79 / 152
which have an impact on the business
risks and management of liability
of Starhill Global REIT, and acts on
comments and recommendations from
the auditors of Starhill Global REIT.
The Board has considered and
reviewed sustainability issues
in the environment, social and
governance aspects of our business.
More information on the material
sustainability issues of Starhill Global
REIT are set out from pages 60 to 75
of this Annual Report.
In the discharge of its functions,
the Board is supported by an Audit
Committee that provides independent
oversight of Management and which
also serves to ensure that there are
appropriate checks and balances.
The Board has established a system
of internal controls and an enterprise
risk management framework. The
application of the policies and
protocol under the framework is
further described in the section “Risk
Management” on page 58. The
Board has adopted a set of internal
controls with approval limits for
capital expenditure, investments and
divestments, bank borrowings and
cheque signatories, amongst others.
Apart from matters that specifically
require Board approval, such as the
issue of new units, income distributions
and other returns to Unitholders,
the Board approves transactions
exceeding certain threshold limits,
while delegating authority for matters
below those limits to Management to
facilitate operational efficiency.
Changes to regulations, policies and
accounting standards are monitored
closely. Where the changes have
significant impact on Starhill Global
REIT and its obligations of continuing
disclosure, the Directors will be
briefed during Board meetings or by
circulation of Board papers. Further,
Directors have access to programmes,
courses or seminars organised by
the Singapore Institute of Directors
(“SID”). During FY 2016/17, the Manager
arranged for Mr Ching Yew Chye,
who is based in Malaysia, to attend
courses organised by the SID which
covered the statutory and regulatory
compliance obligations of listed
companies and risk management
essentials. The costs of training are
borne by the Manager. The Board
has reviewed the current training and
professional development programmes
in place for the Directors.
Newly appointed directors are briefed
on their roles and responsibilities as
Directors of the Manager, and of
the business activities and strategic
directions of Starhill Global REIT. Upon
appointment, a formal letter setting
out the director’s duties, obligations
and responsibilities, together with the
Trust Deed and latest annual report will
be given to the director. The Manager
has in place an orientation programme
aimed at familiarising new Directors
with the business activities and
strategic directions of Starhill Global
REIT, the corporate governance and risk
management structure and practices,
as well as their disclosure obligations
as Directors. The Manager conducted
an orientation programme for the two
Independent Non-Executive Directors
of the Manager appointed during
FY 2016/17, Mr Lim Kok Hoong and
Mr Ching Yew Chye. An orientation
programme will be conducted for
Mr Tan Woon Hum, who was recently
appointed as an Independent Non-
Executive Director of the Manager on
1 August 2017. Appropriate training will
also be provided to first-time directors.
Board Composition
Principle 2:
There should be a strong and
independent element on the Board,
which is able to exercise objective
judgment on corporate affairs
independently, in particular, from
Management and 10% shareholders.
No individual or small group of
individuals should be allowed to
dominate the Board’s decision-making.
The Board comprises six members,
three of whom are Independent Non-
Executive Directors. As such, there is
a strong and independent element
on the Board. A Director who has no
relationship with the Manager, its
shareholders who hold 10% or more
of the voting shares in the Manager,
Unitholders who hold 10% or more of
the units in issue of Starhill Global REIT,
its related corporation or its officers
that could interfere, or be reasonably
perceived to interfere, with the exercise
of the Director’s independent business
judgment in the best interests of
Starhill Global REIT is considered to
be independent. The assessment of
a Director’s independence also
takes into account the enhanced
independence requirements and the
definition of “independent director”
as set out in the draft amendments
to the Securities and Futures
(Licensing and Conduct of Business)
Regulations (“Draft SF(LCB)R”).
Under the enhanced independence
requirements set out in the Draft
SF(LCB)R, an independent director
is one who: (i) is independent from
any management and business
relationship with the Manager and
Starhill Global REIT, (ii) is independent
from any substantial shareholder of
the Manager and any substantial
unitholder of Starhill Global REIT, and
(iii) has not served on the Board for a
continuous period of 9 years or longer.
Mr Ching Yew Chye has disclosed
that he is the independent non-
executive Chairman of AIA Berhad,
a subsidiary of AIA Group Limited,
a substantial unitholder of Starhill
Global REIT. Despite the foregoing,
the Board has assessed Mr Ching’s
independence and has taken the
view that his independent judgment
and ability to act in the interests
of all unitholders as a whole will
not be impeded, given that Mr
Ching is not an executive but an
independent director of AIA Berhad
and is not appointed on the Board
as a nominee of any AIA entities.
He is also not a director of any
substantial unitholder or controlling
unitholder of Starhill Global REIT,
and the businesses of Starhill Global
REIT and AIA Berhad or AIA Group
Limited are distinctly different and
there are therefore unlikely to be any
competing interests.
In addition, Mr Tan Woon Hum has
disclosed that he is a partner of M/s
Shook Lin & Bok LLP (“SLB”), which
provides services to the Trustee from
time to time. As the amount of legal
fees paid to SLB by Starhill Global
REIT in FY 2016/17 and FY 2015/16
is insubstantial in relation to the
revenue of SLB, and Mr Tan will not be
personally involved in legal services
to be provided by SLB for Starhill
Global REIT, the Board has assessed
Mr Tan’s independence and has
taken the view that his independent
judgment and ability to act in the
interests of all unitholders as a whole
will not be impeded.
CORPORATE
GOVERNANCE
77