With the objectives of establishing and maintaining high standards of corporate governance, certain policies and procedures have been put in place to promote the operation of Spring REIT in a transparent manner and with built-in checks and balances. The corporate governance policies of Spring REIT have been adopted having due regard to the requirements under Appendix 14 of the Listing Rules, with necessary changes as if those rules were applicable to REITs. Set out below is a summary of the key components of the corporate governance policies that have been adopted and will be followed by the REIT Manager and Spring REIT.
Spring REIT is a collective investment scheme authorized by the SFC under section 104 of the SFO and regulated by certain laws, regulations and documents including the provisions of the REIT Code. SFC authorization is not a recommendation or endorsement of a scheme nor does it guarantee the commercial merits of a scheme or its performance. It does not mean the scheme is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. The REIT Manager has been licensed by the SFC under section 116 of the SFO to conduct the regulated activity of asset management. The REIT Manager has three persons who are approved as Responsible Officers pursuant to the requirements of section 125 of the SFO and paragraph 5.4 of the REIT Code, at least one of whom is an executive Director of the REIT Manager pursuant to the requirements of section 125 of the SFO.
The Trustee is registered as a trust company under section 77 of the Trustee Ordinance. The Trustee is qualified to act as a trustee for collective investment schemes authorized under the SFO pursuant to the REIT Code.
The Trustee and the REIT Manager are independent of each other. The Trustee, in its capacity as trustee of Spring REIT, is responsible under the Trust Deed for the safe custody of the assets of Spring REIT on behalf of Unitholders. The REIT Manager' s role under the Trust Deed is to manage Spring REIT and its assets in accordance with the Trust Deed and, in particular, to ensure that the financial and economic aspects of Spring REIT' s assets are professionally managed in the sole interests of Unitholders.
The Board comprises seven members, three of whom are independent non-executive Directors. The Board principally oversees the day-to-day management of the REIT Manager' s affairs and the conduct of its business and is responsible for the overall governance of the REIT Manager. The Board exercises its general powers within the limits defined by its constitutional documents, with a view to ensuring that the management discharges its duties and is compensated appropriately, and that appropriate internal control policies and risk management systems are maintained. The Board will also review major financial decisions and the performance of the REIT Manager. In accordance with the REIT Code, the REIT Manager is required to act in the best interests of Unitholders, to whom it owes a fiduciary duty.
With the aim of creating a board structure that is both effective and balanced, the size of the Board has been set to provide for a minimum of seven Directors and a maximum of nine Directors. Pursuant to the REIT Manager's corporate governance policy, independent non-executive Directors must be individuals who fulfill the independence criteria set out in the compliance manual adopted by the REIT Manager.
The composition of the Board is determined using the following principles:
The Board composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience and that the Directors being appointed have the relevant expertise and experience in discharging their duties.
Several board committees have been established under the Spring REIT, and it has adopted international, best-practice corporate governance standards to ensure ongoing transparency in the management.
The Audit Committee is appointed by the Board from among the non-executive Directors and at least one of them shall has appropriate professional qualification or accounting or related financial management expertise. A majority of the members of the Audit Committee are required to be independent non-executive Directors. The Audit Committee is responsible for establishing and maintaining an adequate internal control structure and ensuring the quality and integrity of financial statements. The Audit Committee is also responsible for the nomination of independent external auditors and reviewing the adequacy of external audits in respect of cost, scope and performance.
The Audit Committee also ensures the existence and working of an effective system of internal control and risk management, in respect of both the REIT Manager and Spring REIT.
The Audit Committee' s responsibilities also include:
The Disclosures Committee is appointed by the Board from among the Directors. The Disclosures Committee consists of three Directors, one of whom is an independent non-executive Director. The role of the Disclosures Committee includes reviewing matters relating to the disclosure of information to Unitholders and public announcements. The Disclosures Committee also works with the management of the REIT Manager to ensure that the disclosure of information is accurate and complete.
The Disclosures Committee' s responsibilities include:
The Remuneration Committee is appointed by the Board from among the Directors. A majority of the members of the Remuneration Committee are independent non-executive Directors and the chairman of the Remuneration Committee is an independent non-executive Director. Among other matters, the Remuneration Committee is responsible for reviewing the terms and conditions of employment of all staff and Directors of the REIT Manager (other than the members of the Remuneration Committee, whose remuneration is determined by the Board) and recommending an appropriate manpower deployment plan (including the succession plan for the management of the REIT Manager and the Board), remuneration and retirement policies and packages. The Remuneration Committee also ensures that no Director is involved in deciding his own remuneration.
The Nomination Committee is appointed by the Board from among the Directors. A majority of the members of the Nomination Committee are independent non-executive directors and the chairman of the Nomination Committee is required to be an independent non-executive Director or the Chairman of the Board. Amongst other matters, the Nomination Committee is responsible for reviewing the structure, size and composition of the Board and its committees on an ongoing basis and for nominating, and providing recommendations on, persons for appointment, re-appointment or removal as Directors.
The Advisory Committee is appointed by the Board from among the Directors. The role of the Advisory Committee includes generally reviewing the management services provided by the REIT Manager to Spring REIT, the financial performance of the REIT Manager, investor relations with respect to Spring REIT and potential acquisition opportunities, as well as supervising the performance of service providers to the REIT Manager and Spring REIT. The Advisory Committee presents information to the Board from time to time as it considers necessary and ensures the smooth co-ordination between the various committees established by the Board. Where appropriate, the Advisory Committee can recommend to the Chairman that a Board meeting be convened to discuss any Spring REIT matter. Meetings of the Advisory Committee will be held monthly to review Spring REIT management issues and to make recommendations to the Board.
Spring REIT will in each calendar year hold an annual general meeting in addition to any other general meetings in that year. The Trustee or the REIT Manager may at any time convene a meeting of Unitholders. The REIT Manager will also convene a meeting of Unitholders if requested in writing by not less than two Unitholders registered as holding together not less than 10.0% of the Units for the time being in issue and outstanding. Notice of 14 days or 10 clear business days (whichever is the longer) at the least, of the meeting will be given to Unitholders, except that notice of 21 calendar days or 20 clear business days (whichever is the longer) at the least, will be given to Unitholders where a Special Resolution is proposed for consideration at such meeting, and the notice will specify the time and place of the meeting and the terms of any resolutions to be proposed.
Two or more Unitholders present in person or by proxy registered as holding together not less than 10.0% of the Units for the time being in issue and outstanding will form a quorum for the transaction of all business, except for the purpose of passing a Special Resolution. The quorum for passing a Special Resolution will be two or more Unitholders present in person or by proxy registered as holding together not less than 25.0% of the Units for the time being in issue and outstanding.
Spring REIT will prepare its accounts in accordance with the International Financial Reporting Standards with a financial year end of December 31 and a financial half-year end of June 30. In accordance with the REIT Code, the annual report and accounts for Spring REIT will be published and sent to Unitholders and filed with the SFC no later than four months following each financial year-end of Spring REIT and the semi-annual reports no later than two months following the end of the period it covers.
The REIT Manager shall keep Unitholders informed of any material information pertaining to Spring REIT in a timely and transparent manner as required by the REIT Code and the provisions of Part XIVA of the SFO shall have effect, mutatis mutandis, as if Spring REIT is a "listed corporation" and if the board of directors of the REIT Manager are the board of directors of a "listed corporation".
The REIT Manager shall also inform Unitholders by way of announcement as soon as reasonably practicable of any information concerning Spring REIT which: