapore Corporate Awards 2022. In recognition of its excellence in corporate governance, CICT is included in the ASEAN Asset Class list of the 2021 ASEAN Corporate Governance Scorecard (ACGS) by the ASEAN Capital Markets Forum.
As testament to its commitment to environment, social and corporate governance, CICT maintained its 5 Star rating in the Asia, Diversified-Office/Retail, Listed category and also scored ‘A’ for public disclosure for GRESB 2022.
Duties and Responsibilities
The Board oversees the strategic direction, performance and affairs of the Manager, in furtherance of the Manager’s primary responsibility to foster the success of CICT so as to deliver sustainable value over the long term to Unitholders. It provides overall guidance to the management team (Management), led by the Chief Executive Officer (CEO). The Board works with Management to achieve CICT’s objectives and long-term success and Management is accountable to the Board for its performance. Management is responsible for the execution of the strategy for CICT and the day-to-day operations of CICT’s business.
The Board establishes goals for Management and monitors the achievement of these goals. It ensures that proper and effective controls are in place to assess and manage business risks and compliance with requirements under the Listing Manual, the Property Funds Appendix, as well as any other applicable guidelines prescribed by the SGX-ST, MAS or other relevant authorities, and applicable laws. It also sets the disclosure and transparency standards for CICT and ensures that obligations to Unitholders and other stakeholders are understood and met.
The Board has adopted a set of internal controls which establishes financial approval limits for capital expenditure, investments, divestments, bank borrowings and issuance of debt instruments and this is clearly communicated to Management in writing. The Board has reserved authority to approve certain matters including:
Apart from matters that specifically require the Board’s approval, the Board delegates authority for transactions below the Board’s approval limits to Board Committees and Management to optimise operational efficiency.
The Directors are fiduciaries and are collectively and individually obliged at all times to act honestly and objectively in the best interests of CICT. Consistent with this principle, the Board is committed to ethics and integrity of action and has adopted a Board Code of Business Conduct and Ethics (Board Code) which provides that every Director is expected to, among other things, adhere to the highest standards of ethical conduct. All Directors are required to comply with the Board Code. This sets the appropriate tone from the top in respect of the desired organisational culture, and assists the Board in ensuring proper accountability within the Manager. In line with this, the Board has a standing policy that a Director must not allow himself or herself to get into a position where there is a conflict between his or her duty to CICT and his or her own interests. Where a Director has a conflict of interest in a particular matter, he or she will be required to disclose his or her interest to the Board, recuse himself or herself from deliberations on the matter and abstain from voting on the matter. During the financial year ended 31 December 2022 (FY 2022), every Director has complied with this policy, and where relevant, such compliance has been duly recorded in the minutes of meeting or written resolutions.
Furthermore, the Directors have the responsibility to act with due diligence in the discharge of their duties and ensure that they have the relevant knowledge to carry out and discharge their duties as directors, including understanding their roles as executive, non-executive, and independent directors, the business of CICT and the environment in which CICT Group operates. The Directors are also required to dedicate the necessary effort, commitment and time to their work as directors, and are expected to attend all meetings of the Board, except if unusual circumstances make attendance impractical or if a Director has to recuse himself/herself from the meeting in relation to the sole matter under consideration at such meeting.
In view of the increasingly demanding, complex and multi-dimensional role of a director, the Board recognises the importance of continual training and development for its Directors so as to equip them to discharge the duties and responsibilities of their office as Directors to the best of their abilities. The Board ensures that the Manager has in place a training and professional development framework to guide and support the Manager towards meeting the objective of having a Board which comprises individuals who are competent and possess up-to-date knowledge and skills necessary to discharge their duties and responsibilities. Directors who have no prior experience as a director of an issuer listed on the SGX-ST will be provided with training on the roles and responsibilities of a director of a listed issuer in accordance with the listing rules of the SGX-ST. The costs of training are borne by the Manager. The induction, training and development provided to the new and existing Directors are set out below.
Upon appointment, each Director is provided with a formal letter of appointment and a copy of the Director’s Manual (which includes information on a broad range of matters relating to the role, duties and responsibilities of a Director and policies relating to disclosure of interests in securities, conflicts of interests and securities trading restrictions). All Directors, upon appointment, also undergo an induction programme which focuses on orientating the Director to CICT’s business, operations, strategies, organisation structure, responsibilities of CEO and other persons having executive roles with authority and responsibility for planning, directing and controlling the activities of the Manager (key management personnel), and financial and governance practices. The induction programme may include visits to the CICT Group’s properties. Conducted by the CEO and senior management executives, the induction programme also provides opportunities for the new Director to get acquainted with members of Management which facilitates their interaction at Board meetings.
Following appointment, all Directors are provided with opportunities for continuing education in areas such as director’s duties and responsibilities, changes to regulations and accounting standards, industryrelated matters and sustainability matters as prescribed under the Listing Manual, at the Manager's expense, so as to be updated on matters that affect or may enhance their performance as Directors or Board Committee members. The Directors may also contribute by recommending suitable training and development programmes to the Board. In FY 2022, the training and professional development programmes for the Directors included seminars conducted by experts and senior business leaders on board practices and issues faced by boards, and all the Board members attended the sustainability training courses prescribed under the Listing Manual conducted by providers that represent different constituencies in the capital markets. Sharing and information sessions were also organised as part of Board meetings, where guest speakers and Management team members presented on key topics to the Board. The Directors also regularly receive reading materials on topical matters or subjects as well as updates on regulatory changes and their implications for the business.
The Board has established various Board Committees to assist it in the discharge of its functions. These Board Committees are the Audit Committee (AC), the Executive Committee (EC) and the Nominating and Remuneration Committee (NRC).
All the Board Committees have clear written terms of reference setting out their respective composition, authorities and duties, including reporting back to the Board. Each of the Board Committees operates under delegated authority from the Board with the Board retaining overall oversight. The decisions and significant matters discussed at the respective Board Committees are reported to the Board on a periodic basis. The minutes of the Board Committee meetings which record the key deliberations and decisions taken during these meetings are also circulated to all Board members for their information. The composition of the various Board Committees is set out on pages 31 to 36 and the inside back cover of Annual Report 2022. The duties and responsibilities of the Board Committees are set out in this Report.
The Board may form other Board Committees from time to time. The composition of each Board Committee is also reviewed regularly, and as and when there are changes to Board membership. Where appropriate, changes are made to composition of the Board Committees, with a view to ensuring there is an appropriate diversity of skills and experience, and fostering active participation and contributions from Board Committee members.
Meetings of Board and Board Committees
Board and Board Committee meetings are scheduled prior to the start of each financial year in consultation with the Directors. The Constitution of the Manager (Constitution) permits the Directors to participate in Board and Board Committee meetings via audio or video conference. If a Director is unable to attend a Board or Board Committee meeting, he or she may provide his or her comments to the Chairman or the relevant Board Committee chairman ahead of the meeting and these comments are taken into consideration in the deliberations. The Board and Board Committees may also make decisions by way of written resolutions.
In addition to scheduled meetings, the Board may also hold ad hoc meetings as required by business imperatives. The non-executive Directors, led by the independent Chairman or other independent Director as appropriate, also meet regularly without the presence of Management. The chairman of such meetings provides feedback to the Board and/or Management as appropriate. In FY 2022, the non-executive Directors, led by the independent Chairman, met once without the presence of Management.
At each scheduled Board meeting, the Board is apprised of the following:
This allows the Board to develop a good understanding of the progress of the CICT Group’s business as well as the issues and challenges faced by CICT, and also promotes active engagement with Management.
The Manager adopts and practises the principle of collective decisions and therefore, no individual Director influences or dominates the decision-making process. There is mutual respect and trust among the Directors and therefore the Board benefits from a culture of frank and rigorous discussions. Such discussions conducted on a professional basis contribute to the dynamism and effectiveness of the Board. The Board composition is such that there is diversity in views and perspectives which enriches deliberations and contributes to better decision-making of the Board in the best interests of CICT. At Board and Board Committee meetings, all the Directors actively participate in discussions, in particular, they engage in open and constructive debate and challenge Management on its assumptions and recommendations.
Management provides the Directors with complete, adequate and timely information prior to Board and Board Committee meetings and on an ongoing basis. This enables the Directors to make informed decisions and discharge their duties and responsibilities.
As a general rule, meeting materials are provided to the Directors at least five days prior to Board and Board Committee meetings, to allow them to prepare for the meetings and to enable discussions to focus on any questions or issues that they may have or identify. Agendas for Board and Board Committee meetings are prepared in consultation with the Chairman and the chairmen of the respective Board Committees. This provides assurance that there is time to cover all relevant matters during the meetings.
In line with the Manager’s ongoing commitment to minimise paper wastage and reduce its carbon footprint, the Manager does not provide printed copies of Board and Board Committee meeting materials. Instead, the Directors are provided with tablet devices to enable them to access and review meeting materials prior to and during meetings. This initiative also enhances information security as the meeting materials are made available through a secure channel. The Directors are also able to review and approve written resolutions using the tablet devices.
A total of nine Board meetings, seven AC meetings and two NRC meetings were held in FY 2022. The key deliberations and decisions taken at Board and Board Committee meetings are minuted.
A record of the Directors’ attendance at Board and Board Committee meetings for FY 2022 is set out on page 84 of Annual Report 2022. The CEO who is also a Director attends all Board meetings. He also attends all AC meetings and NRC meetings on an ex officio basis. Other members of Management attend Board and Board Committee meetings as required to brief the Board and Board Committees on specific business matters.
There is active interaction between the Directors and Management during and outside Board and Board Committee meetings. The Directors have separate, independent and unfettered access to Management for any information that they may require. The Board and Management share a productive and harmonious relationship, which is critical for good governance and organisational effectiveness.
The Directors also have separate and independent access to the company secretary of the Manager (Company Secretary). The Company Secretary has oversight of corporate secretarial administration matters and advises the Board and Management on corporate governance matters. The Company Secretary attends Board meetings and assists the Chairman in ensuring that Board procedures are followed. The Company Secretary also facilitates the induction programme for new Directors and oversees the administration work relating to professional development for the Directors. The appointment and the removal of the Company Secretary is subject to the Board’s approval.
The Directors, whether individually or collectively as the Board, are entitled to have access to independent external professional advice where necessary, at the Manager’s expense.
The Board has a strong independent element as six out of nine directors, including the Chairman, are nonexecutive IDs. Other than the CEO who is the only executive director on the Board, non-executive directors make up the rest of the Board. None of the Directors have served on the Board for nine years or longer. No lead ID is appointed as the Chairman is an ID. Profiles of the Directors, their respective Board Committee memberships and roles are set out on pages 31 to 36 of Annual Report 2022. Key information on the Directors is also available on CICT’s website at www.cict.com.sg (Website).
The Board, through the NRC, reviews from time to time the size and composition of the Board and each Board Committee, with a view to ensuring that the size is appropriate in facilitating effective deliberations and decision-making, and the composition reflects a strong independent element as well as balance and diversity of thought and background. The review takes into account the scope and nature of the CICT Group’s operations, the evolving external environment and the competition that the CICT Group faces.
The Board, through the NRC, assesses annually (and as and when circumstances require) the independence of each Director in accordance with the requirements of the Listing Manual and the guidance in the Code, the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR) and where relevant, the recommendations set out in the Practice Guidance accompanying the Code (Practice Guidance). A Director is considered independent if he or she is independent in conduct, character and judgement and:
There is a rigorous process to evaluate the independence of each ID. As part of the process:
Thereafter, the NRC's recommendation is presented to the Board for its approval. Each ID is required to recuse himself or herself from the NRC's and the Board’s deliberations on his or her independence. In appropriate cases, the NRC also reviews the independence of an ID as and when there is a change of circumstances involving the ID and makes its recommendations to the Board for its consideration and determination. In this regard, an ID is required to report to the Manager when there is any change of circumstances which may affect his or her independence.
The Board, through the NRC, has carried out the assessment of the independence of the IDs for FY 2022, and the paragraphs below set out the outcome of the assessment and the Board's determination of independence based on the information available and having taken into account the views of the NRC. Each of the IDs had recused himself or herself from the NRC's and the Board’s deliberations on his or her independence.
Ms Teo Swee Lian
Ms Teo is a non-executive director of Singapore Telecommunications Limited (Singtel) which provides telecommunication services to the CICT Group and CLI and its subsidiaries (CLI Group). Singtel group is also a tenant of some shopping malls in CICT’s portfolio. Ms Teo also serves as a non-executive director of AIA Group Limited (AIA). AIA group rented event spaces at some shopping malls in CICT’s portfolio in FY 2022.
Ms Teo’s roles in Singtel and AIA are non-executive in nature and she was not involved in the business operations of Singtel group and AIA group. She was not involved in the process or approval of (i) the engagement of Singtel by the CICT Group or the CLI Group for the provision of telecommunication services; (ii) the leases entered into between the CICT Group and Singtel group; and (iii) the licences for rental of event spaces entered into between the CICT Group and AIA group. The aforementioned transactions are conducted in the ordinary course of business, on arm’s length basis and based on normal commercial terms and/or market rates.
In addition to her directorship in Singtel which is a subsidiary of Temasek Holdings (Private) Limited (Temasek), Ms Teo also serves as a non-executive director of an associated company of Temasek and such associated company’s subsidiary. Temasek is deemed to be a substantial unitholder of CICT, through its indirect interest in CLI, which is a substantial unitholder of CICT. Ms Teo’s role in these corporations is non-executive in nature and she is not involved in the day-to-day conduct of the business of these corporations. She has also confirmed that she is not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in relation to the corporate affairs of CICT and the Manager.
The Board has considered the conduct of Ms Teo in the discharge of her duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of her independent business judgement in the discharge of her duties and responsibilities as a Director. Save for the relationships stated above, Ms Teo does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect her independent business judgement. The Board is therefore of the view that Ms Teo has exercised independent business judgement in the discharge of her duties and responsibilities. Based on the above, the Board arrived at the determination that Ms Teo is an ID. Ms Teo will recuse herself from participating in any Board’s deliberation on any transactions that could potentially give rise to a conflict of interest.
Mrs Quek Bin Hwee
Mrs Quek served as a non-executive director of The Hongkong and Shanghai Banking Corporation Limited (HSBC), which provides banking services to the CICT Group and CLI Group; HSBC’s wholly owned subsidiary, the Trustee, provides trustee services to the CICT Group and other listed funds in CLI Group. HSBC is also a tenant at The Atrium@Orchard, which is a property in CICT’s portfolio. Mrs Quek stepped down from HSBC in June 2021. Mrs Quek’s role in HSBC was non-executive in nature and she was not involved in the day-to-day conduct of the business of HSBC and the Trustee. She was not involved in the process or approval of (i) the engagement of HSBC and the Trustee by the CICT Group or the CLI Group for the provision of services; and (ii) the lease entered into between the CICT Group and HSBC. The aforementioned transactions were carried out in the ordinary course of business, on arm’s length basis and based on normal commercial terms. Mrs Quek also served as a non-executive director of Mapletree Oakwood Holdings Pte Ltd (MOH), a subsidiary of Temasek, before stepping down in August 2022. Her role in MOH was non-executive in nature and she was not involved in the day-to-day conduct of the business of MOH. MOH invests in a different asset class from CICT and so this role does not pose any conflict of interest issues for Mrs Quek. Mrs Quek is also currently a non-executive director of Certis Cisco Security Pte. Ltd. (CCS) and SIA Engineering Company Limited (SIAEC), subsidiaries of Temasek. CCS group provides security and integrated services to the CICT Group and CLI Group. Mrs Quek’s roles in MOH, CCS and SIAEC are non-executive in nature and she is not involved in the day-to-day conduct of the business of MOH, CCS and SIAEC. The services provided by CCS group are in the ordinary course of business, on arm’s length basis and based on normal commercial terms. She has also confirmed that she is not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in relation to the corporate affairs of CICT and the Manager.
The Board has considered the conduct of Mrs Quek in the discharge of her duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of her independent business judgement in the discharge of her duties and responsibilities as a Director. Save for the relationships stated above, Mrs Quek does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect her independent business judgement. The Board is therefore of the view that Mrs Quek has exercised independent business judgement in the discharge of her duties and responsibilities. Based on the above, the Board arrived at the determination that Mrs Quek is an ID. Mrs Quek will recuse herself from participating in any Board's deliberation on any transactions that could potentially give rise to a conflict of interest.
Mr Leo Mun Wai
Mr Leo serves as a non-executive director of Great Eastern General Insurance Limited (GEGIL), which provided a range of corporate insurance plans and coverage for Industrial All Risks, Property Damages and Business Interruption and claim settlement services, to the CICT Group and CLI Group. Mr Leo also serves as a non-executive director of The Great Eastern Life Assurance Company Limited (GEL), which had purchased STAR$® under the CapitaStar app (CLI's lifestyle and loyalty app) from the CLI Group. CLI Group has also provided campaign management and marketing services through the CapitaStar app to GEL. Mr Leo's roles in GEGIL and GEL are non-executive in nature and he was not involved in the process or approval of (i) the engagement by the CICT Group and CLI Group of GEGIL for the provision of corporate insurance plans and coverage and claim settlement services, and (ii) the sale of STAR$® by the CLI Group to GEL or the provision of campaign management and marketing services through the CapitaStar app by the CLI Group to GEL. The aforementioned transactions were carried out in the ordinary course of business, on arm’s length basis and based on normal commercial terms.
The Board has considered the conduct of Mr Leo in the discharge of his duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of his independent business judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Leo does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect his independent business judgement. The Board is therefore of the view that Mr Leo has exercised independent business judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Leo is an ID. Mr Leo will recuse himself from participating in any Board’s deliberation on any transactions that could potentially give rise to a conflict of interest.
Ms Jeann Low Ngiap Jong
Ms Low was the Group Chief Corporate Officer of Singtel from April 2015 to April 2021 and presently serves as Singtel’s Senior Advisor. Singtel provides telecommunication services to the CICT Group and CLI Group. Singtel group is also a tenant of some shopping malls in CICT’s portfolio. Ms Low’s role in Singtel is nonexecutive in nature and she is not involved in the business operations of Singtel group. She was not involved in the process or approval of (i) the engagement of Singtel by the CICT Group or the CLI Group for the provision of telecommunication services; and (ii) the leases entered into between the CICT Group and Singtel group. The aforementioned transactions are conducted in the ordinary course of business, on arm’s length basis and based on normal commercial terms and market rates.
In addition to her role in Singtel which is a subsidiary of Temasek, Ms Low also serves as a non-executive director of certain other subsidiaries of Temasek under the Singtel group. Temasek is deemed to be a substantial unitholder of CICT through its indirect interest in CLI, which is a substantial unitholder of CICT. Ms Low’s role in these corporations is non-executive in nature and she is not involved in the day-to-day conduct of the business of these corporations. She has also confirmed that she is not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in relation to the corporate affairs of CICT and the Manager.
The Board has considered the conduct of Ms Low in the discharge of her duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of her independent business judgement in the discharge of her duties and responsibilities as a Director. Save for the relationships stated above, Ms Low does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect her independent business judgement. The Board is therefore of the view that Ms Low has exercised independent business judgement in the discharge of her duties and responsibilities. Based on the above, the Board arrived at the determination that Ms Low is an ID. Ms Low will recuse herself from participating in any Board’s deliberation on any transactions that could potentially give rise to a conflict of interest.
Mr Stephen Lim Beng Lin
Mr Lim served as a non-executive director of NTUC Fairprice Co-operative Limited (NTUC) which is a tenant in some of the malls in CICT’s portfolio. He stepped down from NTUC in May 2021. Mr Lim’s role in NTUC was non-executive in nature and he was not involved in the business operations of NTUC. He was not involved in the process or approval of the leases entered into between the CICT Group and NTUC. The aforementioned transactions with the CICT Group are conducted in the ordinary course of business, on arm’s length basis and based on normal commercial terms and market rates.
The Board has considered the conduct of Mr Lim in the discharge of his duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of his independent business judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Lim does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect his independent business judgement. The Board is therefore of the view that Mr Lim has exercised independent business judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Lim is an ID. Mr Lim will recuse himself from participating in any Board’s deliberation on any transactions that could potentially give rise to a conflict of interest.
Mr Tan Boon Khai
Mr Tan serves as the Chief Executive Officer of JTC Corporation (JTC). Leases/sub-leases have been entered into between JTC and CICT Group or CLI Group which includes (i) the payment of rent and various fees arising from such leases/sub-leases, and (ii) the payment of wayleave and driveway licence fees by CICT Group to JTC in relation to IMM Building, which is a property in CICT’s portfolio. The payment of land premium for renewal of the JTC lease for the land on which IMM Building is situated was made in 2004, which pre-dates Mr Tan’s appointment in JTC as well as his appointment as a Director. The annual rent and various fees arising from the JTC lease for the land on which IMM Building is situated, as well as the wayleave and driveway licence fees in relation thereto, payable in FY 2021 and FY 2022 are nominal.
Mr Tan also serves as a non-executive director of Singapore-Suzhou Township Development Pte Ltd (SSTD). CLI Group had provided management services, and corporate secretariat and accounting services to SSTD in FY 2021. Mr Tan’s role in SSTD is non-executive in nature and he was not involved in the process or approval of the engagement by SSTD of CLI Group for the provision of the management services, and corporate secretariat and accounting services. The aforementioned transactions were carried out in the ordinary course of business, on arm’s length basis and based on normal commercial terms.
The Board has considered the conduct of Mr Tan in the discharge of his duties and responsibilities as a Director, and is of the view that the relationships set out above did not interfere with the exercise of his independent business judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Tan does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR and Listing Manual, or any other relationships which may affect his independent business judgement. The Board is therefore of the view that Mr Tan has exercised independent business judgement in the discharge of his duties and responsibilities. Based on the above, the Board arrived at the determination that Mr Tan is an ID. Mr Tan will recuse himself from participating in any Board’s deliberation on any transactions that could potentially give rise to a conflict of interest.
The Board is of the view that as at the last day of FY 2022, each of Ms Teo, Mrs Quek, Mr Leo, Ms Low, Mr Lim, and Mr Tan was able to act in the best interests of all the Unitholders in respect of the period in which they served as directors in FY 2022.
The remaining Directors, namely, Mr Tony Tan Tee Hieong, Mr Jonathan Yap Neng Tong and Ms Janine Gui Siew Kheng, are all employees of CLI group and are not considered to be independent.
The Board embraces diversity and has formally adopted a Board Diversity Policy. The Board Diversity Policy provides for the Board to comprise talented and dedicated Directors with a diverse mix of expertise, experience, perspectives, skills and backgrounds, with due consideration to diversity factors, including but not limited to, diversity in age and gender.
The Board believes in diversity and values the benefits that diversity can bring to the Board in its deliberations by avoiding groupthink and fostering constructive debate. Diversity enhances the Board’s decision-making capability and ensures that the Manager has the opportunity to benefit from all available talent and perspectives, which is essential to the effective governance of CICT's business and for ensuring long-term sustainable growth.
The NRC, in carrying out its duties of determining the optimal composition of the Board in its Board renewal process and addressing Board vacancies, identifies possible candidates that bring a diversity of background and opinion from amongst candidates with the appropriate background and industry or related expertise and experience. In identifying possible candidates and making recommendations of board appointments to the Board, the NRC considers, amongst others, achieving an appropriate level of diversity in the Board composition having regard to diversity factors such as age, educational, business and professional backgrounds of its members.
Gender diversity is also considered an important aspect of diversity. There has been an increase in female representation on the Board in FY 2022 and progressively over the past financial years. The current Board has four female members, one of whom is the Chairman of the Board.
The NRC has reviewed the size and composition of the Board and is of the opinion that the Board’s current size is appropriate with an appropriate balance and diversity of skills, talents, experience and backgrounds, taking into account the objectives of the Board Diversity Policy and the CICT Group’s business needs and plans, for effective decision-making and constructive debate. In line with the Board Diversity Policy, the current Board comprises nine members who are corporate and business leaders, and are professionals with varied backgrounds, expertise and experience including in accounting and finance, banking and capital markets, investment, real estate and industry expertise in retail and office sectors, legal and compliance, technology, and leadership and governance. The Board also has a few members with prior working experience in the industry in which the CICT Group operates. The Board members bring with them the combination of skills, talents, experience and diversity required to serve the needs of the CICT Group.
For further information on the Board’s work in this regard, please refer to “Board Membership” under Principle 4 in this Report.
The roles and responsibilities of the Chairman and the CEO are held by separate individuals, in keeping with the principles that there be a clear division of responsibilities between the leadership of the Board and Management and that no one individual has unfettered powers of decision-making. The non-executive independent Chairman is Ms Teo Swee Lian, whereas the CEO is Mr Tony Tan Tee Hieong. They do not share any family ties. The Chairman and the CEO enjoy a positive and constructive working relationship between them, and support each other in their respective leadership roles.
The Chairman provides leadership to the Board and facilitates the conditions for the overall effectiveness of the Board, Board Committees and individual Directors. This includes setting the agenda of Board meetings in collaboration with the CEO, ensuring that there is sufficient information and time at meetings to address all agenda items, and promoting open and constructive engagement and dialogue among the Directors as well as between the Board and the CEO at meetings.
The Chairman devotes considerable time to keep herself updated as to the business of CICT, including the issues and the competition that CICT faces. She plays a significant leadership role by providing clear oversight, direction, advice and guidance to the CEO. She also maintains open lines of communication and engages with other members of Management regularly, and acts as a sounding board for the CEO on strategic and significant operational matters.
The Chairman also presides over the Annual General Meeting (AGM) each year and other general meetings where she plays a crucial role in fostering constructive dialogue between the Unitholders, the Board and Management.
The CEO has full executive responsibilities to manage the CICT Group’s business and to develop and implement policies approved by the Board.
The separation of the roles and responsibilities of the Chairman and the CEO and the resulting clarity of roles provide a healthy professional relationship between the Board and Management, facilitate robust deliberations on the CICT Group’s business activities and the exchange of ideas and views to help shape the strategic process, and ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making.
As the roles of the Chairman and the CEO are held by separate individuals who are not related to each other, and the Chairman is an ID, no lead ID has been appointed. Moreover, the Board has a strong independent element as six out of nine directors (including the Chairman) are non-executive IDs. There are also sufficient measures in place to address situations where the Chairman is conflicted as the Directors are required to recuse themselves from deliberations and abstain from voting on any matters that could potentially give rise to conflict. Accordingly, the foregoing is consistent with the intent of Principle 3 of the Code.
The Board has a formal and transparent process for the appointment and re-appointment of Directors, taking into account the need for progressive renewal of the Board. The NRC makes recommendations to the Board on all appointments to the Board and Board Committees. All Board appointments are made based on merit and approved by the Board.
The NRC comprises three non-executive directors, two of whom (including the chairman of the NRC) are IDs. The members of the NRC are Ms Teo Swee Lian (NRC Chairman), Mr Stephen Lim Beng Lin and Mr Jonathan Yap Neng Tong. The NRC met twice in FY 2022.
The NRC has also reviewed and approved various matters within its remit via circulating papers. Under its terms of reference, the NRC’s scope of duties and responsibilities in relation to the nomination and appointment of directors includes:
Guided by its terms of reference, the NRC oversees the development and succession planning for the CEO. This includes overseeing the process for selection of the CEO and conducting an annual review of career development and succession matters for the CEO.
In addition to the above, the NRC and/or the Board as a whole is kept abreast of relevant matters relating to the review of succession plans relating to the key management personnel, in particular the appointment and/or replacement of the key management personnel. While this is a partial deviation from Provision 4.1(a) which requires the NRC to make recommendations to the Board on relevant matters relating to the review of succession plans, in particular the appointment and/or replacement of the key management personnel, the Board is of the view that such matters could be considered either by the NRC or by the Board as a whole. This is accordingly consistent with the intent of Principle 4 of the Code.
In respect of the review of training and professional development programmes for the Board and the Directors, the Board is of the view that this should be a matter involving the views and feedback of all members of the Board. Hence, any Director may contribute by recommending to the Board specific training and development programmes which he or she believes would benefit the Directors or the Board as a whole. The review of training and professional development programmes for the Board and its Directors is done by the Board as a whole, and this function was not delegated to the NRC. This is consistent with the intent of Principle 4 of the Code, notwithstanding that the NRC was not specifically assigned to review and make recommendations to the Board on such matters.
The NRC’s duties and responsibilities in relation to remuneration matters are set out on pages 65 to 67 of Annual Report 2022.
Board Composition and Renewal
The Board, through the NRC, strives to ensure that there is an optimal blend in the Board of backgrounds, experience and knowledge in business and general management, expertise relevant to the CICT Group’s business and track record, and that each Director can bring to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made in the interests of the CICT Group. The channels used in the search and nomination process for identifying appropriate candidates, and the channels via which the eventual appointee(s) were found, and the criteria used to identify and evaluate potential new directors, are set out below.
There is a structured process for determining Board composition and for selecting candidates for appointment as Directors. In undertaking its duty of reviewing and making board appointment recommendations to the Board, the NRC considers different time horizons for purposes of succession planning. The NRC evaluates the Board’s competencies on a long-term basis and identifies competencies which may be further strengthened in the long term to achieve CICT’s strategy and objectives. As part of medium-term planning, the NRC seeks to refresh the membership of the Board progressively and in an orderly manner, whilst ensuring continuity and sustainability of corporate performance. The NRC also considers contingency planning to prepare for sudden and unforeseen changes. In reviewing succession plans, the NRC has in mind CICT’s strategic priorities and the factors affecting the long-term success of CICT. Board succession planning takes into account the need to maintain flexibility to effectively address succession planning and to ensure that the Manager continues to attract and retain highly qualified individuals to serve on the Board. The NRC aims to maintain an optimal board composition by considering the trends affecting CICT, reviewing the skills needed and identifying gaps, including considering whether there is an appropriate level of diversity of thought. The process ensures that the Board composition is such that the Board has capabilities and experience which are aligned with CICT’s strategy and environment, and includes the following considerations: (a) the current size of the Board and Board Committees, composition mix and core competencies, (b) the candidate’s/ Director’s independence, in the case of an independent director, (c) the composition requirements for the Board and relevant Board Committees (if the candidate/Director is proposed to be appointed to any Board Committee), and (d) the candidate's/Director's age, gender, track record, experience and capabilities and such other relevant factors as may be determined by the Board, which would provide an appropriate balance and contribute to the collective skills of the Board.
The NRC identifies suitable candidates for appointment to the Board. Searches for possible candidates are conducted through contacts and recommendations. In this regard, the Manager may rely on external consultants from time to time to assist the NRC in identifying candidates. Candidates are identified based on the needs of CICT and the relevant skills required, taking into account, among other things, the requirements in the Listing Manual and the Code, as well as the factors in the Board Diversity Policy. The candidates will be assessed against a range of criteria including their demonstrated business sense and judgement, skills and expertise, and market and industry knowledge (and may include elements such as financial, sustainability or other specific competency, geographical representation and business background). The NRC also considers the qualities of the candidates, in particular whether they are aligned to the strategic directions and values of CICT. In addition, the NRC assesses the candidates’ ability to commit time to the affairs of CICT, taking into consideration their other current appointments. The NRC uses a skills matrix to determine the skills gaps of the Board and if the expertise and experience of a candidate would complement those of the existing Board members.
The NRC also assesses annually, and as and when circumstances require, if a director is independent, having regard to the circumstances set forth in Provision 2.1 of the Code. Directors disclose their relationships with the Manager, its related corporations, its substantial shareholders, CICT’s substantial Unitholders or the Manager’s officers, if any, which may affect their independence, to the Board. For further information on the Board’s determination in this regard, please refer to “Board Independence” under Principle 2 in this Report.
The Board supports the principle that board renewal is a necessary and continual process, for good governance and ensuring that the Board has the skills, expertise and experience which are relevant to the evolving needs of the CICT Group’s business.
Board succession planning is carried out through the annual review by the NRC of the Board’s composition as well as when a Director gives notice of his or her intention to retire or resign. The outcome of that review is reported to the Board. The Board also has in place guidelines on the tenure of Directors. The guidelines provide that an ID should serve for no more than a maximum of two three-year terms and any extension of tenure beyond six years will be reviewed on a yearly basis up to a period of nine years (inclusive of the initial two three-year terms served) by the NRC in arriving at a recommendation to the Board.
As part of the Board renewal process, Mr Tan Boon Khai was appointed as a non-executive ID and a member of the AC, with effect from 25 April 2022.
Ms Janine Gui Siew Kheng was also appointed as a non-executive non-ID and a member of the EC with effect from 25 July 2022, following Mr Lim Cho Pin Andrew Geoffrey stepping down as a non-executive non- ID and a member of the EC.
Directors who are appointed to the Board from time to time either have prior experience as a director of an issuer listed on the SGX-ST or will undergo the training required under Rule 210(5)(a) of the Listing Manual. Mr Tan Boon Khai and Ms Janine Gui Siew Kheng is or will be undergoing the requisite training under Rule 210(5) (a) of the Listing Manual before 24 April 2023 and 24 July 2023 respectively (being one year from the date of their respective appointments to the Board). In FY 2022, all Directors attended the sustainability training courses prescribed under the Listing Manual. Going forward, new Directors who are appointed to the Board from time to time will either have expertise in sustainability matters or will undergo further training required under Rule 720(7) of the Listing Manual.
Review of Directors’ Ability to Commit Time
In view of the responsibilities of a director, Directors need to be able to devote sufficient time and attention to adequately perform their duties and responsibilities. The NRC conducts a review of the other appointments and commitments of each Director on an annual basis and as and when there is a change of circumstances involving a Director which may affect his or her ability to commit time to the affairs of the Manager. In this regard, Directors are required to report to the Board any changes in their other appointments.
In respect of the Directors’ other appointments and commitments, no limit is set as to the number of listed company board appointments. The Board takes the view that the number of listed company directorships that an individual may hold should be considered on a case-by-case basis, as a person’s available time and attention may be affected by many different factors, such as his or her individual capacity, whether he or she is in full-time employment, the nature of his or her other responsibilities and his or her near term plan regarding some of the other appointments. A Director with multiple directorships is expected to ensure that he or she can devote sufficient time and attention to the affairs of the Manager. IDs are also required to inform the Chairman before accepting any invitation for appointment as a director of another entity or offer of a full time executive appointment.
There is also no alternate director to any of the Directors. In keeping with the principle that a Director must be able to commit time to the affairs of the Manager, the Board has adopted the principle that it will generally not approve the appointment of alternate directors to the Directors.
Each of the Directors is required to make his or her own self-assessment and confirm that he or she is able to devote sufficient time and attention to the affairs of the Manager. For FY 2022, all non-executive directors of the Manager had undergone the self-assessment and provided the confirmation.
On an annual basis and, where appropriate, when there is a change of circumstances involving a Director, the NRC assesses each Director’s ability to commit time to the affairs of the Manager. In the assessment, the NRC takes into consideration each Director’s confirmation, his or her other appointments and commitments, attendance record at meetings of the Board and Board Committees, as well as conduct and contributions (including preparedness, participation and level of engagement) at Board and Board Committee meetings.
The Directors’ listed company directorships and principal commitments are disclosed on pages 32 to 36 of Annual Report 2022 and their attendance record for FY 2022 is set out on page 84 of Annual Report 2022. In particular, the CEO does not serve on any listed company board outside of the CICT Group. For FY 2022, the Directors achieved high meeting attendance rates and have contributed positively to discussions at Board and Board Committee meetings. Based on the above, the NRC has determined that each Director has been adequately carrying out his or her duties as a Director and noted that no Director has a significant number of listed directorships and principal commitments.
The Board, taking into consideration the NRC’s assessment, has noted that each Director has been adequately carrying out his or her duties and responsibilities as a director of the Manager.
The Manager believes that oversight from a strong and effective Board goes a long way towards guiding a business enterprise to achieving success.
Whilst Board performance is ultimately reflected in the long-term performance of the CICT Group, the Board believes that engaging in a regular process of self-assessment and evaluation of Board performance provides an opportunity for the Board to reflect on its effectiveness including the quality of its decisions, and for Directors to consider their performance and contributions. It also enables the Board to identify key strengths and areas for improvement which are essential to effective stewardship and attaining success for CICT.
The NRC recommends for the Board’s approval the objective performance criteria, and the Board undertakes a process to evaluate the effectiveness of the Board as a whole and that of each of its Board Committees and individual Directors for every financial year. As part of the process, a questionnaire is sent to the Directors. The evaluation results are aggregated and reported to the NRC, and thereafter the Board. The findings are considered by the Board and follow up action is taken where necessary with a view to enhancing the effectiveness of the Board, Board Committees and individual Directors in the discharge of its and their duties and responsibilities. As and when required, external facilitators may be appointed to assist in the evaluation process of the Board and Board committees. For FY 2022, the evaluation process was conducted without involving any external facilitator.
Board and Board Committees
The evaluation categories covered in the questionnaire include Board composition, Board processes, strategy, performance and governance, access to information and Board Committee effectiveness. As part of the questionnaire, the Board also considers whether the creation of value for Unitholders has been taken into account in the decision-making process. For FY 2022, the outcome of the evaluation was satisfactory and the Board as a whole, and each of the Board Committees, received affirmative ratings across all the evaluation categories.
The evaluation categories covered in the questionnaire include Director’s duties, contributions, conduct and interpersonal skills, as well as strategic thinking and risk management. For FY 2022, the outcome of the evaluation was satisfactory and each of the Directors on the whole received affirmative ratings across all the evaluation categories.
The Board also recognises that contributions by an individual Director can take different forms including providing objective perspectives on issues, facilitating business opportunities and strategic relationships, and accessibility to Management outside of the formal environment of Board and Board Committee meetings.
Board Evaluation as an Ongoing Process
The Board believes that performance evaluation should be an ongoing process and the Board achieves this by seeking feedback on a regular basis. The regular interactions between the Directors, and between the Directors and Management, also contribute to this ongoing process. Through this process of engaging its members, the Board also benefits from an understanding of shared norms between Directors which also contributes to a positive Board culture. The collective Board performance and the contributions of individual Directors are also reflected in, and evidenced by, the synergistic performance of the Board in discharging its responsibilities as a whole by providing proper guidance, diligent oversight and able leadership, and lending support to Management in steering CICT in the appropriate direction, as well as the long-term performance of CICT whether under favourable or challenging market conditions.
All fees and remuneration payable to Directors, key management personnel (including the CEO) and staff of the Manager are paid by the Manager.
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.
The NRC’s scope of duties and responsibilities in relation to remuneration matters under its terms of reference include:
While Provision 6.1 of the Code provides for the NRC to make recommendations to the Board on such matters, the Board is of the view that such matters are best reviewed and determined by the NRC as part of its focused scope, and have delegated the decision-making on such matters to the NRC. The NRC reports any decisions made on such matters to the Board. This is accordingly consistent with the intent of Principle 6 of the Code.
For further information on the composition of the NRC, please refer to “Board Membership” under Principle 4 in this Report.
Remuneration Policy for Key Management Personnel
The remuneration framework and policy are designed to support the implementation of the CICT Group’s business strategy and deliver sustainable returns to Unitholders. The principles governing the remuneration policies of the Manager’s key management personnel are as follows:
> Focus on generating rental income and enhancing asset value over time so as to maximise returns from investments and ultimately the distributions and total returns to Unitholders
> Provide sound and structured funding to ensure affordability and cost-effectiveness in line with performance goals
> Enhance retention of key talents to build strong organisational capabilities
Motivate Right Behaviour
> Pay for performance - align, differentiate and balance rewards according to multiple dimensions of performance
> Strengthen line-of-sight linking rewards and performance
Fair & Appropriate
> Ensure competitive remuneration relative to the appropriate external talent markets
> Manage internal equity such that remuneration is viewed as fair across the CICT Group
> Significant and appropriate portion of pay-at-risk, taking into account risk policies of the CICT Group, symmetrical with risk outcomes and sensitive to the risk time horizon
> Maintain rigorous corporate governance standards
> Exercise appropriate flexibility to meet strategic business needs and practical implementation considerations
> Facilitate employee understanding to maximise the value of the remuneration programme
These remuneration policies are in line with the CICT Group’s business strategy and the executive compensation framework is based on the key principle of linking pay to performance, which is emphasised by linking total remuneration to the achievement of business and individual goals and objectives. The NRC considers all aspects of remuneration, including termination terms, to ensure they are fair, and has access to remuneration consultants for advice on remuneration matters as required.
In reviewing policies on remuneration and determining the remuneration packages for key management personnel, the NRC, through an independent remuneration consultant, takes into consideration appropriate compensation benchmarks within the industry, so as to ensure that the remuneration packages payable to key management personnel are competitive and in line with the objectives of the remuneration policies. It also considers the compensation framework of CLI as a point of reference. The Manager is a subsidiary of CLI which also holds a significant stake in CICT. The association with the CLI Group puts the Manager in a better position to attract and retain better qualified management talent. Additionally, it provides an intangible benefit to the Manager such that it allows its employees to associate themselves with an established corporate group which can offer them the depth and breadth of experience and enhanced career development opportunities.
In FY 2022, Willis Towers Watson was appointed as independent remuneration consultant to provide professional advice on executive remuneration. Willis Towers Watson is a leading global advisory, broking and solutions company with over 45,000 employees serving more than 140 countries and markets. The consultant is not related to the Manager, its controlling shareholder, related corporations or any of its Directors.
Remuneration of Key Management Personnel
The remuneration of key management personnel comprises fixed components, a variable cash component, Unit-based components and employee benefits. A significant proportion of key management personnel’s remuneration is in the form of variable compensation, awarded in a combination of short-term and longterm incentives, in keeping with the principle that the interests of the key management personnel should be aligned with those of Unitholders and that the remuneration framework should link rewards to business and individual performance and promote the long-term success of CICT.
A. Fixed Components:
The fixed components comprise the base salary, fixed allowances and compulsory employer contribution to an employee’s Central Provident Fund.
B. Variable Cash Component:
The variable cash component comprises the Balanced Scorecard Bonus Plan (BSBP) that is linked to the achievement of annual performance targets for each key management personnel.
Under the Balanced Scorecard framework, the CICT Group’s strategy and goals are translated to performance outcomes comprising both quantitative and qualitative targets in the dimensions of:
This includes targets relating to profitability and distributions, capital structure, financial and risk management, as well as investor engagement;
Preparing For Future
This includes targets relating to asset enhancement initiatives, asset performance, occupancy and capital recycling;
This includes targets relating to talent retention, succession planning and sustainable corporate practices (including workplace safety); and
Manager Financial Health
This includes targets relating to the Manager's financial viability and efficiency.
These Balanced Scorecard targets are approved by the Board and cascaded down throughout the organisation, thereby creating alignment across the CICT Group.
After the close of each financial year, the Board reviews the CICT Group’s achievements against the targets set in the Balanced Scorecard and determines the overall performance taking into consideration qualitative factors such as the quality of earnings, operating environment, regulatory landscape and industry trends.
In determining the payout quantum for each key management personnel under the BSBP, the NRC considers the overall business and individual performance as well as the affordability of the payout to the Manager.
C. Unit-based Components:
Unit awards were granted in FY 2022 pursuant to the CapitaLand Integrated Commercial Trust Management Limited Performance Unit Plan (PUP) and CapitaLand Integrated Commercial Trust Management Limited Restricted Unit Plan (RUP) (together, the Unit Plans), approved by the Board. The Manager believes that the Unit-based components of the remuneration for key management personnel serve to align the interests of such key management personnel with that of Unitholders and CICT’s long-term growth and value. The obligation to deliver the Units is satisfied out of existing Units held by the Manager.
To promote the alignment of Management’s interests with that of Unitholders in the longer term, senior members of Management are subject to Unit ownership guidelines to instil stronger identification with the longer-term performance and growth of the CICT Group. Under these guidelines, senior members of Management are required to retain a prescribed proportion of Units received under the Unit Plans worth up to at least one year of basic salary.
Units vested pursuant to the Unit Plans may be clawed back in circumstances where the relevant participants are found to be involved in financial misstatement, misconduct, fraud or malfeasance to the detriment of the CICT Group.
CapitaLand Integrated Commercial Trust Management Limited Performance Unit Plan
In FY 2022, the NRC granted awards which are conditional on targets set for a three-year performance period. A specified number of Units will only be released to the recipients at the end of the qualifying performance period, provided that minimally the threshold target is achieved. Under the PUP, an initial number of Units (PUP baseline award) is allocated conditional on the achievement of a pre-determined target in respect of the Relative Total Unitholder Return (TUR) of the CICT Group measured by the percentile ranking of the TUR of the CICT Group relative to the constituent REITs in the FTSE ST REIT Index.
The above performance measure has been selected as a key measurement of wealth creation for Unitholders. The final number of Units to be released will depend on the CICT Group's performance against the pre-determined targets over the three-year qualifying performance period. This serves to align Management’s interests with that of Unitholders in the longer term and to deter short-term risk taking. No Units will be released if the threshold target is not met at the end of the qualifying performance period. On the other hand, if superior targets are met, more Units than the PUP baseline award can be delivered up to a maximum of 200% of the PUP baseline award. The NRC has the discretion to adjust the number of Units released taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof, at no cost.
For FY 2022, the relevant award for assessment of the performance achieved by the CICT Group is the award granted in FY 2020 where the qualifying performance period was FY 2020 to FY 2022. Based on the NRC’s assessment that the performance achieved by the CICT Group has exceeded the pre-determined performance targets for such performance period, the resulting number of Units for the finalised award has been adjusted accordingly to reflect the performance level.
In respect of the Unit awards granted under the PUP in FY 2021 and FY 2022, the respective qualifying performance periods have not ended as at the date of this Report.
CapitaLand Integrated Commercial Trust Management Limited Restricted Unit Plan
In FY 2022, the NRC granted awards which are conditional on targets set for a one-year performance period. A specified number of Units will only be released to recipients at the end of the qualifying performance period, provided that minimally the threshold targets are achieved.
Under the RUP, an initial number of Units (RUP baseline award) is allocated conditional on the achievement of pre-determined targets in respect of the following performance conditions:
The above performance measures have been selected as they are the key drivers of business performance and are aligned to Unitholder value. The final number of Units to be released will depend on the CICT Group’s performance against the pre-determined targets at the end of the one-year qualifying performance period. The Units will be released in equal annual tranches over a vesting period of three years. No Units will be released if the threshold targets are not met at the end of the qualifying performance period. On the other hand, if superior targets are met, more Units than the RUP baseline award can be delivered up to a maximum of 150% of the RUP baseline award. The NRC has the discretion to adjust the number of Units released taking into consideration other relevant quantitative and qualitative factors. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof, at no cost.
In respect of the Unit awards granted under the RUP in FY 2022, based on the NRC’s assessment that the performance achieved by the CICT Group has exceeded the pre-determined performance targets for FY 2022, the resulting number of Units for the finalised award has been adjusted accordingly to reflect the performance level.
The Unit Plans of the Manager are performance-based and vest over a period of three years. Coupled with interlocking annual grants, this ensures ongoing alignment between remuneration and sustainable business performance in the longer term.
D. Employee Benefits:
The benefits provided are comparable with local market practices.
Each year, the NRC evaluates the extent to which each of the key management personnel has delivered on the business and individual goals and objectives, and based on the outcome of the evaluation, approves the compensation for the key management personnel. In such evaluation, the NRC considers whether the level of remuneration is appropriate to attract, retain and motivate key management personnel to successfully manage CICT for the long term. The CEO does not attend discussions relating to his own performance and remuneration.
While the disclosure of, among others, the CEO’s exact remuneration amount and the names, amounts and breakdown of remuneration of at least the top five key management personnel (who are not Directors or the CEO) in bands no wider than S$250,000 and the aggregate of the total remuneration paid to these key management personnel would be in full compliance with Provision 8.1 of the Code, the Board has considered carefully and decided that such disclosure would not be in the interests of the Manager or Unitholders due to the intense competition for talent in the REIT management industry. Disclosure of such information may subject the Manager to undue risks including the risk of loss of key management personnel resulting in increased management turnover. Given the importance of retaining competent and experienced staff to ensure CICT’s stability and continuity of business operations as well as the need to balance the confidential and commercial sensitivities associated with remuneration matters, the Manager is of the view that it is in the interests of Unitholders not to make such disclosures.
The remuneration of the CEO and the key management personnel is paid out of the fees that the Manager receives. The basis of such management fees is set out in the Trust Deed, with the Trust Deed being deemed approved by Unitholders upon listing of CICT and at various general meetings where Unitholders approved amendments to the Trust Deed in relation to the management fees. The quantum and basis of such management fees are also disclosed to Unitholders in the annual reports of CICT for transparency.
The Manager is of the view that despite this partial deviation from Provision 8.1 of the Code, the disclosures in this Report are consistent with the intent of Principle 8 of the Code and would provide sufficient information and transparency to the Unitholders on the Manager’s remuneration policies and the level and mix of remuneration accorded to the key management personnel, and enable the Unitholders to understand the relationship between CICT’s performance, value creation and the remuneration of key management personnel. For the above reasons, the Manager is of the view that the interests of Unitholders are not prejudiced by this partial deviation.
Apart from the key management personnel and other employees of the Manager, the Manager outsources various other services to a wholly owned subsidiary of CLI (CLI Subsidiary). The CLI Subsidiary provides these services through its employees and employees of CLI Group (together, the Outsourced Personnel). This arrangement is put in place so as to provide flexibility and maximise efficiency in resource management to match the needs of CICT from time to time, as well as to leverage on economies of scale and tap on the management talent of an established corporate group which can offer enhanced depth and breadth of experience. Notwithstanding the outsourcing arrangement, the responsibility for due diligence, oversight and accountability continues to reside with the Board and Management. In this regard, the remuneration of such Outsourced Personnel, being employees of the CLI Subsidiary and CLI Group, is not included as part of the disclosure of remuneration of key management personnel of the Manager in this Report.
The Board, together with the NRC, seeks to ensure that the remuneration of the CEO and other key management personnel is strongly linked to the achievement of business and individual performance targets. The performance targets are set at realistic yet stretched levels each year to motivate a high degree of business performance with emphasis on both shorter-term and longer-term quantifiable objectives.
In FY 2021, a one-time Special CLI Founders Performance Share Plan (Special PSP Award) was granted by the CLI Group to selected senior executives within the group (including the Manager) to commemorate its listing, foster a “founders’ mindset” in driving transformation, and retain talent. The grant has a five-year vesting period with defined performance parameters which are linked to CLI. Subject to the performance achieved, the award may vest at the end of the third year and/or fifth year. In addition, such compensation is in the long-term interests of CICT as CICT is a key part of CLI’s business and ecosystem (and it is also the largest Unitholder of CICT), and Management’s actions to grow CICT and drive CICT’s performance will also have a positive impact on CLI, thus reinforcing the complementary nature of the linked performance between CICT and CLI. The cost of this one-time award will be borne by the Manager and it will not form a significant part of the key management personnel’s annual remuneration. In addition, a proportion of the Management’s remuneration is paid in the form of Units, which further incentivises the Management to take actions which are beneficial to the Unitholders. Accordingly, the Special PSP Award will not result in the Management prioritising the interest of CLI over that of CICT given that the bulk of their remuneration is determined based on the evaluation of the performance of CICT and a proportion of their remuneration comprises Units. In addition, it should be further noted that under the SFA, the Manager and Directors of the Manager are required to act in the best interest of CICT and give priority to the interest of CICT over the interests of the shareholders of the Manager, and this would further mitigate any potential conflicts of interests. Save for the Special PSP Award, the NRC will continue to assess and reward the key management personnel based on the performance of CICT. Accordingly, the Manager is of the view that there would not be any conflicts of interest arising from the arrangement, nor would the arrangement result in any misalignment of interest with those of Unitholders. There was no new Special PSP Award in FY 2022. In respect of the Special PSP Award granted in FY 2021, the qualifying performance period has not ended as at the date of this Report.
In FY 2022, no termination, retirement or post-employment benefits were granted to Directors, the CEO and other key management personnel. There was also no special retirement plan, ‘golden parachute’ or special severance package for any of the key management personnel.
In FY 2022, there were no employees of the Manager who were substantial shareholders of the Manager, substantial Unitholders of CICT or immediate family members of a Director, the CEO, any substantial shareholder of the Manager or any substantial Unitholder of CICT and whose remuneration exceeds S$100,000. “Immediate family member” refers to the spouse, child, adopted child, step-child, sibling or parent of the individual.
Disclosures under AIFMR
The Manager is required under the AIFMR to make quantitative disclosures of remuneration. Disclosures are provided in relation to (a) the staff of the Manager; (b) staff who are senior management; and (c) staff who have the ability to materially affect the risk profile of CICT.
All individuals included in the aggregated figures disclosed are rewarded in line with the Manager’s remuneration policies described in this Report.
The aggregate amount of remuneration awarded by the Manager to its staff (including CEO and nonexecutive Directors) in respect of FY 2022 was approximately S$5.97 million. This figure comprised fixed pay of S$3.06 million, variable pay of S$2.66 million (including Units issued under the Unit Plans, where applicable) and allowances and benefits-in-kind of S$0.25 million. There was a total of 21 beneficiaries of the remuneration described above. In respect of FY 2022, the aggregate amount of remuneration awarded by the Manager to its senior management (which are also members of staff whose actions have a material impact on the risk profile of CICT) was approximately S$3.89 million, comprising six individuals identified having considered, among others, their roles and decision-making powers.
Remuneration for Non-Executive Directors
The non-executive Directors’ fees are paid by the Manager and the FY 2022 fees, together with a breakdown of the components, are set out in the Non-Executive Directors’ Remuneration Table on page 85 of Annual Report 2022.
The compensation policy for non-executive Directors is based on a scale of fees divided into basic retainer fees for serving as Director and additional fees for attendance and serving on Board Committees. The non-executive Directors’ fee structure and Directors’ fees are reviewed and benchmarked against the REIT industry, appropriate to the level of contribution and taking into account the effort, time spent and demanding responsibilities on the part of the non-executive Directors in light of the scale, complexity and geographic scope of the CICT Group’s business. The remuneration of non-executive Directors is reviewed from time to time to ensure that it is appropriate to attract, retain and motivate the non-executive Directors to provide good stewardship of the Manager and CICT.
The CEO, who is an executive director, is remunerated as part of the key management personnel of the Manager and does not receive any Director’s fees for his role as an executive director. The non-executive Directors who are employees of the CLI Group also do not receive any Directors’ fees.
The non-executive Directors’ fees are paid in cash (about 80%) and in the form of Units (about 20%), save that (i) a non-executive Director (not being an employee of the CLI Group) who steps down from the Board during a financial year will be paid fees fully in cash, and (ii) Mr Tan Boon Khai's fees are paid fully in cash to a government agency, The Directorship & Consultancy Appointments Council. The Manager believes that the payment of a portion of the non- executive Directors’ fees in Units will serve to align the interests of non-executive Directors with the interests of Unitholders and CICT’s long-term growth and value. The payment of non-executive Directors’ fees in Units is satisfied from the Units held by the Manager. No individual Director is involved in any decision of the NRC relating to his or her own remuneration.
In order to encourage the alignment of the interests of the non-executive Directors with the interests of Unitholders, a non-executive Director is required to hold a number of Units worth at least one year of the basic retainer fee or the total number of Units awarded, whichever is lower, at all times during his or her Board tenure.
As with previous years, an independent remuneration consultant, Willis Towers Watson, was appointed in FY 2022 to provide professional advice on Board remuneration, with a view to ensuring the fee structure remains in line with market. The framework for the non-executive Directors’ fees has remained unchanged from that of the previous financial year.
The Manager maintains adequate and effective systems of risk management and internal controls (including financial, operational, compliance and information technology (IT) controls) to safeguard Unitholders’ interests and the CICT Group’s assets.
The Board has overall responsibility for the governance of risk and oversees the Manager in the design, implementation and monitoring of the risk management and internal controls systems. The AC assists the Board in carrying out the Board’s responsibility of overseeing CICT's risk management framework and policies for CICT Group.
Under its terms of reference, the scope of the AC's duties and responsibilities includes:
The Manager adopts an Enterprise Risk Management (ERM) Framework which sets out the required environmental and organisational components for managing risks in an integrated, systematic and consistent manner. The ERM Framework and related policies are reviewed annually.
As part of the ERM Framework, the Manager undertakes and performs a Risk and Control Self-Assessment (RCSA) annually to identify material risks along with their mitigating measures.
The adequacy and effectiveness of the systems of risk management and internal controls are reviewed at least annually, by Management, the AC and the Board, taking into account the best practices and guidance in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council and the Listing Manual.
The CICT Group’s RAS, which incorporates the CICT Group's risk limits, addresses the management of material risks faced by the CICT Group. Alignment of the CICT Group’s risk profile to the RAS is achieved through various communication and monitoring mechanisms (including key risk indicators set for Management) put in place across the various functions within the Manager.
More information on the Manager’s ERM Framework including the material risks identified can be found in the Risk Management section on pages 45 to 50 of Annual Report 2022.
The internal and external auditors conduct reviews of the adequacy and effectiveness of the material internal controls (including financial, operational, compliance and IT controls) and risk management systems. This includes testing, where practicable, material internal controls in areas managed by external service providers. Any material non-compliance or lapses in internal controls together with corrective measures recommended by the internal and external auditors are reported to and reviewed by the AC. The AC also reviews the adequacy and effectiveness of the measures taken by the Manager on the recommendations made by the internal and external auditors in this respect.
The Board has received assurance from the CEO and the Chief Financial Officer (CFO) of the Manager that the financial records of the CICT Group have been properly maintained and the financial statements for FY 2022 give a true and fair view of the CICT Group’s operations and finances. It has also received assurance from the CEO, the CFO and the relevant key management personnel who have responsibility regarding various aspects of risk management and internal controls that the systems of risk management and internal controls within the CICT Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which the Manager considers relevant and material to the current business environment.
The CEO, the CFO and the relevant key management personnel of the Manager have obtained similar assurances from the respective risk and control owners.
In addition, for FY 2022, the Board received half-yearly certification by Management on the integrity of financial reporting and the Board provided a negative assurance confirmation to Unitholders as required by the Listing Manual.
Based on the ERM Framework established and the reviews conducted by Management and both the internal and external auditors, as well as the assurance from the CEO and the CFO, the Board is of the opinion that the systems of risk management and internal controls within CICT Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which CICT Group considers relevant and material to the current business environment as at 31 December 2022. The AC concurs with the Board in its opinion. No material weaknesses in the systems of risk management and internal controls were identified by the Board or the AC in the review for FY 2022.
The Board notes that the systems of risk management and internal controls established by the Manager provide reasonable assurance that the CICT Group, as it strives to achieve its business objectives, will not be significantly affected by any event that can be reasonably foreseen or anticipated. However, the Board also notes that no system of risk management and internal controls can provide absolute assurance in this regard, or absolute assurance against poor judgement in decision-making, human error, losses, fraud or other irregularities.
At present, the AC comprises four members, all of whom (including the chairman of the AC) are IDs. The AC Chairman is a Director other than the Chairman of the Board. The members of the AC are Mrs Quek Bin Hwee (AC Chairman), Ms Jeann Low Ngiap Jong, Mr Leo Mun Wai and Mr Tan Boon Khai. The AC Chairman and members bring with them invaluable recent and relevant managerial and professional expertise in accounting, auditing and related financial management domains. The AC does not comprise former partners of CICT’s external auditors, KPMG LLP (a) within a period of two years commencing from the date of their ceasing to be partners of KPMG LLP; or (b) who have any financial interest in KPMG LLP.
The AC has explicit authority to investigate any matter within its terms of reference. Management provides the fullest co-operation in providing information and resources, and in implementing or carrying out all requests made by the AC. The AC has direct access to the internal and external auditors and full discretion to invite any Director or key management personnel to attend its meetings. Similarly, both the internal and external auditors have unrestricted access to the AC.
Under its terms of reference, the AC’s scope of duties and responsibilities includes:
In addition to the above, the AC also reviews the assurance from the CEO and the CFO on the financial records and financial statements.
The AC undertook a review of the independence of the external auditors, taking into consideration, among other factors, the non-audit services provided, CICT’s relationships with the external auditors in FY 2022, as well as the processes and safeguards adopted by the Manager and the external auditors relating to audit independence. Based on the review, the AC is satisfied that the independence of the external auditors is not affected by the provision of the non-audit services. The external auditors have also provided confirmation of their independence to the AC. The fees paid or payable to the external auditors for FY 2022 amounted to S$939,391, of which audit (and audit-related fees) amounted to S$919,149 and non-audit fees amounted to S$20,242.
The AC holds at least four scheduled meetings in a year and met seven times in FY 2022. At all AC meetings in FY 2022, the CEO and the CFO were in attendance. CICT adopts the practice of announcing its financial statements on a half-yearly basis and provides quarterly business updates in between such announcements or as and when necessary. Accordingly, during the AC meetings scheduled in January and July each year, among other things, the AC reviews the half-yearly financial statements, including the relevance and consistency of the accounting principles adopted and any significant financial reporting issues, and recommends the half yearly financial statements and corresponding announcements to the Board for approval. During the AC meetings scheduled in April and October each year, the AC reviews, among other things, the quarterly business and financial updates presented by Management. Such business updates contain, among other things, information on the CICT Group’s key operating and financial metrics.
In FY 2022, the AC also reviewed and assessed the adequacy and effectiveness of the internal controls and risk management systems established by the Manager to address the material risks faced by the CICT Group, taking into consideration the outcome of reviews conducted by Management and both the internal and external auditors, as well as the assurances from the CEO and the CFO.
The AC also meets with the external auditors and internal auditors, without the presence of Management, at least once a year. In FY 2022, the AC met with the external auditors and internal auditors twice, separately and without Management’s presence, to discuss the reasonableness of the financial reporting process, the internal controls and risk management systems, and the significant comments and recommendations by the auditors.
Where relevant, the AC makes reference to the best practices and guidance for audit committees in Singapore including practice directions issued from time to time in relation to the Financial Reporting Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of Singapore (ACRA).
Key Audit Matter
In the review of the financial statements of CICT Group for FY 2022, the AC has discussed with Management the accounting principles that were applied and their judgement of items that might affect the integrity of the financial statements and also considered the clarity of key disclosures in the financial statements. The AC reviewed, amongst other matters, the following key audit matter as reported by the external auditors for FY 2022.
The Manager confirms, on behalf of CICT, that CICT complies with Rules 712 and 715 of the Listing Manual in relation to the appointment of its external auditors.
The Manager has in place an internal audit function supported by CLI’s Internal Audit Department (CLI IA). The head of CLI IA is Ms Jenny Tan. CLI IA is independent of the activities it audits and has unfettered access to the CICT Group’s documents, records, properties and employees, including access to the AC, and has appropriate standing with respect to the Manager. The primary reporting line of CLI IA in respect of CICT Group is to the AC, however, the AC does not decide on the appointment, termination and remuneration of the head of CLI IA as it operates at the CLI Group level. While this is a deviation from Provision 10.4 which requires the AC to decide on the appointment, termination and remuneration of the head of the internal audit function, CLI IA is able to carry out its role effectively for the reasons below and is accordingly consistent with the intent of Principle 10 of the Code.
The AC monitors and assesses the role and effectiveness of the internal audit function through reviewing the internal audit process from time to time and may make recommendations to the Board for any changes to the internal audit process. The AC also reviews to ensure that the internal audit function is adequately resourced and skilled in line with the nature, size and complexity of the Manager and CICT’s business, and that an adequate budget is allocated to the internal audit function to assure its proper functioning.
In respect of FY 2022, the AC has carried out a review of the internal audit function and is satisfied that the internal audit function performed by CLI IA is adequately resourced, effective and independent.
CLI IA formulates its internal audit plan in consultation with, but independently of, Management and its plan is submitted to the AC for approval prior to the beginning of each year. CLI IA adopts a risk-based approach in formulating the audit plan that aligns its activities to the key strategies and risks across the CICT Group’s business. The reviews performed by CLI IA are focused on assisting the Board in promoting sound risk management, robust internal controls and good corporate governance, through assessing the design and effectiveness of operating controls that govern key business processes and risks identified in the overall risk framework of the CICT Group. CLI IA also reviews compliance with the CICT Group’s policies, procedures and regulatory responsibilities, performed in the context of financial and operational and information system reviews.
During FY 2022, the AC reviewed the results of audits performed by CLI IA based on the approved audit plan. All findings are reported to Management and the AC, with highlights on any significant findings. CLI IA also reviews the status of implementation of the audit recommendations and whether there are any past due items, and reports the same to Management and the AC. The AC also reviewed reports on whistle blower complaints reviewed by CLI IA to ensure independent and thorough investigation and adequate follow up. The AC also received reports on Interested Person Transactions reviewed by CLI IA that they were on normal commercial terms and are not prejudicial to the interests of CICT and its minority Unitholders.
CLI IA is adequately resourced and staffed with persons with the relevant qualifications and experience. CLI IA is a corporate member of The Institute of Internal Auditors Inc. (IIA), Singapore, which is an affiliate of the IIA with its headquarters in the United States of America (USA). CLI IA subscribes to, and is guided by, the International Standards for the Professional Practice of Internal Auditing (Standards) developed by IIA, and has incorporated these Standards into its audit practices.
To ensure that internal audits are performed effectively, CLI IA recruits and employs suitably qualified professional staff with the requisite skill sets and experience. For instance, CLI IA staff who are involved in IT audits have the relevant professional IT certifications and are also members of the ISACA Singapore Chapter, a professional body administering information systems audit and information security certifications that is headquartered in the USA. The ISACA Information Systems Auditing Standards provide guidance on the standards and procedures to be applied in IT audits. CLI IA identifies and provides training and development opportunities for its staff to ensure their technical knowledge and skill sets remain current and relevant.
The Manager is committed to treating all Unitholders fairly and equitably. All Unitholders enjoy specific rights under the Trust Deed and the relevant laws and regulations. These rights include, among other things, the right to participate in profit distributions.
CICT supports the principle of encouraging Unitholder participation and voting at general meetings. CICT’s Annual Report is provided to Unitholders within 120 days from the end of CICT’s financial year. Unitholders may download the Annual Report (printed copies are available upon request) and notice of the general meeting from the Website. These documents are also available on SGXNet. More than the legally required notice period for general meetings is generally provided. The rationale and explanation for each agenda item which requires Unitholders’ approval at a general meeting are provided in the notice of the general meeting or in the accompanying circular (if any) issued to Unitholders in respect of the matter(s) for approval at the general meeting. This enables Unitholders to exercise their votes on an informed basis. To safeguard the Unitholders’ interests and rights, a separate resolution is proposed for each substantially separate matter to be approved at a general meeting, unless the issues are interdependent and linked so as to form one significant proposal. Where the resolutions are bundled, the reasons and material implications are explained in the notice of general meeting to enable Unitholders to make an informed decision. Further, if the resolution is in respect of an interested person transaction, the interested person (as defined in the Listing Manual) will be required to abstain from such voting.
In FY 2022, CICT’s AGM was convened and held on 21 April 2022 (AGM 2022) by way of 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 (COVID-19 Temporary Measures Order) and in accordance with the checklist jointly issued by ACRA, MAS and Singapore Exchange Regulation, which gave guidance to listed and non-listed entities on the conduct of general meetings amid the evolving COVID-19 situation (Checklist).
The alternative arrangements put in place for the conduct of AGM 2022 included attendance at the AGM 2022 via electronic means under which Unitholders could observe and/or listen to the AGM 2022 proceedings via live audio-visual webcast or live audio-only stream, submission of questions in advance of and/or live at the AGM 2022 through the live chat function via the audio-visual platform, and voting at AGM 2022 live by themselves or their duly appointed proxy(ies) (other than the chairman of the meeting) via electronic means or by appointing the chairman of the meeting as their proxy to vote on their behalf at the AGM 2022. All Directors (including the CEO who is also a Director) attended the AGM 2022 either in-person or via electronic means. A record of the Directors’ attendance at the AGM 2022 can be found in the record of their attendance at general meeting(s) and Board and Board Committee meetings for FY 2022 set out on page 84 of Annual Report 2022.
The upcoming AGM to be held on 19 April 2023 (AGM 2023) will be convened and held by way of physical meeting, with a live web-cast of the AGM 2023 available for Unitholders who may be unable to attend the AGM in-person. Unitholders will also be allowed to (a) submit questions to the chairman of the meeting in advance of the AGM, and substantial and relevant questions received from Unitholders will be addressed before the AGM via publication on the Website and on the SGXNet, or at the meeting, and (b) appoint proxy(ies) (other than the chairman of the meeting) or the chairman of the meeting as proxy to attend and vote on their behalf at the AGM 2023. Further information on the arrangements relating to the conduct of the upcoming AGM 2023 is provided in the notice of the upcoming AGM 2023.
Unitholders are entitled to attend general meetings and are accorded the opportunity to participate effectively and vote at general meetings (including through the appointment of up to two proxies, if they are unable to attend in person or in the case of a corporate Unitholder, through its appointed representative). Unitholders such as nominee companies which provide custodial services for securities are not constrained by the two proxy limitation, and are able to appoint more than two proxies to attend, speak and vote at general meetings of CICT.
At AGMs, Management makes a presentation to Unitholders to update them on CICT’s performance, position and prospects. The presentation materials are made available to Unitholders on the Website and also on SGXNet. At general meetings, Unitholders are given the opportunity to communicate their views, ask questions and discuss with the Board and Management on matters affecting CICT. Representatives of the Trustee, Directors (including the chairman of the respective Board Committees), key management personnel and the external auditors of CICT, attend and are present for the entire duration of the general meetings to address any queries that the Unitholders may have, including queries about the conduct of CICT’s external audit and the preparation and contents of the external auditors’ report. Directors and Management also interact with Unitholders after the general meetings.
To ensure transparency in the voting process and better reflect Unitholders’ interests, CICT conducts electronic poll voting for all the resolutions proposed at general meetings. One Unit is entitled to one vote. Voting procedures and the rules governing general meetings are explained and vote tabulations are disclosed at the general meetings. An independent scrutineer is also appointed to validate the vote tabulation procedures. Votes cast, for or against and the respective percentages, on each resolution are tallied and displayed ‘live’ on-screen to Unitholders after each resolution is voted on at the general meetings. The total number of votes cast for or against each resolution and the respective percentages are also announced on SGXNet after the general meetings.
Provision 11.4 of the Code requires an issuer’s Constitution to allow for absentia voting at general meetings of shareholders. CICT’s Trust Deed currently does not permit Unitholders to vote at general meetings in absentia (such as via mail or email). The Manager will consider implementing the relevant amendments to CICT’s Trust Deed to permit absentia voting after it has carried out careful study and is satisfied that the integrity of information and the authentication of the identity of Unitholders through the internet will not be compromised, and after the implementation of legislative changes to recognise remote voting. The Manager is of the view that despite the deviation from Provision 11.4 of the Code, Unitholders nevertheless have opportunities to communicate their views on matters affecting CICT even when they are not in attendance at general meetings. For example, Unitholders may appoint proxies to attend, speak and vote, on their behalf, at general meetings.
Minutes of the general meetings recording the substantial and relevant comments made, questions raised and answers provided, are prepared and are available to Unitholders for their inspection upon request. Minutes of general meetings are also made available on the Website. Accordingly, the rights of the Unitholders are consistent with the intent of Principle 11 of the Code.
CICT’s distribution policy is to distribute at least 90.0% of its taxable income (other than gains from the sale of real estate properties by CICT which are determined to be trading gains), with the actual level of distribution to be determined at the Manager’s discretion. Distributions are generally paid within 35 market days after the relevant record date.
Timely Disclosure of Information
The Manager is committed to keeping all Unitholders, other stakeholders, analysts and the media informed of CICT’s performance and any changes in the CICT Group or its business which is likely to materially affect the price or value of the Units.
In FY 2022, the Manager provided Unitholders with half year and full year financial statements within the relevant periods prescribed by the Listing Manual. These half year and full year financial statements were reviewed and approved by the Board prior to release to Unitholders by announcement on SGXNet. The release of half year and full year financial statements were accompanied by news releases issued to the media and which were also made available on SGXNet. In presenting the half year and full year financial statements to Unitholders, the Board sought to provide Unitholders with a balanced, clear and comprehensible assessment of CICT and the CICT Group’s performance, position and prospects.
In addition to the announcement of half year and full year financial statements in FY 2022, in keeping with the Manager’s commitment to provide its Unitholders with information promptly, the Manager also provided Unitholders, on a voluntary basis, with quarterly business updates in between the announcement of half-yearly financial statements. Such business updates contain, among other things, information on the CICT Group’s key operating and financial metrics. In addition to the release of financial statements, the Manager also keeps CICT’s Unitholders, stakeholders and analysts informed of the performance and changes in the CICT Group or its business which would likely materially affect the price or value of the Units on a timely and consistent basis, so as to assist Unitholders and investors in their investment decisions. This is performed through the release on SGXNet of announcements in compliance with regulatory reporting requirements and news releases for the media, on a timely and consistent basis. These announcements and news releases are also posted on the Website. In addition, the Manager also conducts analysts’ and media briefings, and the materials used for such briefings are uploaded on SGXNet.
The Manager has a formal policy on corporate disclosure controls and procedures to ensure that CICT complies with its disclosure obligations under the Listing Manual. These controls and procedures incorporate the decision-making process and an obligation on internal reporting of the decisions made.
The Manager believes in conducting the business of CICT in ways that seek to deliver sustainable value to Unitholders. Best practices are promoted as a means to build an excellent business for CICT and the Manager’s accountability to Unitholders for CICT’s performance. Prompt fulfilment of statutory reporting requirements is but one way to maintain Unitholders’ confidence and trust in the capability and integrity of the Manager.
The Manager has an Investor Relations department which facilitates effective communication with Unitholders and analysts. The Manager also maintains the Website which contains information on CICT including but not limited to its Prospectus, current and past announcements and news releases, financial statements, investor presentations and Annual Reports.
The Manager actively engages with Unitholders with a view to solicit and understand their views, and has put in place a Unitholders’ Communication and Investor Relations Policy which allows for an ongoing exchange of views so as to promote regular, effective and fair communications with Unitholders. The Unitholders’ Communication and Investor Relations Policy, which sets out the mechanism through which Unitholders may contact the Manager with questions and through which the Manager may respond to such questions, is available on the Website. Unitholders are welcomed to engage with the Manager beyond general meetings and they may do so by contacting the Investor Relations department whose details may be found on the Website under the IR Home page.
More information on the Manager’s investor and media relations efforts can be found in the Stakeholders and Communities - Our Investors section on pages 56 to 58 of the Sustainability Report 2022.
The Manager also has in place a corporate communications function supported by CLI’s Group Communications department which works closely with the media and oversees CICT’s media communications efforts.
Managing Stakeholder Relationships
The Board’s role includes considering sustainability as part of its strategy formulation. The Manager adopts an inclusive approach for CICT by considering and balancing the needs and interests of material stakeholders, as part of the overall strategy to ensure that the best interests of CICT are served. The Manager is committed to sustainability and incorporates the key principles of environmental and social responsibility, and corporate governance in CICT’s business strategies and operations. The Manager has arrangements in place to identify and engage with material stakeholder groups from time to time to gather feedback on the sustainability issues most important to them and to manage its relationships with such groups. Such arrangements include maintaining the Website, which is kept updated with current information on its sustainability approach and stakeholder engagements, to facilitate communication and engagement with CICT’s stakeholders. For more details of CICT’s sustainability approach, environmental policies and stakeholder engagements, please refer to the Sustainability Report 2022.
In addition to the AC and NRC, the Board has also established an EC. The members of the EC are Mr Jonathan Yap Neng Tong (EC Chairman), Mr Tony Tan Tee Hieong and Ms Janine Gui Siew Kheng.
The EC oversees the day-to-day activities of the Manager and that of CICT, on behalf of the Board. The EC is guided by its terms of reference, in particular, the EC:
The members of the EC also meet informally during the course of the year.
Review Procedures for Interested Person Transactions
The Manager has established internal control procedures to ensure that all Interested Person Transactions are undertaken on an arm’s length basis and on normal commercial terms, which are generally no more favourable than those extended to unrelated third parties, and are not prejudicial to the interests of CICT and Unitholders. In respect of such transactions, the Manager would have to demonstrate to the AC that such transactions are undertaken on normal commercial terms and are not prejudicial to the interests of CICT and Unitholders which may include obtaining (where practicable) third party quotations or obtaining valuations from independent valuers (in accordance with applicable provisions of the Listing Manual and the Property Funds Appendix). The internal control procedures also ensure compliance with Chapter 9 of the Listing Manual and the Property Funds Appendix.
In particular, the procedures in place include the following:
A summary of Interested Person Transactions of S$100,000 and above entered into within each financial quarter will be reviewed by the Trustee on a quarterly basis, while the summary of all Interested Person Transactions within the financial year will be submitted by CLI IA to the AC for review on an annual basis. Guidelines and procedures established to monitor Interested Person Transactions will be audited by CLI IA on a periodic basis.
The Manager’s internal control procedures are intended to ensure that Interested Person Transactions are conducted at arm’s length, on normal commercial terms and are not prejudicial to CICT and Unitholders’ interests.
The Manager maintains a register to record all Interested Person Transactions which are entered into by CICT (and the basis on which they are entered into, including the quotations obtained to support such basis). All Interested Person Transactions of S$100,000 and above are subject to regular periodic reviews by the AC, which in turn obtains advice from CLI IA, to ascertain that the guidelines and procedures established to monitor Interested Person Transactions, including the relevant provisions of the Listing Manual and the Property Funds Appendix, as well as any other guidelines which may from time to time be prescribed by the SGX-ST, MAS or other relevant authorities, have been complied with. The review includes an examination of the nature of the transaction and its supporting documents or such other information deemed necessary by the AC. If a member of the AC has an interest in a transaction, he or she is to abstain from participating in the review and approval process in relation to that transaction.
Details of all Interested Person Transactions (equal to or exceeding S$100,000 each in value) entered into by CICT in FY 2022 are disclosed on pages 272 to 273 of Annual Report 2022.
The following principles and procedures have been established to deal with potential conflicts of interest which the Manager (including its Directors, key management personnel and employees) may encounter in managing CICT:
In respect of voting rights where the Manager would face a conflict between its own interests and that of Unitholders, the Manager shall cause such voting rights to be exercised according to the discretion of the Trustee.
The Manager has adopted a securities dealing policy for the officers and employees which applies the best practice recommendations in the Listing Manual. Under this policy, Directors and employees of the Manager as well as certain relevant executives of the CLI Group (together, the Relevant Persons) are required to refrain from dealing in CICT’s securities (i) while in possession of material unpublished pricesensitive information, and (ii) during the one-month period immediately preceding, and up to the time of the announcement of CICT’s half-year and full year financial statements. Prior to the commencement of each relevant black-out period, an email would be sent to all the Relevant Persons to inform them of the duration of the black-out period. The Manager also does not deal in CICT’s securities during the same black-out period. In addition, Directors and certain employees identified as “Key Insiders” are prohibited from dealing in the securities of CICT, except during the open trading window (being one calendar month commencing from the relevant date of announcement of CICT’s results), provided that they are not in possession of undisclosed material or price-sensitive information. Employees and Capital Markets Services Licence Appointed Representatives (CMSL Representatives) of the Manager are also required to give a pre-trading notification to the CEO and the Compliance department before any dealing in CICT’s securities.
This policy also provides for the Manager to maintain a list of persons who are privy to price-sensitive information relating to the CICT Group as and when circumstances require such a list to be maintained.
Directors and employees of the Manager are also required to refrain from dealing in CICT’s securities if they are in possession of unpublished price-sensitive information of CICT arising from their appointment as Directors and/or in the course of performing their duties. As and when appropriate, they would be issued an advisory to refrain from dealing in CICT’s securities.
Under this policy, Directors and employees of the Manager are also discouraged from trading on shortterm or speculative considerations. They are also prohibited from using any information with respect to other companies or entities obtained in the course of their employment in connection with securities transactions of such companies or entities.
A Director is required to notify the Manager of his or her interest in CICT’s securities within two business days after (a) the date on which he or she becomes a Director or (b) the date on which he or she acquires an interest in CICT’s securities. A Director is also required to notify the Manager of any change in his or her interests in CICT’s securities within two business days after he or she becomes aware of such change.
Dealings by the Directors are disclosed in accordance with the requirements in the SFA and the Listing Manual. In FY 2022, based on the information available to the Manager, save as disclosed in accordance with such requirements and other than the awards of Units in part payment of Directors’ fees and CEO's remuneration under the Unit Plans, there were no dealings by the Directors in CICT’s securities.
The Manager adheres to an ethics and code of business conduct policy which deals with issues such as confidentiality, conduct and work discipline, corporate gifts and concessionary offers. Clear policies and guidelines on how to handle workplace harassment and grievances are also in place.
The policies and guidelines are published on CLI Group’s intranet, which is accessible by all employees of the Manager.
The policies that the Manager has implemented aim to help to detect and prevent occupational fraud in mainly three ways, as set out below.
First, the Manager offers fair compensation packages, based on practices of pay-for-performance and promotion based on merit to its employees. The Manager also provides various healthcare subsidies and financial assistance schemes to alleviate the common financial pressures its employees may face.
Second, clearly documented policies and work procedures incorporate internal controls which ensure that adequate checks and balances are in place. Periodic audits are also conducted to evaluate the efficacy of these internal controls.
Finally, the Manager seeks to build and maintain the right organisational culture through its core values, educating its employees on good business conduct and ethical values.
In line with its core values, the Manager is committed to doing business with integrity. This is reflected in its longstanding zero tolerance stance against fraud, bribery and corruption. Consistent with this commitment, various policies and guidelines are in place to guide all employees of the Manager to maintain the highest standards of integrity in their work and business dealings. This includes clear guidelines and procedures for the giving and receipt of corporate gifts and concessionary offers, and an annual pledge by all employees of the Manager to uphold the Manager’s core values and to not engage in any corrupt or unethical practices. The Manager’s zero tolerance policy on bribery and corruption extends to its business dealings with third parties. Pursuant to this policy, the Manager requires that certain agreements incorporate antibribery and anti-corruption provisions.
The Manager’s employees adhere to CLI’s Fraud, Bribery and Corruption Risk Management Policy (FBC Risk Management Policy). The FBC Risk Management Policy reiterates the strong stance against fraud, bribery and corruption, and sets the overarching approach and standards in managing fraud, bribery and corruption risks in an integrated, systematic and consistent manner. The Manager’s stance against bribery and corruption is also reiterated by Management during its regular staff communication sessions.
A whistle-blowing policy has been put in place by the Manager which sets out the procedures for the Manager’s employees and parties who have dealings with the Manager to make a report to the Manager on misconduct or wrongdoings relating to the Manager and its officers. Procedures are put in place to provide such employees and parties with well-defined, accessible and trusted channels to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace, and for the independent investigation of any reported incidents and appropriate follow up action. The Manager ensures that the identity of the whistle-blower is kept confidential. The objective of this policy is to encourage the reporting of such matters so that employees or external parties making any reports in good faith will be able to do so with the confidence that they will be treated fairly and, to the extent possible, be protected from reprisal. The Manager is committed to ensuring protection of the whistle-blower against detrimental or unfair treatment. The AC is responsible for oversight and monitoring of the investigation of whistle-blowing reports made in good faith at its scheduled meetings. Independent, thorough investigation and appropriate follow up actions are taken. The outcome of each investigation is reported to the AC. All employees of the Manager are informed of this policy which is made available on CLI Group’s intranet.
The Manager has implemented a Business Continuity Management (BCM) programme that puts in place the prevention, detection, response and, business recovery and resumption measures to minimise the impact of adverse business interruptions or unforeseen events on the CICT Group’s operations and also has in place a Business Continuity Plan (BCP). Under the BCP, Management has identified the critical business functions, processes and resources, and is able to tap on a pool of CLI Group’s employees who are trained under a Business Psychological Resilience Programme to provide peer support to colleagues following the occurrence of adverse events. As part of the BCP, periodic desktop exercises and drills, simulating different scenarios, are carried out to stress-test the effectiveness of processes, procedures and escalation protocols. This holistic approach under the BCP serves to ensure organisational and staff preparedness and readiness to deal with adverse business disruptions such as acts of terrorism, cyber attacks, data breaches and epidemics. This approach aims to minimise financial loss to CICT, allow the Manager to continue to function as the manager of CICT and mitigate any negative effects that the disruptions could have on the Manager’s reputation, operations and ability to remain in compliance with relevant laws and regulations. The Manager has also acquired insurance policies for the CICT Group on business interruption events.
As a holder of a Capital Markets Services Licence issued by MAS, the Manager abides by the MAS’ guidelines on the prevention of money laundering and countering the financing of terrorism. Under these guidelines, the main obligations of the Manager are:
The Manager has in place a policy on the prevention of money laundering and terrorism financing and remains alert at all times to suspicious transactions. Enhanced due diligence checks are performed on counterparties where there is a suspicion of money laundering or terrorism financing. Suspicious transactions will also be reported to the Suspicious Transaction Reporting Office of the Commercial Affairs Department
Under this policy, all relevant records or documents relating to business relations with the CICT Group’s customers or transactions entered into must be retained for a period of at least five years following the termination of such business relations or the completion of such transactions.
All prospective employees, officers and CMSL Representatives of the Manager are also screened against various money laundering and terrorism financing information sources and lists of designated entities and individuals provided by MAS. Periodic training is provided by the Manager to its Directors, employees and CMSL Representatives to ensure that they are updated and aware of applicable anti-money laundering and countering of terrorism financing regulations, the prevailing techniques and trends in money laundering and terrorism financing and the measures adopted by the Manager to combat money laundering and terrorism financing.
CEO’s Remuneration Table for FY 2022