Board Matters

Principle 1: The Boards' Conduct of Affairs

Boards' Duties and Responsibilities

The Boards oversee the strategic direction, performance and affairs of the Managers, in furtherance of the Managers' primary responsibility to foster the success of CLAS so as to deliver sustainable value over the long term to Stapled Securityholders. The Boards provide overall guidance to the management team (Management), led by the Chief Executive Officer (CEO). The Boards work with Management to achieve CLAS' objectives and long-term success and Management is accountable to the Boards for its performance. Management is responsible for the execution of the strategy for CLAS and the day-to-day operations of CLAS' business.

The Boards establish goals for Management and monitor the achievement of these goals. The Boards ensure 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. The Boards also set the disclosure and transparency standards for CLAS and ensure that obligations to Stapled Securityholders and other stakeholders are understood and met.

The Boards have 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 Boards have reserved authority to approve certain matters including:

1. material acquisitions, investments and divestments;
   
   
2. issue of new stapled securities in CLAS (Stapled Securities);
   
   
3. income distributions and other returns to Stapled Securityholders; and
   
   
4. matters which involve a conflict of interest for a controlling Stapled Securityholder or a Director.
   
   

Apart from matters that specifically require the Boards' approval, the Boards delegate authority for transactions below the Boards' approval limits to Board committees (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 CLAS. Consistent with this principle, the Boards are committed to ethics and integrity of action and have 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 Boards in ensuring proper accountability within the Managers. In line with this, the Boards have 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 CLAS 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 Boards, recuse himself or herself from deliberations on the matter and abstain from voting on the matter. 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 CLAS and the environment in which CLAS 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 Boards, except if unusual circumstances make attendance impractical.

Sustainability

The Managers place sustainability at the core of everything we do. We are committed to growing our business in a responsible manner, delivering long-term economic value, and contributing to the environmental and social well-being of the communities in which we have a presence. In keeping with this commitment, sustainability-related considerations are key aspects of the Boards' strategic formulation.

At the board level, in recognition of the importance of sustainability as a business imperative and consistent with the principle that the Boards play an important role in considering and incorporating sustainability considerations as part of its strategy development, an important consideration is ensuring that Environmental, Social and Governance (ESG) risks and opportunities are holistically integrated into and form the Managers' long-term strategy. This also sets the tone at the top to ensure the alignment of the Managers' activities with its purpose and stakeholder interests.

The Boards and the Managers are committed to ensuring environmental and workplace health and safety for their stakeholders, including employees and customers. CapitaLand's Environmental, Health and Safety Management System is audited by a third-party accredited certification body to ISO 14001 and ISO 45001 standards, internationally recognised standards for the environmental management of businesses and occupational health and safety management of businesses respectively. CLAS' health and safety practices are also aligned with the Code of Practice on Chief Executives' and Board of Directors' Workplace Safety and Health Duties which was gazetted in October 2022. CapitaLand's Environmental, Health and Safety policy is readily available to employees on CLI Group's intranet and to all suppliers, service providers and partners.

All the members of the Boards attended or will attend the sustainability training as prescribed by the SGX-ST. New Directors who are appointed to the Boards from time to time who have not undergone training on sustainability matters as prescribed by the SGX-ST will either have expertise in sustainability matters or will undergo further training required under Rule 720(7) of the Listing Manual. Arrangements have been made for Mr Max Loh Khum Whai and Mr Lui Chong Chee, who were appointed as Directors in November 2023 and February 2024 respectively, to attend such mandatory sustainability training in FY 2024.

More details of CLAS' sustainability approach, environmental policies, anti-corruption efforts, training and development can be found on pages 79 to 86 of this Annual Report and in CLAS' Sustainability Report 2023 which will be published in May 2024.

Directors' Development

In view of the increasingly demanding, complex and multi-dimensional role of a director, the Boards recognise the importance of continual training and development for their Directors so as to equip them to discharge the duties and responsibilities of their office as directors to the best of their abilities. This is even if the Directors are generally experienced professionals in their own right, and takes into account the specific role a Director plays and the specific skills a Director should possess in relation to that role he or she has to perform. The Boards ensure that the Managers have in place a training and professional development framework to guide and support the Managers towards meeting the objective of having Boards which comprise individuals who are competent and possess up-to-date knowledge and skills necessary to discharge their duties and responsibilities. The costs of training are borne by the Managers. The induction, training and development provided to new and existing Directors are set out below.

Each newly-appointed Director is provided with a formal letter of appointment setting out the key terms of appointment, the time commitment expected and other relevant matters pertaining to the appointment. He or she also has access to the Director's Manual which includes information on a broad range of matters relating to the role, duties and responsibilities of a Director and CLAS' policies relating to disclosure of interests in securities, conflicts of interests and securities trading restrictions. All Directors upon appointment also undergo an induction or orientation programme which focuses on orientating the Director to CLAS' 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 Managers (key management personnel), and financial and governance practices. Conducted by the CEO and key management personnel, the induction programme may include visits to CLAS' properties. Through the induction programme, the new Directors also get acquainted with members of Management which facilitates their interaction at Board meetings. Where a newly appointed Director has no prior experience as a director of an issuer listed on SGX-ST, such Director will undergo training on the roles and responsibilities of a director of a listed issuer, as prescribed by SGX-ST. Mr Max Loh Khum Whai, being a first-time director, will undergo training in the roles and responsibilities of a director of a listed issuer, as prescribed by the SGX-ST, the details of which are set out above in the Board Changes section on page 95 of this Report.

Following appointment, the Directors are provided with opportunities for continuing education in areas such as director's duties and responsibilities, changes to regulations, risk management and accounting standards, and industry-related matters, so as to be updated on matters that affect or may enhance their performance as Directors or Board Committee members. Directors can also request for further information on any aspect of CLAS' business from Management. Directors may also contribute by recommending to the Boards specific training and development programmes which he or she believes would benefit Directors or the Boards as a whole. The Directors are regularly kept informed by the Company Secretary of the availability of appropriate courses, conferences and seminars including those conducted by the Singapore Institute of Directors, and the Directors are encouraged to attend such training at the Managers' expense. Bespoke arrangements as required and catered to address the needs of particular members of the Boards may also be organised from time to time. These would also facilitate Board-Management interaction and feedback.

During the year, the training programmes attended by the Directors included the Sustainability Training for Directors of REIT manager organised by REITAS, as well as various seminars organised by business partners in relation to board matters, audit and risk committee matters including Business Interruption Risk, Cybersecurity, Environmental Health and Safety and Global Sanctions Compliance Policy.

Board Committees

The Boards have established various Board Committees to assist them in the discharge of their functions. These Board Committees are the Audit Committee (AC), the Executive Committee (EC) and the Nominating and Remuneration Committee (NRC).

Each Board Committee is formed with clear written terms of reference (setting out their composition, authorities and duties, including reporting back to the Boards) and operates under delegated authority from the Boards with the Boards retaining overall oversight. The chairpersons of these Board Committees report on the decisions and significant matters discussed at the respective Board Committees meetings to the Boards on a periodic basis. The minutes of the Board Committee meetings which record the deliberations and decisions taken during these meetings are also circulated to all members of the Boards for their information. The composition of the various Board Committees is set out on page 134 of this Annual Report and the inside back cover of this Annual Report. The duties and responsibilities of the Board Committees are set out in this Report.

The Boards may form other Board Committees from time to time. The composition of each Board Committee is also reviewed by the Boards, through the NRC, and as and when there are changes to membership of the Boards. Considerations include leveraging on the respective Directors' leadership and governance backgrounds and expertise to optimise the overall effectiveness of the Board Committees, ensuring continuity of experience in the respective Board Committees and an equitable and balanced distribution of duties among members of the Boards whilst providing members of the Boards the opportunity to focus on specific areas and develop expertise over time to benefit CLAS.

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 Constitutions of the Managers permit 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 Boards and Board Committees may also make decisions by way of written resolutions.

The IDs, led by the independent Chairman or other IDs as appropriate, also meet regularly at least once a year without the presence of Management. The chairman of such meetings will provide feedback to all members of the Boards and/or Management as appropriate. In FY 2023, the IDs met four times without the presence of Management.

At each scheduled Board meeting, the Boards are apprised of the following:

1. significant matters discussed at the AC meeting which is typically scheduled before the Board meeting;
   
   
2. ARC's recommendation on CLAS' periodic and year-end financial results following ARC's review of the same;
   
   
3. decisions made by Board Committees in the period under review;
   
   
4. updates on CLAS' business and operations in the period under review, including market developments and trends, as well as business initiatives and opportunities;
   
   
5. financial performance, budgetary and capital management related matters in the period under review, including any material variance between any projections in budget or business plans and the actual results from business activities and operations;
   
   
6. any risk management issues that materially impact CLAS' operations or financial performance;
   
   
7. updates on key Stapled Securityholder engagements in the period under review, as well as analyst views and market feedback;
   
   
8. prospective transactions which Management is exploring; and
   
   
9. updates on CLAS' sustainability efforts and performance, including but not limited to environmental and climate change related initiatives, as well as workplace health and safety.
   
   

All of the above allow the Boards to develop a good understanding of the progress of CLAS' business as well as the issues and challenges faced by CLAS, and also promote active engagement with Management.

The Managers adopt and practise 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 Boards benefit from a culture of frank and rigorous discussions. Such discussions conducted on a professional basis contribute to the dynamism and effectiveness of the Boards. The Boards' composition is such that there is diversity in views and perspectives which enriches deliberations and contributes to better decision-making of the Boards in the best interests of CLAS. 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 working 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 Managers' ongoing commitment to minimise paper wastage and reduce their carbon footprint, the Managers do 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 seven Board meetings, five ARC meetings and two NRC meetings were held in FY 2023. 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 2023 is set out on page 134 of this Annual Report. The CEO who is also a Director attends all Board meetings. She also attends all ARC and NRC meetings on an ex officio basis. Other members of Management attend Board and Board Committee meetings as required to brief the Boards 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 Boards 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 Managers (Company Secretary). The Company Secretary keeps herself abreast of relevant developments. She has oversight of corporate secretarial administration matters and advises the Boards 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 undertakes the administration work relating to professional development for the Directors. The Company Secretary is legally trained and the appointment and removal of the Company Secretary is subject to the Boards' approval.

The Directors, whether individually or collectively as the Boards, are entitled to have access to independent external professional advice where necessary, at the Managers' expense.

Principle 2: Board Composition and Guidance

Board Independence

The Boards have a strong independent element given that six out of nine directors, including the Chairman, are non-executive IDs¹. Other than the CEO who is the only executive Director on the Boards, non-executive Directors make up the rest of the Boards. None of the Directors have served on the Boards 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 13 to 17 of this Annual Report. Key information on the Directors is also available on CLAS' website at https://www.capitalandascotttrust.com (Website). The statement on the Composition of the Board of Directors of the Trustee-Manager pursuant to Regulation 12(8) of the BTR can be found on pages 141 to 142 of this Annual Report.

The Boards, through the NRC, review from time to time the size and composition of the Boards and each Board Committee, with a view to ensuring that the size is appropriate in facilitating effective 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 CLAS' operations, the evolving external environment and the competition that the Stapled Group faces.

Note:
1. For FY 2023 and as at the date of this Report.

The Boards, with the recommendation of the NRC, assess and determine 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), the BTR 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:

1. has no relationship with the Managers, their related corporations, their substantial shareholders, CLAS' substantial Stapled Securityholders (being Stapled Securityholders who have interests in voting Stapled Securities with 5% or more of the total votes attached to all voting Stapled Securities) or the Managers' officers that could interfere, or be reasonably perceived to interfere with the exercise of his or her independent business judgement in the best interests of CLAS;
   
   
2. is independent from the management of the Managers and CLAS, from any business relationship with the Managers and CLAS, and from every substantial shareholder of the Managers and every substantial Stapled Securityholder of CLAS;
   
   
3. is not a substantial shareholder of the Managers or a substantial Stapled Securityholder of CLAS;
   
   
4. is not employed and has not been employed by the Managers or CLAS or their related corporations in the current or any of the past three financial years;
   
   
5. does not have an immediate family member who is employed or has been employed by the Managers or CLAS or their related corporations in the current or any of the past three financial years and whose remuneration is or was determined by the Boards; and
   
   
6. has not served on the Boards for a continuous period of nine years or longer.
   
   

There is a rigorous process to evaluate the independence of each ID. As part of the process:

1. each ID provides information of his or her business interests and confirms, annually, that there are no relationships which interfere with the exercise of his or her independent business judgement with a view to the best interests of the Stapled Securityholders as a whole, and such information is then reviewed by the Boards; and
   
   
2. the Boards also reflect on the respective IDs' conduct and contributions at Board and Board Committee meetings, in particular, whether the relevant ID has exercised independent judgement in discharging his or her duties and responsibilities.
   
   

Each ID is required to recuse himself or herself from the Boards' 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 Boards for its consideration and determination. In this regard, an ID is required to report to the Managers when there is any change of circumstances which may affect his or her independence. Thereafter, the NRC's recommendation is presented to the Boards for approval.

TThe Boards have carried out the assessment of the independence of the IDs for FY 2023 and the paragraphs below set out the outcome of the assessment. Each of the IDs had recused himself or herself from the deliberations of the Boards and NRC on his or her independence.

Mr Tan Beng Hai, Bob

Mr Tan is a non-executive director (NED) of Singapore Post Limited (SingPost), an associated company of Temasek Holdings (Private) Limited (Temasek), which provides postal services to CLI and its subsidiaries (CLI Group). In addition, SingPost engages CLI Group to manage SingPost Centre. The decision to procure or provide the services was made by the management of CLI in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates. He was also a NED of Sembcorp Marine Ltd (Sembcorp) before he stepped down on 28 February 2023. Sembcorp was a subsidiary of Temasek until 28 February 2023. Temasek is deemed to be a substantial Stapled Securityholder and a substantial shareholder of the Managers. Mr Tan is therefore considered as connected to Temasek. Mr Tan's role in these corporations is non-executive in nature and he is not involved in the day-to-day conduct of the business of these corporations.

Mr Tan has confirmed that he serves on the Managers' board in his personal capacity and not as a representative of Temasek and he is not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in relation to the affairs of the Managers and CLAS.

The Boards also considered the conduct of Mr Tan in the discharge of his duties and responsibilities as a Director, and are of the view that the relationships set out above did not impair his ability to act with independent 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, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Tan has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Tan is an ID.

Mr Sim Juat Quee Michael Gabriel

Mr Sim serves as a board member of Jurong Town Corporation (JTC), a statutory board under the Ministry of Trade and Industry. CLI Group had made payments to JTC for JTC leases and the subletting thereof. Mr Sim has confirmed that he has no involvement in the process or approval of the lease arrangements between CLI Group and JTC. The leases signed are conducted in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates. Mr Sim's role in JTC is non-executive in nature and he is not involved in the day-to-day business operations of JTC.

The Boards also considered the conduct of Mr Sim in the discharge of his duties and responsibilities as a Director, and are of the view that the relationships set out above did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Sim does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Sim has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Sim is an ID.

Mr Chia Kim Huat

Mr Chia is the Regional Head, Corporate and Transactional Group of Rajah & Tann Singapore LLP (Rajah & Tann), which provides legal services to some of the subsidiaries of CLI Group. Mr Chia is considered as having a business relationship with the related corporations of the Managers. The engagement of Rajah & Tann to provide legal services to CLI Group was made by the management teams within the CLI Group and Mr Chia is not involved in the process or approval of such engagement. These services were provided in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates.

Mr Chia is also a director of SATS Ltd (SATS), an associated company of Temasek. Temasek is deemed to be a substantial Stapled Securityholder and a substantial shareholder of the Managers. Mr Chia's role in SATS is non-executive in nature and he is not involved in the day-to-day conduct of the business of SATS. Mr Chia has confirmed that he serves on the Managers' Board in his personal capacity and not as a representative of Temasek and he is not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in the affairs of the Managers and CLAS.

The Boards also considered the conduct of Mr Chia in the discharge of his duties and responsibilities as a Director, and are of the view that the relationships set out above did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Chia does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Chia has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Chia is an ID.

Ms Deborah Lee Siew Yin

Ms Lee is not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual and does not have any other relationships which may affect her independent judgement.

The Boards also considered the conduct of Ms Lee in the discharge of her duties and responsibilities as a Director. The Boards are of the view that Ms Lee has exercised independent judgement in the discharge of her duties and responsibilities. Based on the above, the Boards arrived at the determination that Ms Lee is an ID.

Mr Ong Su Kiat Melvyn

Mr Ong stepped down from the Boards with effect from 1 January 2024. He is a Board member of JTC, a statutory board under the Ministry of Trade and Industry. CLI Group had made payments to JTC for JTC leases and the subletting thereof. Mr Ong has confirmed that he had no involvement in the process or approval of the lease arrangements between CLI Group and JTC and that the leases signed were conducted in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates. His role in JTC is non-executive in nature and he is not involved in the day-to-day business operations of JTC.

Mr Ong is also a NED of Singapore Technologies Engineering Ltd (STE), a subsidiary of Temasek. Temasek is deemed to be a substantial Stapled Securityholder and a substantial shareholder of the Managers. Mr Ong's role in STE is non-executive in nature and he is not involved in the day-to-day conduct of the business of STE. He was also not under any obligation, whether formal or informal, to act in accordance with the directions of Temasek in the affairs of the Managers and CLAS.

The Boards also considered the conduct of Mr Ong in the discharge of his duties and responsibilities as a Director, and are of the view that the relationships set out above did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Ong did not have any other relationships and was not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Ong has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Ong was an ID.

Mr Max Loh Khum Whai

Mr Loh was a managing partner of Ernst & Young LLP, Singapore (EY LLP) and a director of EY Corporate Advisors Pte. Ltd. (EY CAPL) and a few other companies affiliated with EY LLP. CLAS and its subsidiaries (CLAS Group), and CLI Group have business relationships with EY CAPL for tax consultancy and compliance services provided by EY CAPL. In addition, several member firms of Ernst & Young Global Limited established outside Singapore (EY Overseas Firms) have provided tax consultancy and compliance services to CLAS Group and CLI Group. EY LLP and related entities have made short term apartment bookings at the properties of CLAS and/or CLI Group for their employees' accommodation requirements. Mr Loh has confirmed that he had no involvement in the process or approval of such engagements and that such transactions were conducted in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates.

Mr Loh is a NED of SPH Media Holdings Pte. Ltd. (SPH Media). CLI Group has business relationships with SPH Media for the subscription of newspapers, placement of advertisements in the newspapers and provision of sponsorships for a yearly campaign organised by SPH Media. SPH Media has also made short-term apartment bookings at the properties of CLAS and/or CLI Group for their employees' accommodation requirements. Mr Loh's role in SPH Media is non-executive in nature and he is not involved in the day-to-day conduct of the business of these corporations. Mr Loh has confirmed that he had no involvement in the process or approval of such engagements and that such transactions were conducted in the ordinary course of business, on arm's length basis and based on normal commercial terms and/or market rates.

The Boards also considered the conduct of Mr Loh in the discharge of his duties and responsibilities as a Director, and are of the view that the relationships set out above did not impair his ability to act with independent judgement in the discharge of his duties and responsibilities as a Director. Save for the relationships stated above, Mr Loh does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Loh has exercised independent judgement in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Loh is an ID.

Mr Lui Chong Chee

Mr Lui was appointed to the Boards on 1 February 2024. He was a non-executive independent chairman of the board of CapitaLand Malaysia REIT Management Sdn. Bhd. (CMRM), the manager of CapitaLand Malaysia Trust, before he stepped down on 1 February 2024. CMRM is a wholly owned subsidiary of CLI, which is a substantial Stapled Securityholder of CLAS. Thus, CMRM is a related corporation of the Managers. CLI Group has business relationships with CMRM for various matters.

Mr Lui’s role in CMRM was non-executive in nature and he has confirmed that he was not involved in the day-to-day conduct of CMRM’s business including the business relationship with CLI Group.

As a NED of CMRM, Mr Lui was paid/will be paid director’s fees for his services as chairman of the board of CMRM (as well as member of the NRC). The framework for remuneration of directors is reviewed and determined by CMRM, taking into account compensation benchmarks within the industry and professional advice from independent remuneration consultants.

Mr Lui was deemed a person connected to CLI by virtue of his directorship in CMRM. This deemed relationship ceased when he stepped down as a director of CMRM on 1 February 2024. Mr Lui has confirmed that he is not under any obligation, whether formal or informal, to act in accordance with the direction of CLI in the affairs of the Managers and CLAS.

Save for the relationship stated above which ceased with effect from 1 February 2024, Mr Lui does not have any other relationships and is not faced with any of the circumstances identified in the Code, SFR, BTR and Listing Manual, or any other relationships which may affect his independent judgement. The Boards are therefore of the view that Mr Lui is able to exercise independent judgement and act in the best interests of all Stapled Securityholders, in the discharge of his duties and responsibilities. Based on the above, the Boards arrived at the determination that Mr Lui is an ID.

The Boards are of the view that as at the last day of FY 2023, each of Mr Tan, Mr Sim, Mr Chia, Ms Lee, Mr Loh and Mr Ong was able to act in the best interests of all Stapled Securityholders in respect of the period in which they served as Directors in FY 2023.

In addition, under Regulation 13H(1) of the SFR, where a substantial shareholder of a manager of a real estate investment trust (REIT) is a corporation, a person would be considered to be connected to that substantial shareholder if he is, inter alia, a director of the substantial shareholder or a director of a related corporation or an associated company of the substantial shareholder. Such person will prima facie not be deemed to be independent unless the directors nevertheless regard him to be independent.

The Trustee-Manager is a related corporation of the REIT Manager as both the Trustee-Manager and the REIT Manager are directly held by CLI Group and as CapitaLand Ascott BT and CapitaLand Ascott REIT are stapled, the directors of the Managers are identical to avoid any differences or deadlock in the operation of the Stapled Group. As a result, all independent directors of the REIT Manager, namely Mr Tan Beng Hai, Bob, Mr Sim Juat Quee Michael Gabriel, Mr Chia Kim Huat, Ms Deborah Lee Siew Yin, Mr Ong Su Kiat Melvyn, Mr Max Loh Khum Wai and Mr Lui Chong Chee will prima facie be deemed to be connected to a substantial shareholder of the REIT Manager and hence not independent pursuant to Regulation 13H of the SFR.

Against the foregoing, the board of directors of the REIT Manager (REIT Manager Board) has reviewed and assessed the independence of each of the IDs of the REIT Manager in relation to Regulation 13H of the SFR and has pursuant to Regulation 13D(8) of the SFR, resolved that notwithstanding that each of the IDs is a director of both the REIT Manager and the Trustee-Manager, the REIT Manager Board is satisfied that the IDs’ independent judgement and ability to act with regard to the interests of all the Stapled Securityholders of CLAS as a whole will not be impaired, on the basis that:

1. for so long as CapitaLand Ascott BT is stapled to CapitaLand Ascott REIT, there will be no real prejudice to the interests of the holders of CapitaLand Ascott REIT Units for the Trustee-Manager and the REIT Manager to have the same board of directors as CapitaLand Ascott REIT Units and the CapitaLand Ascott BT Units will be stapled together and held by the same investors. The stapling together of CapitaLand Ascott REIT Units and CapitaLand Ascott BT Units means that the holders of CapitaLand Ascott REIT Units are at the same time the investors of the Stapled Securities, who stand to benefit as a whole; and
   
   
2. since the CapitaLand Ascott BT Units and CapitaLand Ascott REIT Units are held by the same pool of investors in the same proportion, concerns and potential abuses applicable to interested party transactions will be absent in transactions between CapitaLand Ascott REIT and CapitaLand Ascott BT.
   
   

The remaining non-executive Directors, namely, Mr Goh Soon Keat Kevin and Ms Beh Siew Kim are employees of CLI Group and are not considered to be independent.

Board Diversity

The Boards embrace diversity and have formally adopted a Board Diversity Policy. The Board Diversity Policy provides for the Boards 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 Boards believe in diversity and value the benefits that diversity can bring to the Boards in their deliberations by avoiding groupthink and fostering constructive debate. Diversity enhances the Boards' decision-making capability and ensures that the Managers have the opportunity to benefit from all available talent and perspectives, which is essential to effective business governance and for ensuring long-term sustainable growth.

The diversity targets, plans and timelines for achieving the targets and progress towards achieving the targets are described below.

The NRC, in carrying out its duties of determining the optimal composition of the Boards in their 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 Boards, the NRC considers, among others, achieving an appropriate level of diversity in the Boards' composition having regard to diversity factors such as age, educational, business and professional backgrounds of their members.

Gender diversity is also considered an important aspect of diversity. The current Boards have three female members, one of whom is also the CEO, and the current female representation on the Boards is 33.3%. It is noted that the Council for Board Diversity has a target of women making up 25% of the boards of SGX-ST listed companies by 2025.

The NRC has reviewed the size and composition of the Boards and is of the opinion that the Boards' 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 CLAS' business needs and plans, for effective decision-making and constructive debate. In line with the Board Diversity Policy, the current Boards comprise 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, legal and compliance, technology and leadership and governance, and sustainability. The Boards also have a few members with prior working experience in the industry in which CLAS operates. The members of the Boards bring with them the combination of skills, talents, experience and diversity required to serve the needs of CLAS.

For further information on the Boards' work in this regard, please refer to “Board Membership” under Principle 4 in this Report.

Principle 3: Chairman and Chief Executive Officer

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 Boards and Management and that no one individual has unfettered powers of decision-making. The non-executive independent Chairman is Mr Tan Beng Hai, Bob, whereas the CEO is Ms Teo Joo Ling, Serena. 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 Boards and facilitates the conditions for the overall effectiveness of the Boards, Board Committees and individual Directors. This includes setting the agenda of Board meetings, ensuring that there is sufficient information and time at meetings to address all agenda items, and promoting open and constructive engagement among the Directors as well as between the Boards and the CEO on strategic issues.

The Chairman devotes considerable time to understanding the business of CLAS, as well as the issues and the competition that CLAS faces. He plays a significant leadership role by providing clear oversight, direction, advice and guidance to the CEO. He 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 he plays a crucial role in fostering constructive dialogue between the Stapled Securityholders, the Boards and Management.

The CEO has full executive responsibilities to manage the Stapled Group's business and to develop and implement policies approved by the Boards.

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 Boards and Management, facilitate robust deliberations on CLAS' 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 Boards 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 Boards have 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.

Principle 4: Board Membership

The Boards have a formal and transparent process for the appointment and re-appointment of Directors, taking into account the need for progressive renewal of the Boards. The Boards have established the NRC, which makes recommendations to the Boards on all appointments to the Boards and Board Committees. All Board appointments are made based on merit and approved by the Boards.

The NRC comprises three NEDs, two of whom (including the chairman of the NRC) are IDs. As at the date of this Report, the three members on the NRC are Mr Tan Beng Hai, Bob (NRC Chairman), Ms Deborah Lee Siew Yin1 and Mr Goh Soon Keat Kevin.

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 nomination and appointment of directors includes:

1. reviewing and making recommendations to the Boards on the structure, size and composition of the Boards and the Board Committees, formulating, reviewing and making recommendations to the Boards on succession plans for Directors, in particular, the appointment and/or replacement of the Chairman and the CEO;
   
   
2. reviewing and making recommendations to the Boards on the process and criteria for the evaluation of the performance of the Boards, Board Committees and individual Directors and the results of such evaluation annually;
   
   
3. considering annually and, as and when circumstances require, if a Director is independent; and
   
   
4. considering and making recommendations to the Boards on the appointment and re-appointment of Directors (including alternate directors, if any)².
   
   

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.

Note:
1. Mr Ong Su Kiat Melvyn relinquished his role, and Ms Deborah Lee Siew Yin was appointed as NRC member with effect from 1 January 2024.
2. For the avoidance of doubt, there are no alternate directors appointed for FY 2023.

In addition to the above, the NRC and/or the Boards as a whole are 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 deviation from Provision 4.1(a) of the Code which requires the NRC to make recommendations to the Boards on relevant matters relating to the review of succession plans, in particular the appointment and/or replacement of the key management personnel, the Boards are of the view that such matters could be considered either by the NRC or by the Boards 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 Boards and the Directors, the Boards are of the view that this should be a matter involving the views and feedback of all members of the Boards. Hence, any Director may contribute by recommending to the Boards specific training and development programmes which he or she believes would benefit Directors or the Boards as a whole. The review of training and professional development programmes for the Boards and their Directors is done by the Boards 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 Boards on such matters. For further information on the training and professional development programmes for the Boards and their Directors, please refer to “Directors' Development” under Principle 1 in this Report.

The NRC's duties and responsibilities in relation to remuneration matters are set out on page 112 of this Annual Report.

Board Composition and Renewal

The Boards, through the NRC, strive to ensure that there is an optimal blend in the Boards of backgrounds, experience and knowledge in business and general management, expertise relevant to the Stapled Group's business and track record, and that each Director can bring to the Boards an independent and objective perspective to enable balanced and well-considered decisions to be made in the interests of the Stapled Group. The Boards comprise members who have experience in the sector that CLAS operates in. 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 Boards appointment recommendations to the Boards, the NRC considers different time horizons for purposes of succession planning. The NRC evaluates the Boards' competencies on a long-term basis and identifies competencies which may be further strengthened in the long term to achieve CLAS' strategy and objectives. As part of medium-term planning, the NRC seeks to refresh the membership of the Boards 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 CLAS' strategic priorities and the factors affecting the long-term success of CLAS. Board succession planning takes into account the need to maintain flexibility to effectively address succession planning and to ensure that the Managers continue to attract and retain highly qualified individuals to serve on the Boards. The NRC aims to maintain the optimal composition of the Boards by considering the trends affecting CLAS, 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 Boards have capabilities and experience which are aligned with CLAS' strategy and environment, and includes the following considerations: (a) the current size of the Boards 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 Boards 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 Boards, which would provide an appropriate balance and contribute to the collective skill of the Boards.

The Boards support the principle that board renewal is a necessary and continual process, for good governance and ensuring that the Boards have the skills, expertise and experience which are relevant to the evolving needs of CLAS' business.

Board succession planning is carried out through the annual review by the NRC of the Boards' 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 Boards. The Boards seek to refresh their membership progressively and in an orderly manner, whilst ensuring continuity and sustainability of corporate performance. The Boards also have 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 Boards.

The NRC identifies suitable candidates for appointment to the Boards. Searches for possible candidates are conducted through contacts and recommendations. In this regard, the Managers may rely on external consultants from time to time to assist the NRC in identifying candidates. Candidates are identified based on the needs of CLAS 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 CLAS. In addition, the NRC assesses the candidates' ability to commit time to the affairs of CLAS, taking into consideration their other current appointments. The NRC uses a skills matrix to determine the skills gaps of the Boards and if the expertise and experience of a candidate would complement those of the existing members of the Boards.

The NRC also determines 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 Managers, their related corporations, their substantial shareholders or their officers, if any, which may affect their independence, to the Boards. For further information on the Boards' determination in this regard, please refer to “Board Independence” under Principle 2 in this Report.

Board Changes

As part of the Boards' renewal process, Mr Ong Su Kiat Melvyn stepped down from the Boards with effect from 1 January 2024 while Mr Max Loh Khum Whai and Mr Lui Chong Chee were appointed as Independent Directors (IDs) on 23 November 2023 and 1 February 2024 respectively.

Directors who are appointed to the Boards from time to time either have prior experience as a director of an issuer listed on the SGX-ST or will undergo further training required under Rule 210(5)(a) of the Listing Manual. Mr Max Loh Khum Whai, being a first-time director, is or will be undergoing the requisite training under Rule 210(5)(a) of the Listing Manual before 22 November 2024 (being one year from the date of his appointment to the Boards). As at the date of this Report, Mr Max Loh Khum Whai has attended and completed some but not all of the relevant modules under the Listed Entity Directors (LED) Programme conducted by the Singapore Institute of Directors. Arrangements have been made for Mr Loh to attend the remaining modules under the LED Programme to complete the mandatory training requirements under Practice Note 2.3 of the Listing Manual, with the target date of completion being end March 2024.

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 Managers. In this regard, Directors are required to report to the Boards 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 Boards take 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 Managers. IDs are also required to inform the Chairman before accepting any invitation for appointment as a director of another entity's board or governing body, or offer of a full-time executive appointment or other principal commitment, to enable any concerns relating to potential conflicts of interest or the ability to commit time, to be shared and addressed.

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 Managers, the NRC 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 Managers. For FY 2023, all non-executive Directors 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 Managers. In conducting the assessment, the NRC takes into consideration each Director's confirmation, his or her commitments, attendance record at meetings of the Boards and Board Committees, as well as conduct and contributions (including preparedness and participation) at Board and Board Committee meetings.

The Directors' listed company directorships and principal commitments are disclosed on pages 13 to 17 of this Annual Report and their attendance record for FY 2023 is set out on page 134 of this Annual Report. In particular, the CEO does not serve on any listed company board outside of the Stapled Group. For FY 2023, 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 Boards, taking into consideration the NRC's assessment, have noted that each Director has been adequately carrying out his or her duties and responsibilities as a Director.

Principle 5: Board Performance

The Managers believe that oversight from strong and effective Boards goes a long way towards guiding a business enterprise to achieving success.

Whilst Board performance is ultimately reflected in the long-term performance of CLAS, the Boards believe that engaging in a regular process of self-assessment and evaluation of Board performance provides an opportunity for the Boards to reflect on their effectiveness including the quality of their decisions, and for Directors to consider their performance and contributions. It also enables the Boards to identify key strengths and areas for improvement which are essential to effective stewardship and attaining success for CLAS.

The NRC recommends for the Boards' approval the objective performance criteria, and the Boards undertake, with the assistance of the Company Secretary, a process to evaluate the effectiveness of the Boards 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 by the Company Secretary, who aggregates and reports the evaluation results to the NRC, and thereafter the Boards. Management's feedback is also sought in areas including Board structure, developing strategy, performance and governance, board functions and practices. The findings are considered by the Boards and follow up action is taken where necessary with a view to enhancing the effectiveness of the Boards, Board Committees and individual Directors in the discharge of their duties and responsibilities. As and when required, external facilitators may be appointed to assist in the evaluation process of the Boards, Board committees and the individual Directors. For FY 2023, 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 Boards also consider whether the creation of value for Stapled Securityholders has been taken into account in the decision-making process. For FY 2023, the outcome of the evaluation was satisfactory and the Boards as a whole, and each of the Board Committees, received affirmative ratings across all the evaluation categories.

Individual Directors

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 2023, the outcome of the evaluation was satisfactory and each of the Directors on the whole received affirmative ratings across all the evaluation categories.

The Boards also recognise 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.

Each Director has objectively discharged his or her duties and responsibilities at all times as fiduciaries in the interests of the Managers and CLAS.

Board Evaluation as an Ongoing Process

The Boards believe that performance evaluation should be an ongoing process and the Boards achieve 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 their members, the Boards also benefit from an understanding of shared norms between Directors which also contributes to a positive board culture. The collective Boards performance and the contributions of individual Directors are also reflected in, and evidenced by, the synergistic performance of the Boards in discharging their responsibilities as a whole by providing proper guidance, diligent oversight and able leadership, and lending support to Management in steering CLAS in the appropriate direction, as well as the long-term performance of CLAS whether under favourable or challenging market conditions.