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Ascott Residence Trust
Annual Report 2015
Corporate Governance
Board Membership
Principle 4:
There should be a formal and transparent process for the appointment and re-appointment of directors
to the Board.
The Board undertakes the function of a nominating committee and therefore, the Manager does not have a
nominating committee. The Board performs the functions that such a committee would otherwise perform,
namely, it administers nominations to the Board, reviews the structure, size and composition of the Board,
and reviews the performance and independence of Board members. The Board seeks to ensure that the
composition of the Board provides an appropriate balance and diversity of skills, experience and knowledge of
the industry and that the Directors, as a group, have the necessary core competencies relevant to Ascott Reit’s
business. The current Board comprises individuals who are business leaders and professionals with financial,
banking, fund management, real estate, investment and accounting backgrounds. The varied backgrounds of the
Directors enable Management to benefit from their respective expertise and diverse background.
As part of its commitment towards improving its corporate governance, the Board recently undertook a review
of the matter and has determined that it shall continue to undertake the functions of a nominating committee.
The following considerations were taken into account:
(a) the Manager is a dedicated manager to only Ascott Reit and in general, REITs (including Ascott Reit) have a
more focused scope and scale of business compared to those of listed companies. For this reason, the Board’s
capacity would not be unduly stretched if the responsibilities of a nominating committee were also undertaken
by the Board as the Board would be able to give adequate attention to such issues;
(b) the focused scope of the business of Ascott Reit also means a manageable competency requirement for the
Board such that the Board is able to manage the duties of a nominating committee; and
(c) that IDs form at least half of the Board and the Chairman is an ID demonstrate that the IDs play a substantive
role and assures the objectivity and independence of the decision making process concerning nomination.
This also mitigates any concerns of conflict which can be managed by having the conflicted directors abstain
from the decision making process. Further, conflict situations are less likely to arise in matters of nomination.
In terms of the criteria and process put in place for selecting, appointing and reappointing Directors and for
reviewing the performance of Directors, the Board has adopted the following for FY 2016 and after:
(a) The Board will at least annually carry out a review of the Board composition as well as on each occasion when
an existing ID gives notice of his intention to retire or resign. This is to assess the collective skills, knowledge
and experience of Directors represented on the Board to determine whether the Board, as a whole, has the
skills, knowledge and experience required to achieve the Manager’s objectives for Ascott Reit.
(b) The Board will review the suitability of any candidates put forward by any Director for appointment,
having regard to the skills required and the skills represented on the Board and whether a candidate’s skills,
knowledge and experience will complement the existing Board and whether he has sufficient time available
to commit to his responsibilities as a director, and whether he is a fit and proper person for the office in
accordance with the Guidelines on Fit and Proper Criteria issued by MAS (which require the candidate to be,
among other things, competent, honest, to have integrity and be financially sound).
(c) External consultants may be engaged from time to time to access a wide base of potential directors.
(d) No member of the Board will be involved in any decision of the Board relating to his own appointment,
reappointment or assessment of independence.
(e) A newly appointed Director will receive a formal appointment letter and a copy of Directors’ Manual
(which includes information on a broad range of matters relating to the role and responsibilities of a director).
(f) All directors on appointment will undergo an induction programme to help familiarise them with matters
relating to Ascott Reit’s business and the Manager’s strategy for Ascott Reit.
(g) The performance of the Board, Board Committees and Directors will be reviewed annually.
(h) The Board will proactively address any issues identified in the board performance evaluation.
