THE MANAGERCorporate Governance

(A) BOARD MATTERS

(B) REMUNERATION MATTERS

Principles 6, 7 and 8: Procedures for Developing Remuneration Policies, Level and Mix of Remuneration and Disclosure on Remuneration

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. No Director is involved in deciding his or her own remuneration.

The Board has established the NRC and under its terms of reference, the NRC's scope of duties and responsibilities in relation to remuneration matters include reviewing and determining:

1. the Board remuneration framework and the specific remuneration packages for the Directors; and
2. the compensation framework and the specific remuneration packages for the CEO and other key management personnel.

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 has 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.

Guided by its terms of reference, the NRC oversees the development and succession planning for the CEO. This includes overseeing the process for the selection of the CEO and conducting an annual review of career development and succession matters for the CEO.

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 CLCT Group’s business strategy and deliver sustainable value to Unitholders. The principles governing the remuneration policies of the Manager’s key management personnel are as follows:

Business Alignment

1. 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
2. Provide sound and structured funding to ensure affordability and cost-effectiveness in line with performance goals
3. Enhance retention of key talents to build strong organisational capabilities
4. Strengthen alignment to ESG practices

Motivate Right Behaviour

1. Pay for performance - align, differentiate and balance rewards according to multiple dimensions of performance
2. Strengthen line-of-sight linking rewards and performance

Fair & Appropriate

1. Ensure competitive remuneration relative to the appropriate external talent markets
2. Manage internal equity such that remuneration is viewed as fair across the CLCT Group
3. Significant and appropriate portion of pay-at-risk, taking into account risk policies of the CLCT Group, symmetrical with risk outcomes and sensitive to the risk time horizon

Effective Implementation

1. Maintain rigorous corporate governance standards
2. Exercise appropriate flexibility to meet strategic business needs and practical implementation considerations
3. Facilitate employee understanding to maximise the value of the remuneration programme

These remuneration policies are in line with the CLCT 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 CLCT. 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 in 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 2023, 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 46,000 employees serving more than 140 countries and markets. The consultant is not related to the Manager, its controlling shareholder, its related corporations or any of its Directors.

Remuneration of Key Management Personnel

The remuneration of key management personnel comprises fixed components, a variable component, long-term 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, deferred and long-term 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 CLCT.

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 Component:

The variable component is derived from the Performance Bonus Plan (PBP). It is linked to the achievement of annual performance targets for each key management personnel’s annual performance targets as set in their Balanced Scorecard (BSC).

Under the Balanced Scorecard framework, the CLCT Group’s strategy and goals are translated to performance outcomes comprising both quantitative and qualitative targets in the dimensions of:

• REIT Performance

  This includes targets relating to profitability and distributions, investor outreach and communication, capital structure, as well as financial and risk management

• Preparing for Future

  This includes targets relating to asset performance and occupancy, assets enhancements and capital recycling

• Sustainability

  This includes targets relating to talent retention, succession planning and sustainable corporate practices (including workplace safety)

• Manager's 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 CLCT Group.

After the close of each financial year, the Board reviews the CLCT 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 PBP, the NRC considers the overall business and individual performance as well as the affordability of the payout to the Manager. The PBP is delivered in a combination of cash and deferred Units with employees in senior management grades receiving a greater proportion of their PBP payout in deferred Units. These time-based Units are awarded pursuant to the CapitaLand China Trust Management Limited Restricted Unit Plan (RUP) and will vest in three equal annual tranches without further performance conditions. Recipients will receive fully paid Units, their equivalent cash value or combinations thereof, at no cost. These Units awards ensure ongoing alignment between remuneration and sustainable business performance.

C. Long-Term Components:

The long-term components comprise CapitaLand China Trust Management Limited Performance Unit Plan (PUP) and CapitaLand China Trust Management Limited Restricted Unit Plan (RUP), together the “Unit Plans”. Unit awards were granted in FY 2023 pursuant to the PUP. 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 CLCT’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 instill stronger identification with the longer-term performance and growth of the CLCT Group. Under these guidelines, senior members of Management are required to retain a prescribed proportion of the 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 CLCT Group.

CapitaLand China Trust Management Limited Performance Unit Plan

In FY 2023, 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 pre-determined targets for Unitholder returns and sustainability (included with effect from the FY 2023 award). In respect of Unitholder returns, Management is measured by the Relative Total Unitholder Return (TUR) of the CLCT Group based on the percentile ranking of the TUR of the CLCT Group relative to the constituent REITs in the FTSE ST REIT Index. In respect of sustainability, Management is measured on outcomes such as green building certification.

The above performance measures have been selected as a key measurement of wealth creation for Unitholders and the commitment of the CLCT Group towards sustainability. The final number of Units to be released will depend on the CLCT 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 2023, the relevant award for assessment of the performance achieved by the CLCT Group is the award granted in FY 2021 where the qualifying performance period was FY 2021 to FY 2023. Based on the NRC’s assessment that the performance achieved by the CLCT Group has partially met 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 2022 and FY 2023, the respective qualifying performance periods have not ended as at the date of this Annual Report.

CapitaLand China Trust Management Limited Restricted Unit Plan

Prior to FY 2023, 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:

1. net property income of the CLCT Group; and
2. distribution per Unit of the CLCT Group

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 CLCT 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.

There were no performance-based awards granted under the RUP in FY 2023.

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 CLCT for the long term. The CEO does not attend discussions relating to his own performance and remuneration.

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. The aggregate remuneration of the key management personnel of CLCT in FY 2023 was approximately S$2.20 million.

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:

1. the intense competition for talents in the REIT management industry, the Manager is of the view that it is in the interests of Unitholders to not make such disclosures so as to minimise potential staff movement and undue disruption to its key management team;
2. the need to balance the confidential and commercial sensitivities associated with remuneration matters, the Manager is of the view that such disclosures could be prejudicial to the interests of Unitholders;
3. the importance of retaining competent and experienced staff to ensure CLCT’s stability and continuity of business operations, the Manager is of the view that such disclosures may subject the Manager to undue risks, including unnecessary key management turnover; and
4. there being no misalignment between the remuneration of the CEO and key management personnel and the interest of Unitholders. Their remuneration are not borne by CLCT as they are paid out of the fees that the Manager receives (the quantum and basis of which have been disclosed on page 205 of this Annual Report).

The Manager is of the view that despite this partial deviation from Provision 8.1 of the Code, the disclosures in this Annual 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 CLCT’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 CLCT 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.

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 performance 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 CLCT as CLCT is a key part of CLI’s business and ecosystem (and CLI is also a substantial Unitholder of CLCT), and Management’s actions to grow CLCT and drive CLCT’s performance will also have a positive impact on CLI, thus reinforcing the complementary nature of the linked performance between CLCT and CLI. The cost of this one-time award will be borne by the Manager and it is not expected to form a significant part of the key management personnel’s remuneration over a five-year period. 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 CLCT given that the bulk of their remuneration is determined based on the evaluation of the performance of CLCT 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 CLCT and give priority to the interest of CLCT over the interests of the shareholders of the Manager, and this would further mitigate any potential conflicts of interest. Save for the Special PSP Award, the NRC will continue to assess and reward the key management personnel based on the performance of CLCT. 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 2023. In respect of the Special PSP Award granted in FY 2021, the qualifying performance period has not ended as at the date of this Annual Report.

In FY 2023, 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 2023, there were no employees of the Manager who were substantial shareholders of the Manager, substantial Unitholders of CLCT or immediate family members of a Director, the CEO, any substantial shareholder of the Manager or any substantial Unitholder of CLCT. “Immediate family member” refers to the spouse, child, adopted child, step-child, sibling or parent of the individual.

Remuneration for Non-Executive Directors

The non-executive Directors’ fees for FY 2023, together with a breakdown of the components, are set out in the Non-Executive Directors’ Remuneration Table on page 145 of this Annual Report. These non-executive Directors’ fees are paid by the Manager.

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 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 CLCT 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 CLCT.

The CEO 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 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. 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 CLCT’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 the 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 2023 to provide professional advice on Board remuneration, with a view to ensuring the fee structure is market competitive and consistent with industry practices.

(C) ACCOUNTABILITY AND AUDIT

Principle 9: Risk Management and Internal Controls

The Manager maintains adequate and effective systems of risk management and internal controls addressing material financial, operational, compliance and information technology (IT) risks to safeguard Unitholders’ interests and the CLCT Group’s assets.

The Board has overall responsibility for the governance of risks and oversees the Manager in the design, implementation and monitoring of the risk management and internal controls systems. The ARC assists the Board in carrying out the Board’s responsibility of overseeing the risk management framework and policies for the CLCT Group.

Under its terms of reference, the scope of the ARC’s duties and responsibilities includes:

1. making recommendations to the Board on the Risk Appetite Statement (RAS) for the CLCT Group;
2. assessing the adequacy and effectiveness of the risk management and internal controls systems established by the Manager to manage risks;
3. overseeing the formulation, updating and maintenance of an adequate and effective risk management framework, policies and strategies for managing risks that are consistent with the CLCT Group’s risk appetite and reporting to the Board on its decisions on any material matters concerning the aforementioned;
4. making the necessary recommendations to the Board such that an opinion regarding the adequacy and effectiveness of the risk management and internal controls systems can be made by the Board in the Annual Report in accordance with the Listing Manual and the Code; and
5. considering and advising on risk matters referred to it by the Board or Management, including reviewing and reporting to the Board on any material breaches of the RAS, any material non-compliance with the approved framework and policies and the adequacy of any proposed action.

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 ARC and the Board, taking into account the Listing Manual and best practices and guidance in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council.

The CLCT Group’s RAS, which incorporates the CLCT Group’s risk limits, addresses the management of material risks faced by the CLCT Group. Alignment of the CLCT 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 104 to 109 of this Annual Report.

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 ARC. The ARC 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 ARC’s concurrence is obtained for the Board opinion as described below.

The Board has received assurance from the CEO and the Chief Financial Officer (CFO) of the Manager, being the key management personnel who are responsible, that:

1. the financial records of the CLCT Group have been properly maintained and the financial statements for FY 2023 give a true and fair view of the CLCT Group’s operations and finances; and
2. the systems of risk management and internal controls within the CLCT 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 and the CFO have obtained similar assurances from the respective risk and control owners. In addition, in FY 2023, the Board received 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 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 the CLCT Group are adequate and effective to address the risks (including financial, operational, compliance and IT risks) which the CLCT Group considers relevant and material to its current business environment as at 31 December 2023. In arriving at its opinion, the Board noted that the ARC has concurred that such systems of risk management and internal controls within the CLCT Group are adequate and effective to address the aforesaid risks. No material weaknesses in the systems of risk management and internal controls were identified by the ARC and the Board in the review for FY 2023.

The Board notes that the systems of risk management and internal controls established by the Manager provide reasonable assurance that the CLCT 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.

Principle 10: Audit and Risk Committee

The Audit Committee was renamed the Audit and Risk Committee with effect from 1 January 2024. As at the date of this Annual Report, the ARC comprises four non-executive Directors, all of whom (including the chairman of the ARC) are IDs, namely Mr Neo Poh Kiat (ARC chairman), Professor Ong Seow Eng, Ms Tay Hwee Pio and Ms Wan Mei Kit. The ARC chairman is a Director other than the Chairman of the Board. The ARC chairman and other ARC members bring with them invaluable recent and relevant managerial and professional expertise in accounting, auditing and/or related financial management domains. In FY 2023, the ARC does not comprise former partners of CLCT’s incumbent 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 ARC 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 ARC. The ARC 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 ARC.

Under its terms of reference, the ARC’s scope of duties and responsibilities includes:

1. reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Manager and CLCT and any announcements relating to CLCT’s financial performance;
2. reviewing and reporting to the Board at least annually the adequacy and effectiveness of the Manager’s internal controls (including financial, operational, compliance and IT controls) and risk management system;
3. reviewing the scope and results of the external audit and the adequacy, effectiveness, independence and objectivity of the external auditors;
4. reviewing the scope and results of the internal audit and the adequacy, effectiveness, independence and objectivity of the Manager’s internal audit and compliance functions;
5. making recommendations to the Board on the proposals to Unitholders on the appointment, re- appointment and removal of the external auditors, and approving the remuneration and scope of engagement of the external auditors;
6. reviewing and approving processes to regulate transactions between an interested person (as defined in Chapter 9 of the Listing Manual) and/or interested party (as defined in the Property Funds Appendix) (each, an Interested Person) and CLCT and/or its subsidiaries (Interested Person Transactions), to ensure compliance with the applicable regulations. The regulations include the requirements that Interested Person Transactions are on normal commercial terms and are not prejudicial to the interests of CLCT and its minority Unitholders. In respect of any property management agreement which is an Interested Person Transaction, the ARC also carries out reviews at appropriate intervals to satisfy itself that the Manager has reviewed the property manager’s compliance with the terms of the property management agreement and has taken remedial actions where necessary; and
7. reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, and independently investigated, for appropriate follow-up action to be taken.

In addition to the above, the ARC also reviews the assurance from the CEO and the CFO on the financial records and financial statements.

The ARC undertook a review of the independence of the external auditors, taking into consideration, among other factors, non-audit services (if any) provided by the external auditors in FY 2023, CLCT’s relationships with the external auditors in FY 2023, as well as the processes and safeguards adopted by the Manager and the external auditors relating to audit independence. Based on the review, the ARC is satisfied that the external auditors are independent. The external auditors have also provided confirmation of their independence to the ARC. The amount of audit and audit-related fees paid or payable to the external auditors for FY 2023 amounted to S$915,820. The external auditors did not provide any non-audit services in FY 2023 and accordingly, no nonaudit fees were paid in FY 2023.

As part of CLCT’s ongoing good corporate governance initiatives, the Board has concurred with the ARC’s recommendation for the proposed appointment of Deloitte & Touche LLP (Deloitte) as the independent external auditors of CLCT which is being tabled for approval at the upcoming AGM. Further details on the proposed appointment of Deloitte as external auditors is set out in the Notice of AGM dated 28 March 2024 under Ordinary Resolution 2 and in the Letter to Unitholders dated 28 March 2024. The incumbent external auditors, KPMG LLP will be retiring and will not be seeking re-appointment as external auditors of CLCT for FY 2024.

The ARC holds at least four scheduled meetings in a year and met five times in FY 2023. At all scheduled ARC meetings in FY 2023, the CEO and the CFO were in attendance. CLCT has adopted 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 ARC meetings in January 2023 and July 2023, among other things, the ARC reviewed the half-yearly financial statements including the relevance and consistency of the accounting principles adopted and any significant financial reporting issues, and recommended the half-yearly financial statements and corresponding announcements to the Board for approval. During the ARC meetings in April 2023 and October 2023, the ARC reviewed, among other things, the quarterly business and financial updates presented by Management. Such business updates contained, among other things, information on the CLCT Group’s key operating and financial metrics.

In FY 2023, the ARC also reviewed and assessed the adequacy and effectiveness of the internal controls and risk management systems established by the Manager to manage risks, 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 ARC also meets with the external auditors and with the internal auditors, in each case without the presence of Management, at least once a year. In FY 2023, the ARC 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 ARC 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.

Key Audit Matter

In its review of the financial statements of the CLCT Group for FY 2023, the ARC had discussed with Management the accounting principles that were applied and their judgement of items that could affect the integrity of the financial statements and also considered the clarity of key disclosures in the financial statements. The ARC reviewed, among other matters, the key audit matter set out below, as reported by the external auditors for FY 2023.

The Manager confirms, on behalf of CLCT, that CLCT complies with Rules 712 and 715 of the Listing Manual.

Internal Audit

The Manager has in place an internal audit function supported by CLI’s Internal Audit Department (CLI IA). CLI IA is independent of the activities it audits and has unfettered access to the CLCT Group’s documents, records, properties and employees, including access to the ARC, and has appropriate standing with respect to the Manager. The primary reporting line of CLI IA in respect of the CLCT Group is to the ARC, however, the ARC 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 of the Code which requires the ARC 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 ARC 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 ARC also reviews to ensure that the IA function is adequately resourced and skilled in line with the nature, size and complexity of the Manager and CLCT’s business, and that an adequate budget is allocated to the internal audit function to assure its proper functioning. In respect of FY 2023, the ARC has carried out a review of the internal audit function and is satisfied that the internal audit function performed by CL IA is adequately resourced, effective and independent. In addition, CLI IA has passed the quality assurance review conducted by an external independent auditor.

CLI IA formulates its internal audit plan in consultation with, but independently of, Management and its plan is submitted to the ARC 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 CLCT 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 CLCT Group. CLI IA also reviews compliance with the CLCT Group's policies, procedures and regulatory responsibilities, performed in the context of financial and operational and information system reviews.

During FY 2023, the ARC reviewed the results of audits performed by CLI IA based on the approved audit plan. All findings are reported to Management and the ARC, 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 ARC. The ARC also reviewed reports on whistle blower complaints reviewed by CLI IA to ensure independent and thorough investigation and adequate follow-up. The ARC also received reports on Interested Person Transactions reviewed by CLI IA that these transactions were on normal commercial terms and were not prejudicial to the interests of CLCT and its minority Unitholders.

The ARC notes that the CLI IA is independent, effective, 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 the IIA, and has incorporated these Standards into its audit practices.

To ensure that internal audits are performed by competent professionals, 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.

(D) UNITHOLDER RIGHTS AND ENGAGEMENT

Principles 11, 12 and 13: Shareholder Rights and Conduct of General Meetings, Engagement with Shareholders, Managing Stakeholder Relationships

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.

General Meetings

CLCT supports the principle of encouraging Unitholder participation and voting at general meetings. CLCT’s Annual Report is provided to Unitholders within 120 days from the end of CLCT’s financial year. Unitholders may download the Annual Report (printed copies of the Annual Report are available upon request) and notice of 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 letter or 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 will be explained in the notice of 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.

CLCT’s AGM in FY 2023 (AGM 2023) was held by way of a physical meeting. Unitholders were able to submit questions to the chairman of the meeting in advance of the AGM, and substantial and relevant questions received from Unitholders were addressed before the AGM via publication on the Website and on the SGXNet, or at the meeting. Unitholders could vote at the AGM themselves or through duly appointed proxy(ies). Unitholders, who did not wish to, or were unable to, attend the AGM 2023 in person but who wished to only watch the AGM proceedings were able to do so remotely by accessing CLCT’s live webcast of the AGM 2023 if they had registered to do so. Further information on the arrangements relating to the conduct of the AGM 2023 was provided in the Notice of AGM dated 27 March 2023. All Directors (including the CEO who is also a Director) attended the AGM 2023 either in-person or via electronic means. A record of the Directors' attendance at the AGM 2023 can be found in the record of their attendance at general meeting(s) and Board and Board Committee meetings for FY 2023 set out on page 144 of this Annual Report.

The upcoming AGM, which is to be held on 22 April 2024, will be held both physically and by electronic means. Additional measures have been put in place for Unitholders who are not physically present at the AGM to be able to ask questions live and vote live at the AGM. Further details on the arrangements put in place for the conduct of the upcoming AGM are set out in CLCT’s Notice of AGM dated 28 March 2024.

The description below sets out CLCT’s usual practice for Unitholders’ meetings.

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 CLCT.

At AGMs, Management makes a presentation to Unitholders to update them on CLCT’s performance, position and prospects. The presentation materials are made available to Unitholders on the Website and also on SGXNet.

Unitholders are informed of the rules governing general meetings and are given the opportunity to communicate their views, ask questions and discuss with the Board and Management on matters affecting CLCT. Representatives of the Trustee, Directors (including the chairman of the respective Board Committees), key management personnel and the external auditors of CLCT, are present for the entire duration of the AGMs to address any queries that the Unitholders may have, including queries about the conduct of CLCT’s external audit and the preparation and contents of the external auditors’ report. Directors and Management also interact with Unitholders after the AGMs.

To ensure transparency in the voting process and better reflect Unitholders’ interests, CLCT 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. CLCT’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 CLCT’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 CLCT 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.

Distribution Policy

CLCT’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 CLCT 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 CLCT’s performance and any changes in the CLCT Group or its business which would likely materially affect the price or value of the Units. This is achieved through posting announcements and news releases on SGXNet on a timely and consistent basis. These announcements and news releases are also posted at the Website.

For FY 2023, 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 half year and full year financial statements to Unitholders, the Board sought to provide Unitholders with a balanced, clear and comprehensible assessment of CLCT and the CLCT Group’s performance, position and prospects.

Apart from the announcements of half year and full year financial statements in FY 2023, 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 these announcements. Such business updates contained, among other things, information on the CLCT Group’s key operating and financial metrics.

In addition to the release of half year and full year financial statements, the Manager also keeps CLCT’s Unitholders, stakeholders and analysts informed of the performance and changes in the CLCT 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 CLCT complies with its disclosure obligations under the Listing Manual. These controls and procedures incorporate the decisionmaking process and an obligation on internal reporting of the decisions made.

The Manager believes in conducting the business of CLCT in ways that seek to deliver sustainable value to Unitholders. Best practices are promoted as a means to build an excellent business for CLCT and the Manager’s accountability to Unitholders for CLCT’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.

Investor Relations

The Manager has in place an Investor Relations department which facilitates effective communication with Unitholders and analysts. The Manager also maintains the Website which contains information on CLCT 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 via the Manager Contacts channel on the Website.

More information on the Manager’s investor and media relations efforts can be found in the Investor Relations section on pages 49 to 51 of this Annual Report.

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 CLCT’s media communications efforts.

Managing Stakeholder Relationships

The Board’s role includes considering sustainability as part of its strategic formulation. The Manager adopts an inclusive approach for CLCT by considering and balancing the needs and interests of material stakeholders, as part of the overall strategy to ensure that the best interests of CLCT are served. The Manager is committed to sustainability and incorporates the key principles of environmental and social responsibility, and corporate governance in CLCT’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, to facilitate communication and engagement with CLCT’s stakeholders.

More details of CLCT’s sustainability approach, environmental policies and stakeholder engagements can be found on pages 96 to 102 of this Annual Report.

(E) ADDITIONAL INFORMATION

Executive Committee

In addition to the ARC and NRC, the Board has also established an EC.

As at the date of this Annual Report, the EC comprises the CEO and two non-executive Directors, namely Ms Quah Ley Hoon (EC chairman) and Mr Puah Tze Shyang.

The EC oversees the day-to-day activities of the Manager and that of CLCT, on behalf of the Board. The EC is guided by its terms of reference, in particular, the EC:

1. approves specific budgets for capital expenditure on development projects, acquisitions and enhancements/ upgrading of properties within its approved financial limits;
2. reviews management reports and operating budgets; and
3. awards contracts for development projects.

The EC held one meeting in FY 2023 and the members of the EC also meet informally during the course of the year.

Dealings with Interested Persons

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 CLCT and Unitholders. In respect of such transactions, the Manager would have to demonstrate to the ARC that such transactions are undertaken on normal commercial terms and are not prejudicial to the interests of CLCT 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 entered into within the financial year will be submitted by the Manager to the Trustee, and submitted by CLI IA to the ARC 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.

Role of the Audit and Risk Committee for Interested Person Transactions

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 CLCT and Unitholders’ interests.

The Manager maintains a register to record all Interested Person Transactions which are entered into by CLCT (and the basis on which they are entered into, including the quotations obtained to support such basis). All Interested Person Transactions are subject to regular periodic reviews by the ARC, 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 ARC. If a member of the ARC 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. In addition, the Trustee also reviews such audit reports to ascertain that the Listing Manual and the Property Funds Appendix have been complied with.

Details of all Interested Person Transactions (equal to or exceeding S$100,000 each in value) entered into by CLCT in FY 2023 are disclosed on pages 224 to 225 of this Annual Report.

Dealing with Conflicts of Interest

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 CLCT:

1. the Manager is a dedicated manager to CLCT and will not manage any other REIT or be involved in any other real property business;
2. all resolutions at meetings of the Board in relation to matters concerning CLCT must be decided by a majority vote of the Directors, including at least one ID;
3. in respect of matters in which CLI and/or its subsidiaries have an interest, whether direct or indirect, any nominees appointed by CLI and/or its subsidiaries to the Board will abstain from voting. In such matters, the quorum must comprise a majority of IDs and shall exclude such nominee Directors of CLI and/or its subsidiaries;
4. in respect of matters in which a Director or his or her associates have an interest, whether direct or indirect, such interested Director will abstain from voting. In such matters, the quorum must comprise a majority of the Directors and shall exclude such interested Director(s);
5. if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of CLCT with an affiliate of the Manager, the Manager is obliged to consult with a reputable law firm (acceptable to the Trustee) which shall provide legal advice on the matter. If the said law firm is of the opinion that the Trustee, on behalf of CLCT, has a prima facie case against the party allegedly in breach under such agreement, the Manager is obliged to pursue the appropriate remedies under such agreement; and
6. at least one-third of the Board shall comprise IDs.

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.

Dealings in Securities

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 CLCT’s securities (i) while in possession of material unpublished price-sensitive information, and (ii) during the one-month period immediately preceding, and up to the time of each announcement of CLCT’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 CLCT’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 CLCT, except during the open trading window (being one calendar month commencing from the relevant date of announcement of CLCT’s half year or full year financial statements), 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 CLCT’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 CLCT 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 CLCT’s securities if they are in possession of unpublished price-sensitive information of CLCT 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 CLCT’s securities.

Under this policy, Directors and employees of the Manager are also discouraged from trading on short-term 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 CLCT’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 CLCT’s securities. A Director is also required to notify the Manager of any change in his or her interests in CLCT’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 2023, 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, there were no dealings by the Directors in CLCT’s securities.

Code of Business Conduct

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 and educate its employees on good business conduct and ethical values.

Fraud, Bribery and Corruption Risk Management Policy

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 anti-bribery 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.

Whistle-Blowing Policy

A whistle-blowing policy applicable to the Manager has been put in place 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 whistleblower 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 ARC 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 ARC. All employees of the Manager are informed of this policy which is made available on CLI group’s intranet.

Business Continuity Management

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 CLCT 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 CLCT, allow the Manager to continue to function as the manager of CLCT 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 CLCT Group on business interruption events.

Anti-Money Laundering and Countering the Financing of Terrorism Measures

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:

1. evaluation of risk;
2. customer due diligence;
3. suspicious transaction reporting;
4. record keeping;
5. employee and CMSL Representative screening; and
6. training

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 CLCT 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.

Global Sanctions Compliance

As an organisation, the Manager is committed to carrying on business in accordance with the highest ethical standards. This includes complying with the sanctions laws and regulations of Singapore and the United Nations (UN). Due to the international nature of the CLCT Group’s business, the transactions the CLCT Group engages in may be subject to unilateral sanctions imposed by relevant government authorities which apply across borders.

To help ensure that the Manager and its directors, employees and officers and other third parties acting on its behalf or any entity within the CLCT Group fully complies with all sanctions applicable to the CLCT Group’s business activities, the Manager abides by a policy to comply with sanctions. The policy sets out the sanctions risk appetite and the risk management framework to help directors, employees and third parties identify the areas where breaches of applicable sanctions laws might arise and to support them in making the right decisions in line with the corporate position as stated in the policy and in the process establish a consistent approach for the Manager’s response to sanctions laws and regulations.

CEO'S REMUNERATION