Blog

116
FRASERS HOSPITALITY TRUST
CORPORATE GOVERNANCE REPORTS
INTRODUCTION
Frasers Hospitality Trust (“FHT“) is a stapled group comprising Frasers Hospitality Real Estate Investment Trust (“FH-REIT“) and Frasers Hospitality Business Trust (“FH-BT“).
The units in FH-REIT and the units in FH-BT are stapled together under the terms of a stapling deed dated 20 June 2014 (“Stapling Deed“) entered into between Frasers Hospitality Asset Management Pte. Ltd., as manager of FH-REIT (“REIT Manager“), Perpetual (Asia) Limited, as trustee of FH-REIT (“REIT Trustee“), and Frasers Hospitality Trust Management Pte. Ltd., as trustee-manager of FH-BT(“Trustee-Manager“, and together with the REIT Manager, the “Managers” and each, the “Manager“), to form stapled securities in FHT (“Stapled Securities“, and each a “Stapled Security“). Each Stapled Security, consisting of one FH-REIT unit and one FH-BT unit, is treated as a single instrument. The Stapled Securities are listed on the Main Board of the Singapore Exchange Securities Trading Limited (the “SGX-ST“).
FH-REIT is a real estate investment trust (“REIT“) constituted in Singapore by a trust deed dated 12 June 2014 made between the REIT Manager and the REIT Trustee (as amended and restated by a first amending and restating deed dated 20 June 2014, and as further amended, restated and/or supplemented from time to time) (the “FH-REITTrust Deed“). FH-REIT is a collective investment scheme under the Securities and Futures Act 2001 (the “SFA“).
FH-BT is a business trust constituted in Singapore by a trust deed dated 20 June 2014 (as further amended, restated and/or supplemented from time to time) (the “FH-BTTrust Deed“, and together with the FH-REIT Trust Deed and the Stapling Deed, the “Trust Deeds“). FH-BT is registered as a business trust under the Business Trusts Act 2004 (the “BTA“).
FH-BT was activated on 19 October 2016 to act as master lessee of “Novotel Melbourne on Collins” under a master lease agreement (the “Melbourne Master Lease Agreement“) entered into between FH-BT NMCS Operations Pty Ltd (an indirectly wholly-owned subsidiary of FH-BT) and The Trust Company (PTAL) Limited, as trustee for FHT Melbourne Trust 1 (an indirectly wholly-ownedsub-trust of FH-REIT). The Melbourne Master Lease Agreement is an internal arrangement within the FHT stapled group.
The Managers comply with the principles of the Code of Corporate Governance 2018 (the “CG Code“) in line with the listing manual of the SGX-ST (the “SGX-STListing Manual“). The REIT Manager also complies with the CG Code in accordance with its obligations under the Guidelines to All Holders of a Capital Markets Services Licence for Real Estate Investment Trust Management (Guideline No: SFA04-G07) issued by the Monetary Authority of Singapore (“MAS“). The practices and activities of the Board of Directors of each of the Managers (collectively the “Boards“) and the management of the Managers (collectively the “Management“) adhere closely to the provisions under the CG Code.
To the extent the practices may vary from any provision of the CG Code, the Managers will state explicitly the provision from which it has varied, explain the reason for the variation and explain how the practices nevertheless are consistent with the intent of the relevant principle of the CG Code. The Managers are also guided by the Practice Guidance which accompanies the CG Code and which sets out best practices for listed issuers; as this will build investor and stakeholder confidence in FHT and the Managers. A summary of compliance with the express disclosure requirements under the provisions of the CG Code is set out on pages 156 to 157 of this Annual Report.
Due to the different legislative and regulatory requirements in relation to a REIT as compared to a business trust, the corporate governance procedures and disclosure requirements in relation to the REIT Manager are different from those in relation to the Trustee-Manager, and where appropriate, we have highlighted them below.
FHT is a signatory to the 2022 Corporate Governance Statement of Support initiated by the Securities Investors Association (Singapore) where FHT has pledged its continued commitment to uphold high standards in corporate governance.
ANNUAL REPORT 2022
117
Contents
Overview
Year in Review
Leadership
Portfolio
Reports
Financial Section
CORPORATE GOVERNANCE REPORTS
The Managers
The Managers are wholly-owned subsidiaries of Frasers Property Limited (“FPL” or the “Sponsor” and together with its subsidiaries, “Frasers Property Group“). Each of the REIT Manager and the Trustee-Manager has general powers of management over the business and assets of FH-REIT and FH-BT, respectively.
The REIT Manager holds a Capital Markets Services Licence issued by the MAS as required under the licensing regimes for real estate investment trust managers to carry out REIT management activities. The REIT Manager’s main responsibility is to manage FH-REIT’s assets and liabilities for the benefit of unitholders of FH-REIT. To this end, the REIT Manager is able to set the strategic direction of FH-REIT and make recommendations to the REIT Trustee, on acquisitions, divestments and enhancement of the assets of FHT. The role of the REIT Manager includes the pursuit of a business model that sustains the growth and enhances the value of FH-REIT and is focused on delivering regular and stable distribution to holders of the Stapled Securities of FHT (the “Stapled Securityholders“). Other functions and responsibilities of the REIT Manager include preparing annual asset plans, undertaking regular individual asset performance analysis and market research analysis, and managing finance functions relating to FH-REIT (which includes financial and tax reporting, capital management, treasury, and preparation of consolidated budgets). The Trustee-Manager performs similar functions for FH-BT.
The MAS has granted the Trustee-Manager an exemption from compliance with Sections 10(2)(a) and 11(1)(a) of the BTA to act in the best interests of the holders of FH-BT unitholders only, subject to:
The Values of the REIT Manager and the Trustee-Manager
The Boards work with Management to ensure that these values underpin its leadership of the REIT Manager and the Trustee-Manager.
The REIT Manager and the Trustee-Manager are staffed by an experienced and well-qualified team who manage the operational matters of FH-REIT and FH-BT (as the case may be). The Managers are wholly-owned subsidiaries of FPL, a multi-nationaldeveloper-owner-operator of real estate products and services across five asset classes, namely, residential, retail, commercial & business parks, industrial & logistics as well as hospitality. The Frasers Property Group has businesses in Southeast Asia, Australia, Europe and China, and its well-established hospitality business owns and/or operates more than 120 award-winning serviced, hotel residences and boutique lifestyle hotels in 70 cities across Asia, Australia, Europe, the Middle East and Africa.
118
FRASERS HOSPITALITY TRUST
CORPORATE GOVERNANCE REPORTS
As the Sponsor holds a substantial ownership stake of approximately 25.80% in FHT as at 30 September 2022, there is an alignment of interests between the Sponsor, the Managers and the Stapled Securityholders. The Managers are able to benefit from and leverage on its association with the Sponsor in the management of FHT in various ways, including tapping on the Sponsor’s extensive experience in development and management of real estate assets, sourcing for talent and experienced personnel within the Sponsor’s pool of employees, including those who may be considered for appointment to the Boards, access to the Frasers Property Group’s network of lenders for debt financing, and negotiating for favourable terms with external suppliers and vendors on a group basis.
The REIT Manager and the Trustee-Manager are appointed in accordance with the terms of the FH-REIT Trust Deed and the FH-BT Trust Deed respectively. The REIT Manager and the Trustee-Manager are staffed by an experienced and well- qualified team who manage the operational matters of FH-REIT and FH-BT (as the case may be). The REIT Manager can be removed by notice in writing given by the REIT Trustee in favour of a corporation appointed by the REIT Trustee under certain circumstances outlined in the FH-REIT Trust Deed, including where the unitholders of FH-REIT, by a resolution duly passed by a simple majority of unitholders of FH-REIT present and voting (with no unitholder of FH-REIT being disenfranchised) at a unitholders’ meeting, decide that the REIT Manager is to be removed. The Trustee-Manager may be removed, by a resolution by the unitholders of FH-BT holding in the aggregate not less than three-fourths of the voting rights of all the unitholders of FH-BT.
BOARD MATTERS
The Board
Each of the REIT Manager and the Trustee-Manager has its own Board.
So long as the FH-REIT units remain stapled to the FH-BT units, in order to avoid any conflict between FH-REIT and FH-BT and to act in the best interests of FHT, the Board of FH-REIT (“REIT Manager Board“) and the Board of FH-BT(“Trustee-ManagerBoard“) will comprise the same persons.
The REIT Manager Board is responsible for the overall leadership and oversight of both FH-REIT’s and the REIT Manager’s business, financial, investment and material operational affairs and performance objectives, and FH- REIT’s long-term success. The REIT Manager Board sets the strategic direction of FH-REIT and the REIT Manager, which includes appropriate focus on value creation, innovation and sustainability. The REIT Manager Board also determines the REIT Manager’s approach to corporate governance, including setting appropriate tone-from-the-top and the desired organisational culture, values and ethical standards of conduct, and works with Management on its implementation across all levels of the organisation’s values, standards, policies and practices.
The key roles of the Trustee-Manager Board are to: (a) guide the corporate strategy and directions of the Trustee- Manager; (b) ensure that senior Management discharges business leadership and demonstrates the highest quality of management skills with integrity and enterprise; (c) oversee the proper conduct of the Trustee-Manager; and (d) ensure that measures relating to corporate governance, financial regulations and other required policies are in place and enforced. Further information on the roles and responsibilities of the Trustee-Manager Board can be found in the Statement on the Policies and Practices in Relation to the Management and Governance of Frasers Hospitality Business Trust on pages 165 to 170.
The Managers also focus on value creation, innovation and sustainability. The Boards, supported by Management, ensure necessary resources are in place for FHT and the Managers to meet their strategic objectives. Through the enterprise-wide risk management framework of FHT and its subsidiaries (the “Group“), the Boards establish and maintain a sound risk management framework to effectively monitor and manage risks and to achieve an appropriate balance between risks and the Group’s performance. The Boards also put in place policies, structures and mechanisms to ensure compliance with legislative and regulatory requirements. The Boards, which comprise directors who, as fiduciaries, are expected to act objectively in the best interests of the Managers and the Group, constructively challenges Management and reviews their performance, and holds Management accountable for performance. The Managers oversee Management to ensure transparency and accountability to key stakeholder groups.
In FY2022, the Boards continued to monitor the impact of the ongoing COVID-19 pandemic with the emergence of new variants and have been working closely with Management in reviewing the business opportunities and challenges posed by the COVID-19 pandemic. In addition, the Boards have been paying close attention to the level of financial discipline and portfolio management rigour across the Group’s businesses.
ANNUAL REPORT 2022
119
Contents
Overview
Year in Review
Leadership
Portfolio
Reports
Financial Section
CORPORATE GOVERNANCE REPORTS
To mitigate the impact of the COVID-19 pandemic on FHT’s earnings, FH-REIT had relied on the contractual minimum master lease income that provides downside protection. At the operating level of our properties, the hotel and serviced residence operators persisted in pursuing alternative sources of stable revenue for the portfolio, such as tapping on opportunities to support some local government agencies by providing hotel accommodation for returning residents serving their quarantine orders or stay-home notices.
The Chairman
The chairman of the Board (the “Chairman“) leads the Board1. The Chairman, provides leadership and direction in the review of Managers’ corporate strategy and objectives, sets the right ethical and behavioural tone and ensures the Board’s effectiveness by, among other things, promoting and maintaining high standards of corporate governance and transparency, encouraging active and effective engagement, participation from all directors of the REIT Manager (also the Trustee-Manager Directors, collectively, the “Directors“) and facilitating constructive and appropriate relations among and between them and Management. The Chairman sets the agenda for each Board meeting to take full account of the issues and concerns of the Directors and the Management team, promotes a culture of openness and debate at Board meetings and encourages Directors to engage in productive and thorough discussions and constructive debate on strategic, business and other key issues pertinent to the business and operations of the Group, the REIT Manager and the Trustee-Manager, leading to better decision-making and enhanced business performance. The Chairman also enhances the standing of the FHT with the outside world and ensures effective communication with Stapled Securityholders, financial analysts and the media on critical issues that could significantly affect the reputation and standing of FHT.
The Chairman also presides over the Annual General Meeting each year and any other general meetings of Stapled Securityholders. The Chairman addresses, and/or requests the Chief Executive Officer (the “CEO“) of the Managers to address, Stapled Securityholders’ queries and ensures that there is clear and open dialogue between all stakeholders.
Role of the CEO and Management
The Management is led by the CEO of the Managers. The CEO is responsible for the execution of the strategies and policies as approved by the Boards, leading, promoting and conducting the affairs of FHT and the Managers with the highest standards of integrity, corporate governance and transparency. The CEO is responsible and is accountable to the Boards for the conduct and performance of Management. The CEO and Management team of the Managers, are responsible for executing the Boards’ strategies and policies as approved by the Boards and are responsible for the planning, direction, control, conduct and performance of the business operations of the Group. With the support of the Management, the CEO seeks business opportunities, drives new initiatives and is responsible for the operational performance of the Group and building and maintaining strong relationships with stakeholders of the Group.
Division of Responsibilities between the Chairman and the CEO
The Chairman and the CEO are separate persons and the division of responsibilities between the Chairman and the CEO is clearly demarcated, avoids concentration of power and ensures a degree of checks and balances, an increased accountability, and greater capacity of the Boards for independent decision making. Such separation of roles between the Chairman and CEO promotes robust deliberations by the Boards and Management on the business activities of FHT.
Relationships between the Boards and the CEO
None of the members of the Boards and the CEO are related to one another, and none of them has any business relationships among them.
1 In this Corporate Governance Report, references to the “Board“, “Chairman“, “Directors” and similar words and expressions are intended to mean the Board, Chairman, Directors, etc. of each of the REIT Manager and the Trustee-Manager (save where the context otherwise requires), as during FY2022, the Boards and Management comprised the same persons.
120
FRASERS HOSPITALITY TRUST
CORPORATE GOVERNANCE REPORTS
Board Committees
Each of the REIT Manager Board and the Trustee-Manager Board has formed committees of their respective boards (the “Board Committees“) to oversee specific areas, for greater efficiency and has delegated authority and duties to such Board Committees based on written and clearly defined terms of reference. The terms of reference of the Board Committees set out their compositions, authorities and duties, including reporting back to the Boards. Each of the REIT Manager Board and the Trustee-Manager Board has constituted two Board Committees, namely, the Audit, Risk and Compliance Committee (“ARCC“), and the Nominating and Remuneration Committee (“NRC“).
The ARCC of the REIT Manager (“REIT Manager ARCC“) and the ARCC of the Trustee-Manager(“Trustee-ManagerARCC“) comprise the same persons. The NRC of the REIT Manager (“REIT Manager NRC“) and the NRC of the Trustee-Manager(“Trustee-ManagerNRC“) also comprise the same persons.
Minutes of all Board Committee meetings are circulated to the respective Boards so that Directors are aware of and kept updated on the proceedings, matters discussed and decisions made during such meetings, and to enable the Directors to weigh in on any key points under consideration.
AUDIT, RISK AND COMPLIANCE COMMITTEE(1)
MEMBERSHIP
KEY OBJECTIVES
David Wong See Hong, Chairman
• Assist Board in fulfilling responsibility for overseeing the quality and
Law Song Keng, Member
integrity of the accounting, auditing, financial practices, internal controls,
Liew Choon Wei, Member
risk management and sustainability practices of the Manager
Note:
As at 30 September 2022, each of the ARCCs2 comprises non-executive Directors, all of whom, including the chairman of each of the ARCCs, are independent Directors. All members of the ARCC, including the chairman of each of the ARCCs, are appropriately qualified and collectively possess relevant accounting and related financial management expertise or experience. Their collective wealth of experience and expertise enables them to discharge their responsibilities competently.
Under the Terms of Reference of each of the ARCCs, a former partner or director of FHT’s existing auditing firm or auditing corporation should not act as a member of the ARCC: (a) within a period of two years commencing on the date of his ceasing to be a partner of the auditing firm or a director of the auditing corporation; and in any case, (b) for as long as he has any financial interest in the auditing firm or auditing corporation. None of the members of the ARCCs is a former partner of FHT’s external auditors, KPMG LLP and none of the members of the ARCCs holds any financial interest in FHT’s external auditors, KPMG LLP.
Audit Functions
The Terms of Reference of the ARCCs provide that some of the key responsibilities of the ARCCs include:
2
3
In this Corporate Governance Report, references to the “ARCC” are intended to mean each of the REIT Manager ARCC and the Trustee-Manager ARCC, and references to the “NRC” are intended to mean each of the REIT Manager NRC and the Trustee-Manager NRC (save where the context otherwise requires)
For FY2022, the internal audit function is outsourced to the Frasers Property Group.
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
Disclaimer
Frasers Hospitality Trust published this content on 03 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 January 2023 07:47:05 UTC.

source