Corporate Governance | Print this page |
The management of Hektar REIT is governed by a Trust Deed executed on 5 October 2006 between the Manager and the Trustee (“The Deed”). The Deed, inter alia, details out the roles, duties, obligations and power of the Manager and the Trustee. Essentially, the Trustee and the Manager play countervailing roles against each other to ensure that the REIT is managed with efficiency and integrity.
The Board of the Manager views corporate governance in four key concepts:
- good performance
- accountability
- transparency
- integrity
The Board has the responsibility to ensure that the abovementioned concepts were rigorously observed throughout the year ended 31 December 2009. To this end, the Manager applied the principles and best practices as set out in Parts 1 and 2 respectively of the Malaysian Code of Corporate Governance (“the Code”) and Bursa Malaysia’s Listing Requirements (“LR”).
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The board of directors
The Board of the Manager is responsible for the overall corporate governance of Hektar REIT, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. The role and function of the Board, as well as the differing roles of the Executive Directors and Non-Executive Directors, are clearly documented in the Operations Manual.
back to top Executive committee
An Executive Committee is delegated by the Board to, among other things:
- make decisions in relation to investments to be made or expenditure to be incurred by Hektar REIT;
- make decision in relation to operations and management of Hektar REIT; and
- carry out and undertake such other functions as may be determined by the Board by unanimous resolution and to act in accordance with the instructions of the Board
The committee comprises three directors, namely, Dato’ Jaafar bin Abdul Hamid as Chairman, Zalila binti Mohd Toon and Christopher Tang.
back to top Audit committee
An Audit Committee, comprising the Independent Directors Dato’ Syed Amin Aljeffri as Chairman, Dato’ Robert Lim Git Hooi and Philip Eng Heng Nee is delegated by the Board to undertake, among other things, the following duties and responsibilities:
- Review and deliberate on Hektar REIT’s Financial Performance
- Review and deliberate on the Quarterly Report to Bursa Malaysia
- Receive and deliberate on report issued by the external and internal auditor
Board meetings
The Board ordinarily meets at least once every financial quarter with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. For the year ended 31 December 2009, the Board met on 4 occasions, where it deliberated upon and considered a variety of matters including Hektar REIT’s financial results and strategic and major investment decisions.
The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. The Board papers are comprehensive and encompass both qualitative and quantitative factors so that informed decisions can be made. All proceedings from the Board meetings are minuted.
back to top Board balance
As at the date of this statement, the Board consists of eight (8) members, comprising one (1) Executive Chairman, one (1) Executive Director, three (3) Non-Executive Directors and three (3) Independent Non-Executive Directors. As more than 37% of Directors are considered independent, this complies and exceeds the directors’ independence requirements set out under paragraph 15.02 of Bursa Malaysia’s LR which requires that at least one-third of the Board to be independent Directors. A brief profile of each Director is presented in the Board of Directors section of this annual report.
The concept of independence adopted by the Board is in tandem with the definition of an independent Director in Section 1.01 of Bursa Malaysia’s LR.
The Directors, with their varied backgrounds and areas of expertise, collectively bring with them a wide range of experience and expertise in areas such as strategy, finance, corporate affairs, legal, marketing and operations. The Executive Directors are responsible for implementing policies and decisions of the Board, overseeing operations as well as coordinating the development and implementation of business and corporate strategies. The Independent Directors bring objective and independent judgment to the decision making of the Board and provide a review and challenge on the performance of management. As such, there is proper balance in the Board because of the presence of Independent Directors of the caliber necessary to carry sufficient weight in Board decisions.
The Board is satisfied that the current Board composition fairly reflects the interest of Hektar REIT’s minority unitholders.
back to top Directors training
In May 2009, Mr. Lim Ee Seng, Mr. Christopher Tang, and Mr. Lam Juck Ngai attended the Mandatory Accreditation Programme of Directors for Public Listed Companies (“MAP”) organised by Bursatra, Bursa Malaysia’s training arm. With this, all the Directors of Hektar Asset Management Sdn Bhd have attended the MAP.
back to top Supply of information
The Board recognizes that the decision making process is highly dependent on the quality of information furnished. As such, all Directors have full and unrestricted access to any information pertaining to Hektar REIT.
The Chairman plays a key role in ensuring that all Directors have full and timely access to information relevant to matters that will be deliberated at the Board meeting. The agenda and set of Board papers are circulated in advance of the Board meetings. A comprehensive balance of financial and non-financial information is encapsulated in the papers covering strategic, operational, financial, regulatory and marketing issues.
All Directors have access to the advice and services of the Company Secretary, who ensures that the Board receives appropriate and timely information for its decision-making, that Board procedures are followed and the statutory and regulatory requirements are met. The Secretary also assists the Chairman in ensuring that all Directors are properly briefed on issues arising at Board meetings. The Board believes that the current Company Secretary is capable of carrying out the appropriate duties to ensure the effective functioning of the Board while the terms of appointment permit the removal and appointment by the Board as a whole.
back to top Unitholders
The Manager recognizes the importance of being accountable to investors of Hektar REIT and as such maintained an active and constructive communication policy that enables the Board and Management to communicate effectively with Hektar REIT’s investors, stakeholders and public generally. This is achieved principally through quarterly reports, interim reports and annual reports.
The Manager also holds periodic briefings for fund managers, analysts and institutional investors. Press conferences are held when required, to brief members of the media on Hektar REIT’s strategic direction, performance and key events.
While the Manager endeavours to provide as much information possible to Hektar REIT’s unitholders, it is mindful of the legal and regulatory frameworks governing the release of material and price-sensitive information.
back to top Financial reporting
It is the Board’s commitment to provide a balanced and meaningful assessment of Hektar REIT’s financial performance and prospects at the end of the financial year, primarily through annual financial statements, quarterly and half yearly announcements of results to unitholders.
back to top Directors’ responsibility statement in respect of the preparation of the audited financial statements
The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of Hektar REIT as at the end of the accounting period and of their profit & loss and cash flows for the period ended. In preparing the financial statements, the Directors endeavour to ensure that applicable approved accounting standards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 are applied.
In preparing the financial statements, the Directors endeavour to select and apply consistently suitable accounting policies and make reasonable and prudent judgments and estimates. The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of Hektar REIT and to prevent and detect fraud and other irregularities.
back to top Statement on Internal Control
The Board acknowledges its responsibilities for maintaining sound internal control systems to safeguard unitholders’ interest and Hektar REIT’s assets and for reviewing the adequacy and integrity of these systems. Due to the limitations that are inherent in any system of internal control, the system currently employed is designed to manage, rather than eliminate, the risk of failure to achieve corporate objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatement or loss.
The Board has put in place an organizational structure with formally defined lines of responsibility and delegation of authority. A process of hierarchical reporting has been established which provide for a documented and auditable trail of accountability. The procedures include the establishment of limits of authority coupled with the publication of an Employees Handbook. There are also established procedures for planning, capital expenditure and for monitoring Hektar REIT’s business and performance.
These procedures provide for continuous assurance to be given at increasingly higher levels of management, and finally, the Board.
The Chairman/Chief Executive Officer reports to the Board on significant changes in the business and external environment. The Chief Financial Officer provides the Board with quarterly financial information, which includes key financial indicators. This includes, among others, the monitoring of results against budget, with variances being followed up and management action taken, where necessary.
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