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 mid to long term to achieve CLCT’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 peformance. The NRC also considers contingency planning to prepare for sudden and unforeseen changes. In reviewing succession plans, the NRC has in mind CLCT’s strategic priorities and the factors affecting the long-term success of CLCT. The review includes planning ahead to fill one or more vacancies which may arise in the future. 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 CLCT, 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 CLCT’s strategy and environment, and that there are non-executive Directors who have prior working experience in the sectors that CLCT is operating in. The process includes considerations that will provide an appropriate balance and contribute to the collective skills and competencies of the Board, such as (a) the current size and composition of the Board and Board committees; (b) the independence of potential ID candidates; (c) the suitability of potential candidates for appointment to various Board Committees; and (d) diversity factors such as business or professional experience, age and gender. The Board supports the principle that Board renewal is a necessary and continual process, both for good governance and for ensuring that the Board has the skills, expertise, diversity and experience which are relevant to the evolving needs of the CLCT 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 annual review takes into account, among other things, the requirements in the Listing Manual and the Code, feedback from individual Directors as well as the diversity targets and factors in the Board Diversity Policy. The outcome of that review is reported to the Board. The Board seeks to refresh its membership progressively and in an orderly manner, whilst ensuring continuity and sustainability of corporate performance. 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 threeyear terms and any extension of tenure beyond six years will be rigorously considered by the NRC in arriving at a recommendation to the Board, and will be on a yearly basis up to a period of nine years (inclusive of the initial two three-year terms served). 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, to ensure that a diverse slate of candidates is presented for the NRC’s and the Board’s consideration. Candidates are identified based on the needs of CLCT, taking into account the strategic priorities of CLCT and the relevant skills required. 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) with due consideration to diversity, including but not limited to diversity in business or professional experience, age and gender. The NRC also considers the qualities of the candidates, in particular whether they are aligned to the strategic directions and values of CLCT, while assessing the candidates’ ability to commit time to the affairs of CLCT, taking into consideration their other current appointments or commitments. The NRC uses a board competency matrix as a guide in determining if there are gaps in the skills of the Board as a whole and if the skills, 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, CLCT'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. CORPORATE GOVERNANCE 124 CAPITALAND CHINA TRUST
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