Religare Health Trust and Religare Health Trust Trustee Manager Pte. Ltd. have since been renamed "RHT Health Trust" and "RHT Health Trust Manager Pte. Ltd." on 3 August 2016.
Religare Health Trust ("RHT" or the "Trust") is constituted as a business trust under the Singapore Business Trust and is externally managed by Religare Health Trust Trustee Manager Pte. Ltd. ("RHT TM" or the "Trustee-Manager"). The Trustee-Manager recognises the importance of upholding high corporate governance standards, which will serve to safeguard the interests of unitholders and contribute to the success of RHT. Under the Business Trusts Act, Chapter 31A of Singapore ("BTA"), the Trustee-Manager is also obliged to act in the best interests of the unitholders as a whole.
The Trustee-Manager has used the Code of Corporate Governance 2012 ("CG Code 2012") as its benchmark for best corporate governance practices and has set up policies and practices with the CG Code 2012 in mind. The Trustee Manager has also incorporated specific provisions under the Business Trust Regulations ("BTR") which may be required of the Trustee-Manager in its corporate governance framework.
The Trustee-Manager also proactively tracks the requirements under the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore ("CIS Code"), including the Property Funds Appendix in Appendix 6 of the CIS Code, as well as the various laws and regulations which are applicable to Capital Market Services Licence ("CMS Licence") holders. Wherever possible, the Trustee-Manager has voluntarily complied with the provisions under the CIS Code (including the Property Funds Appendix 6) and the laws and regulations applicable for CMS Licence holders.
In this report, we have described the main corporate governance policies and practices which the Trustee-Manager has put in place, with reference to the CG Code 2012. Any deviations from the CG Code 2012 are explained in the report.
Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board.
The Board of RHT TM (the "Board") provides the strategic direction for RHT, and guides management of RHT TM in achieving efficient management of the Trust. Along with monitoring the achievement of these goals, the Board is also responsible for ensuring that the management has a framework of internal and risk management controls in place, which help RHT to achieve its goals while taking into account the interest of its unitholders.
To assist the Board in the discharge of its duties, a total of 3 committees have been set up with their own terms of reference. These three committees are:
The ARMC assists the Board in reviewing significant financial reporting issues and considering the report of the external auditor. The ARMC also oversees the risk management framework and policies of RHT and has oversight of the internal audit function. The NC supports the Board through evaluating and recommending the Board composition in terms of size, independence and skill requirements. The RC will in turn evaluate and recommend an appropriate remuneration framework to the Board. The terms of reference for each committee, as well as the members of each committee (together with their role in the committee and whether they are independent/executive) are as described in the Appendix to this Corporate Governance Report ("CG Report").
The Board of Directors meet at least 4 times a year to review and approve the financial results of RHT as well as receive key reports from both the external professionals such as the internal auditors, and senior management. The Board also review and approve, amongst others, the strategic direction of RHT, its annual budget, capital structuring, risk reports and key policies. As and when warranted by circumstances, Board meetings are also held outside of the quarterly meetings to discuss the strategies, policies or key activities of RHT such as acquisitions and disposals. Under the Articles of Association of the Trustee-Manager, board meetings are permitted to be held via way of conference by telephone or by means of similar communication equipment whereby all persons participating in the meeting are able to hear each other.
The current Directors and details of their membership on Board committees, number of Board and Committee meetings held for FY2016 between 1 April 2015 to 31 March 2016, as well as their attendance at these meetings are disclosed in the table below.
|Name||Board||Audit and Risk Management Committee||Nominating Committee||Remuneration Committee|
|No. of meetings held||No. of meetings attended||No. of meetings held||No. of meetings attended||No. of meetings held||No. of meetings attended||No. of meetings held||No. of meetings attended|
|Gurpreet Singh Dhillon||5||5||-||-||-||-||-||-|
|Dr Yogendra Nath Mathur||5||5||5||5||1||1||-||-|
|Sydney Michael Hwang||5||5||-||-||1||1||1||1|
|Peter Joseph Seymour Rowe||5||5||5||5||-||-||1||1|
|Eng Meng Leong||5||5||5||5||-||-||1||1|
The Trustee-Manager has formalised the matters which are specifically reserved for decision and approval by the Board. These matters are in relation to:
(a) RHT's long term objectives, strategy and budget including internal limits on authority in relation to investments, acquisitions and disposals, capital expenditures.
(b) changes to RHT's structure and capital, including new unit issuances, new material debt facilities.
(c) financial reporting and internal risk controls, including significant changes in accounting policies, review of interested party transactions, conflicts of interests situations and corporate governance arrangements.
(d) communication to regulators or unitholders involving matters which has been deliberated or approved by the Board.
Outside of the matters reserved specifically for the Board's decision, the Board has delegated the management of the day to day operations to the Management of RHT TM. as well as the decision making over certain operational matters in order to facilitate operational efficiency.
Newly appointed directors to the Board of RHT TM are issued with an appointment letter that spells out his duties and obligations as a director. They will also be briefed by senior management to provide an overview of the business of RHT as well as the key policies and Board processes. Material documents pertaining to RHT are also made available to the new Directors. Where there are first time directors being appointed to the Board, they will be provided external training by professional providers, such as the Singapore Institute of Directors, on what they need to know as a director of a listed company in Singapore. The Independent Directors conduct a site visit to India every year where the assets of RHT are located. During the site visit, the Independent Directors will also meet with the India based senior management of RHT, external professionals such as internal auditors and external auditors.
The Trustee-Manager monitors new laws, regulations and rules that are implemented, for implications on RHT and RHT TM. Where relevant, Directors are updated about the changes to existing or new rules and regulations. There have been briefings conducted during board meetings whereby either the senior management or external professionals have briefed the Directors on new developments or where the Board deems that expert advice is required in order to formulate key decisions. In FY2016, management briefed the Board on the proposed changes to the regulatory regime governing reit estate investment trusts (REITS) and REIT managers. There was also a brief on the proposed Corporate Sustainability Report to be implemented by the Singapore Exchange Ltd. Our Directors also received copies of the recent guidebooks which were released in Singapore for the Risk Committee, NC and RC.
Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders. No individual or small group of individuals should be allowed to dominate the Board's decision making.
The Board of RHT TM is made up of 7 Directors, of which a majority or 4 of the Directors are independent and non-executive Directors.
The remaining 3 Directors, including the Chairman of the Board, are executive and non-independent Directors.
The Business Trust Regulations ("BTR") provides that:
Once every year, and as and when the circumstances require, the NC will assess the independence of each Director. The Nominating Committee has carried out its assessment, and with the concurrence of the Board had considered and found Mr Sydney Michael Hwang, Mr Eng Meng Leong, Dr Yogendra Nath Mathur and Mr Peter Joseph Seymour Rowe to be independent from:
Mr Ravi Mehrotra, our Executive Chairman, Mr Gurpreet Singh Dhillon our Chief Executive Officer ("CEO") and Mr Pawanpreet Singh, our Chief Financial Officer are not considered to be independent under the CG Code 2012 and /or the BTR Sections 3 and 4.
The current Board comprises of 7 Directors with extensive experience in various fields ranging from legal, investments, tax and accounting to healthcare. The NC has evaluated the size and composition of the Board and is of the view that the size of the Board is appropriate in relation to the scale of operations of RHT, and possesses the requisite experience for managing a healthcare infrastructure related trust such as RHT. The independent Directors have met at least once during FY2016 without management present.
1 Independent from management and business relationships with Trustee-Manager as defined under Section 3 of the BTR.
2 Independent from substantial shareholder of the Trustee-Manager as defined under Regulation 4 of the BTR.
Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company's business. No one individual should represent a concentration of power.
The positions of the Chairman of the Board and the CEO are held by two separate persons, so that there is an effective segregation of duties and accountability. The Board of RHT TM is led by our Executive Chairman, Mr Ravi Mehrotra and Mr Gurpreet Singh Dhillon is our CEO. Both Mr Ravi Mehrotra and Mr Gurpreet Singh Dhillon are not immediate family members. As Chairman of the Board, Mr Mehrotra sets the agenda for the Board meetings, engages the Directors in discussing and debating on issues while working towards important decisions. The Chairman also serves to encourage constructive relations within the Board and between the Board and management. As our non-executive Directors have diverse background and experience, the Board and management benefit from their views on matters being tabled before the Board.
As Executive Chairman of the Board, Mr Mehrotra plays a key role in guiding the strategy of RHT and monitoring the performance of the management. The CEO is responsible for managing the daily operations of the Trust and the Trustee-Manager in accordance with the business plans and strategies as set out by the Board.
There is clear segregation of roles within the Board and the ARMC, NC and RC each have their own terms of reference and responsibilities. The three Committees are each headed by a different independent Director, and there is no individual Director on the Board who has a considerable concentration of power.
We have appointed Dr Yogendra Nath Mathur as our lead independent Director, who serves as a conduit between unitholders and the Board, or between the independent directors and the Board, wherever there are concerns from from either party.
The independent directors have private sessions without the presence of management, and also have feedback sessions with the Chairman without management around.
Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.
The Board had approved the establishment of an NC comprising of a majority of independent directors, including the lead independent director. The role of the NC under its terms of reference as approved by the Board includes making recommendations on:
When conducting a search for a new director, the Board will shortlist suitable candidates based on criteria which will be drawn up taking into consideration the roles and expertise that is required of the new director and the needs of the Board. The potential candidates may originate from various sources such as recommendations from the management and Directors, the Singapore institute of Directors or utilising external search consultants. The shortlisted candidates will be put forth to the NC for consideration, with the final candidate as selected by the NC being put to the Board for approval.
Under the appointment letters signed with the Independent Directors that are appointed to the Board of RHT TM, the directors are required to put themselves up for re-nomination and re-election once every 3 years.
The NC is also tasked with ascertaining if each Director, having multiple directorships, is able and has been adequately carrying out his duties as a Director. This review is done by the NC once a year, and takes into consideration the director's number of listed company board representations and other principal commitments. The NC holds the view that the number of directorships held by a Director does not determine the performance of the Director. A Director's performance is assessed based on a number of factors including their time commitment towards Board meetings and discussions, their ability to draw on their experience to contribute to the strategy and decision makings required of the Board. As such, the NC proposed with the concurrence of the Board, to not fix a limit on the number of directorships which a Director may hold but rather to assess the performance of each Director as a whole.
Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.
An annual formal assessment is conducted on the effectiveness of the Board, the Board Committees and on each Director. The assessment is conducted using an evaluation form which is constantly updated for relevance. The evaluation form seeks feedback from each Director on a confidential basis, on their views relating to:
For the annual assessment conducted in respect of the financial year ended 31 March 2016 ("FY2016"), the Company Secretary was responsible for sending and collating the information provided by each Director in response to evaluation form. The results of the evaluation survey were then presented to the NC for its assessment and recommendations. In formulating the feedback form, attention was given to ensuring feedback was sought from the Directors on the core areas, whilst also providing room for each Director to freely express their opinions on other matters in a confidential manner. The results of the evaluation, and the NC's recommendations, were put up to the Board for their concurrence.
Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informal decisions to discharge their duties and responsibilities.
The calendar for Board and Committee meetings are scheduled one year in advance to allow for better planning. Management provides the Board with monthly reports and/or calls, in addition to board papers on matters which are being tabled during the Committee or Board meetings. Board papers are sent to the Board approximately five business days before the meeting takes place. Directors are also entitled to request for separate and independent access to the management, the company secretary or external professionals. The Chairman of the ARMC meets separately on a regular basis with each of the management, the internal auditor and external auditor. Such meetings take place on a quarterly basis with the management and internal auditors, and on a half yearly basis with the external auditor. As stipulated in the Director's appointment letter, they are also entitled to seek independent professional advice relating to their role and responsibility as a Director of RHT TM.
The management provides the Board with a call and/or a report each month on the operating environment and management financials of RHT. During the quarterly Board meetings, matters such as the financial results, the report from the independent auditors, management's internal risk assessment report, business and operational updates for the quarter are presented for the Board's review. Once a year, the strategy, forecast and annual budget is presented for the Board's review and approval. On an on-going basis, where there are material variances against the forecast and actual financial figures, explanations would be provided.
The Company Secretary attends all Board and Board Committee meetings and is responsible for keeping accurate minutes on the proceedings. Their advice on matters relating to corporate governance may also be sought during these meetings. The Head of Compliance in RHT TM works together with the Company Secretary to ensure good and timely information flow to the Board of Directors. Where there should be any proposed change to the Company Secretary, this would be put to the Board for approval.
Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing remuneration packages of individual directors. No director should be involved in fixing his own remuneration.
Principle 8: The level and structure of remuneration should be aligned with the long term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.
Principle 9: Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to Directors and key personnel, and performance.
The Board had approved the establishment of a RC with its own terms of reference. The RC comprises of wholly independent non-executive Directors, and they are responsible for reviewing the reviewing the remuneration policy and framework of the Directors and the key management.
In the RC meeting held in February 2016, the RC had reviewed the compensation structure for the Directors, as well as the compensation structure and package for the key management of RHT TM respectively. Under RHT TM's compensation structure for its Directors, Executive Directors are not be paid any Director's fee, while Non-Executive Directors are paid a base fee which is a fixed amount, with a variable fee for every additional role which each Director may take on. This serves to compensate the Directors according to the amount of responsibility, time and effort required of that role. In general, the Chairman of the Board Committees is paid higher variable fees compared to that of members of the Committees. The remuneration framework for the non-Executive Directors is as shown in the following table.
|Fee||Base Fee||Variable Fee|
|Non-Executive Director||Base Fee (BF) p.a.||Chairman||Member of Committee|
|50% of BF as Chairman of Board/ARMC||15% of Base Fee|
|25% of BF as Chairman of RC/NC|
Non-Executive Directors' fees are benchmarked against the market and industry levels to ensure that the amounts are sufficient to motivate and attract Directors, without being too generous to pose a potential compromise of the independence of the Directors. The remuneration that is paid to the Directors of RHT TM are determined and paid from RHT TM (in its personal capacity) as approved by its shareholder Stellant, and not out of RHT Trust property. Directors' fees paid to each of the following non-Executive Directors for FY2016 did not exceed S$250,000:
Mr Eng Meng Leong;
Mr Sydney Michael Hwang;
Dr Yogendra Nath Mathur; and
Mr Peter Joseph Seymour Rowe.
Once a year, a review would be carried out of the remuneration framework and the amounts paid to key management of RHT and RHT TM. The Trustee-Manager has put in place a performance based remuneration framework for its key management. Currently, the key management of RHT TM, including the Chief Executive Officer ("CEO"), are paid a fixed yearly salary with a performance related bonus that is tied to the performance of RHT TM. The performance of RHT TM is in turn linked to the performance of RHT. The main regular source of revenue earned by RHT TM is from the fees paid from RHT to RHT TM. The fees payable by RHT to RHT TM are based on (i) the value of the assets under management at RHT and (ii) the amount of distributable income generated at RHT. The greater the growth of the value of RHT's assets and the amount of distributable income available for unitholders of RHT, will result in higher revenue for RHT TM. The Trustee-Manager has also elected for the variable bonus to make up a higher proportion of the total salary payable to key employees, in order to tighten the link between the performance of the individual and their remuneration.
To assist the RC in their assessment on the appropriate compensation level for key management, a report is commissioned yearly to provide information on the remuneration paid by comparable peers in the industry. Similar to the Directors, key management and employees of RHT TM are paid by the Trustee-Manager and not out of RHT Trust property. In FY2016, the management of RHT TM had disposed of their shares in the RHT TM which were granted pursuant to a Management Incentivisation Plan (the "MIP"). The disposal of the management's MIP shares took place alongside the sale of the remaining issued and paid up share capital of RHT TM from RGAM Investment Advisors Private Limited to Stellant Capital Advisory Services Private Limited ("Stellant") on 2 February 2016. The MIP was terminated post the sale of RHT TM to Stellant. Currently there is no other share incentive or employee share option scheme in place for the management.
No Director or employee of RHT TM is paid in the form of shares or interests in the Trustee Manager's controlling shareholder or its related entities.
The following table shows the remuneration in bands of S$250,000, of the CEO, CFO as well as the top two key executive officers of the Trustee-Manager. The key executives of the Trustee-Manager are based on the importance of their roles in Trustee-Manager. The Trustee-Manager is of the view that the disclosure of the specific remuneration of each of the management and key employee may lead to retention or recruitment difficulties in light of the relatively small number of trusts currently operating in Singapore. Futhermore, the remuneration paid to the management of RHT TM is from RHT TM, and not out RHT's Trust Property.
|Executive Directors||Remuneration Band||Fixed Salary||Bonus|
|Gurpreet Singh Dhillon||S$ 751,000–1,000,000||66%||44%|
|Pawanpreet Singh||S$ 500,001–750,000||53%||47%|
|Key Management||Remuneration Band||Fixed Salary||Bonus|
|Tan Suan Hui||S$ 251,000–500,000||53%||47%|
|Alex Lim Zhi Wei||S$ 0–250,000||51%||49%|
Dr Ramnik Ahuja who is employed as Vice President of Research and Strategy, is the spouse of Mr Pawanpreet Singh, the Chief Financial Officer and Executive Director of RHT TM. Her annual remuneration fell in the band of S$50,000–100,000 in FY2016.
Currently, none of the Directors or key management has a contract with RHT TM that contain provisions on termination benefits.
Principle 10: The Board should present a balanced and understandable assessment of the company's performance, position and prospects.
The Board is committed to providing unitholders of RHT with a balanced and understandable assessment of RHT's performance, position and prospects. The financial results of RHT as well as any other material price sensitive information are disseminated out via the SGXNET as well as put up on the website of RHT, as well as via investors meetings and quarterly conference calls with investors.
As mentioned under Principle 6 on Access to Information, the Board is provided with a monthly report on RHT, which summarises the key financial performance of RHT against that forecasted, as well as the business environment and pertinent operations of RHT. Where there are material differences from month to month, explanations are provided to the Board. The Board has also approved an internal Compliance Manual which compiles the relevant rules and regulations applicable to both RHT and RHT TM. This Compliance Manual serves to assist management in meeting the regulatory requirements.
Principle 12: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.
The members of the Audit & Risk Management Committee ("ARMC") of RHT TM are appointed from among the Directors of the Board and comprise of 3 non-Executive independent Directors. They are:
Within the role and function of the ARMC, it is provided that the ARMC may investigate any matter within the ARMC's terms of reference, whenever it deems necessary, where it should have full access to and cooperation by the management and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.
The ARMC met 5 times in FY2016. During the year, the ARMC reviewed the quarterly and full year results of FY2016, including the adequacy of disclosures as well as the key changes in accounting policies applied. Management is kept abreast of changes in the accounting standards by both the external auditors and other sources. Every year, management perform a diagnostic of the changes in the accounting standards applicable to RHT, and brief the ARMC and Board about such changes.
On a quarterly basis, the ARMC also reviews the reports from the internal auditors with respect to their findings as well as the internal risk committee of RHT TM on changes in key risks and policies affecting RHT. There are also quarterly reports provided by the management to the ARMC on the actions taken to resolve previous internal audit findings. In addition, management prepares a liquidity report on RHT for the ARMC's information and review. Key policies are reviewed by management on a regular basis to ensure that they are up to date and put up to the ARMC for approval to be put to the Board.
All interested party transactions ("IPT") are tabled to the ARMC, including the terms on which the IPT were conducted. This is in accordance with our IPT policy, which sets out the procedure whereby such transactions are identified, reported and recorded down in the IPT register. The terms of the transactions, including information to support that the transactions are conducted on normal commercial terms, are also recorded in the register.
Details of the Interested Person Transactions entered into between the RHT Group and with interested persons (including Fortis, Religare Enterprises Limited and their respective subsidiaries and associates) during the course of the current financial year ending 31 March 2016 which fall under the Listing Manual of the SGX-ST are set out below.
|No.||Interested Person||Nature of Transaction||Value of Transaction (S$)(1)||Percentage of NTA (2)|
|1||Religare Invesco Mutual Fund||Investment as a treasury transaction||3,809,270||0.55%|
|2||Religare Healthworld Ltd||Revenue share from pharmaceutical operations||1,561,723||0.23%|
|3||Religare Infrafacilities Ltd||Rental and administrative charges for RHT Corporate office in India||146,071||0.02%|
|4||SRL Ltd||Revenue share from pathology operations||543,324||0.08%|
|5||Religare Health Insurance Company Ltd||Medical and accident policy for RHT India staff||64,317||0.01%|
(1) Values are converted at the end of each month as per the prevailing exchange rate at that month end.
(2) Based on the latest audited net tangible assets of RHT as of 31 March 2016 of S$692,985,000
RHT's excess cash balances are invested with Religare Mutual Fund from which RHT receives interest income. The transactions with Religare Healthworld Ltd and SRL Ltd involve the leasing out of space at various RHT Clinical Establishments to companies owned by Religare Entreprises Ltd. RHT in turn has leased office space from Religare Enterprises Ltd to cater for the RHT personnel that are based in India. This office lease arrangement was terminated on 31 March 2016. The medical insurance plan for the staff in RHT India was purchased from Religare Health Insurance Company Ltd.
The ARMC also reviews the audit plans for both the internal and external auditor for the forthcoming year. In FY2016, both the external and internal auditors each met at least once during the year with the ARMC without management being present. In the same financial year, the Chairman of the ARMC also met separately with the internal auditors once every quarter and separately with the external auditor twice. It is also the practice of the Chairman of the ARMC to meet with the Chief Financial Officer of the Trustee-Manager prior to the quarterly ARMC meetings to review the financial reports.
One of the roles of the ARMC is to review the independence of the external auditors. For FY2016, the ARMC noted that S$346,000 was paid to the external auditor as audit fee and S$28,000 was paid for non-audit services. A discussion was held with the external auditor in relation to the type of non-audit services that were provided, and the ARMC was satisfied with the independence of the external auditor. No ARMC member is a former partner or director with the external audit firm.
The Trustee Manager has complied with Rule 712 and 715 of the SGX-ST listing manual. All of RHT's foreign incorporated subsidiaries are audited by Deloitte Haskins & Sells LLP ("DHS"). The ARMC has assessed the track record and capabilities of DHS and the partner in carrying out work for similar companies in India. They have also discussed with DHS, the manner in which audit work is proposed to be carried out by DHS. The ARMC is of the view that DHS is a suitable audit firm to meet the RHT Group's audit obligations.
RHT TM has established a whistle blowing policy to provide a channel for whistleblowers to report any actual or suspected wrongdoings, as well to provide assurance that the whistleblower will be protected from reprisals or victimization for whistle blowing. The whistleblowing policy and procedure is approved and overseen by the ARMC, and it provides for both the employees and the public to raise concerns to both the Head of Compliance of RHT TM and/or the Chairman of the ARMC. Investigations will commence upon receiving a whistleblowing report and follow up actions would be taken if required.
Principle 13: The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.
The Trustee-Manager is committed to having an internal audit function at all times. The current internal audit firm which has been appointed to perform the function for RHT is KPMG Services Pte Ltd. The selection and appointment of the internal audit firm for RHT was determined by the ARMC, and the internal audit plan for each financial year is approved by the ARMC. The scope of the internal audit is intended to cover key aspects of RHT and RHT TM's internal controls in the areas of finance, operations, compliance and information technology. During the course of their work, the internal auditors are given full access to any documents, records or personnel, and they report directly to the ARMC Chairman.
As mentioned under the section "Audit Committee", the Chairman of the ARMC meets the internal auditors every quarter. These meetings take place without the management being present, which allows the discussions to be as open and candid as possible. The ARMC has reviewed the internal audit plan for the FY2017, the resources allocated to carrying out the plan, as well as the work done by the internal auditors over FY2016, and they are satisfied with the adequacy and effectiveness of the current internal auditor.
Principle 11: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders' interests and company's assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.
Having an effective and sound system of risk management and internal controls system in place enables the Trustee-Manager to achieve its strategic objectives, whilst keeping the business and assets of RHT secure. An effective risk management system keeps both management and the Board up to date with the key risks and challenges that RHT faces, it also serves to guide the Trustee-Manager in its decision making and allocation of resources.
Keeping with the above goal of having a sound system of risk management and internal controls, the Trustee-Manager has established an internal risk committee ("IRC") comprising of senior management, to undertake the task of managing the risk management system and internal controls. Under the Trustee-Manager's risk management system, the IRC is responsible for the identification of risks. Key risks are rated and the controls for mitigating the risks are evaluated. A register is maintained which tracks the rating of each key risk post the controls that have been put in place. Each IRC member is responsible for risks in their respective areas such as finance, operations, compliance, investments, information technology.
The IRC meets on a quarterly basis, or where the situation requires, to evaluate how the risks facing RHT might have evolved following changes in both the operating environment and internal operations of RHT. Key risk indicators are used as a means for early identification of escalating risks or signals of changes in areas that affect RHT. The key risk indicators will be able to assist management and the Board in signaling issues that may be developing (whether internally or externally) which can potentially have an adverse impact on RHT. Key risk indicators can also provide information to the management and the Board to consider when executing strategies for RHT.
The IRC also debates on whether new processes or existing processes need to be implemented in order to manage any of the new risks. During some of the IRC meetings, relevant staff might be invited to join the meetings or discussions in order to brief the IRC in terms of changes that might have occurred in their respective areas, and to give their views on how new risks might have risen. The involvement of various staff within RHT in risk management discussions help to promote a culture where risk awareness and governance is integral to the daily operations of RHT.
The IRC also regularly meets with the internal auditors, in order to compare each's assessment of the key risks and the adequacy of the internal controls. This helps to ensure that there are all gaps are filled wherever possible and no key risk is inadvertently left out. The implementation of control self assessment ("CSA") exercise is also being rolled out within RHT. The aim of the CSA is to raise the awareness of staff within RHT in relation to key policies and processes, as well as allow themselves to undertake a check on whether they have been complying with these processes.
The discussions of the quarterly IRC are put up to the ARMC at each quarter's meeting, where the ARMC will assess the effectiveness and adequacy of the risk management and internal controls within RHT TM. This is complemented by a quarterly report provided by the internal auditor to the ARMC on their findings, together with a quarterly report from management on the actions taken to address issues which had been highlighted previously by the internal auditors. Apart from the quarterly reports by the internal auditor, the internal auditor also provides the ARMC with an annual review of the adequacy and effectiveness of the internal controls within RHT, including financial, operational compliance and information technology controls. Where there are areas for enhancements, the internal auditor will highlight it to the ARMC.
Both the ARMC and the Board also receives a quarterly letter of assurance from the CEO and CFO in relation to the quarter's and/or full year results (whichever is applicable). The letter provides assurance in terms of the proper maintenance of the financial records of RHT, and that the financial statements give a true and fair view of the RHT's operations and finances, and in relation to the effectiveness of RHT's risk management and internal control systems.
After assessing the internal risk management framework that is in place, as well as the quarterly reports from the IRC and internal auditor, coupled with the annual assessment undertaken by each of the internal auditor and external auditor, the ARMC and Board are in a position to comment on the adequacy of the internal controls of RHT.
For FY2016, based on ARMC's review of the internal risk management framework and internal controls which the management of RHT TM has put in place, the creation of an IRC to continuously monitor the risks affecting RHT and evaluate the efficacy of the internal processes, as well as the reports from the internal auditor and external auditor, the Board with the concurrence of the ARMC, is of the opinion, that RHT has in place reasonable, adequate and effective risk management and internal controls including financial, operational, compliance and information technology controls.
However, the Board notes that the risk management structure which the Trustee-Manager has been put in place cannot provide absolute assurance that RHT will not be affected by any event that may be foreseen as well as poor judgement and decision making, human error, fraud and other irregularities.
There were material contracts subsisting at the end of FY2016, between RHT Group and Fortis. Most of these contracts were entered into at the time of the listing of RHT on the SGX-ST. These material contracts are summarised within the section "Exempted Agreements" in the RHT IPO prospectus which can be found on the RHT's website www.rhealthtrust.com. These exempted agreements were deemed to have been specifically approved by unitholders upon their subscription for the units of RHT at the time of the initial public offering of RHT. There was another Hospital and Medical Services Agreement entered into in FY2015, between RHT Group and Fortis, during the acquisition of the Mohali Clinical Establishment.
Principle 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders' rights and continually review and update such governance arrangements.
Principle 15: Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.
Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.
The Trustee-Manager ensures that material information is disseminated to unitholders on an accurate and timely basis, with full and complete information to enable unitholders to make form their investment decisions. Our announcements are all disseminated via the SGXNET and the RHT website, www.religarehealthtrust.com. Where necessary, the announcements may also be placed in the local newspapers. There is no selective disclosure of information.
Every quarter, after the release of our financial results, or when there are announcements on material corporate actions, the Trustee-Manager will hold both analyst briefings as well as investor conference calls. The analyst briefings facilitate research coverage on RHT, to enable a more independent analysis from the analysts. The investor calls present great opportunity for investors to hear from the management, and to have their questions answered.
The management participates actively in investor conferences which are held in different locations throughout the year, and embark on dedicated non-deal roadshows. By reaching out to investors through such means enables the management to obtain direct feedback from investors or analysts. The Board is in turned briefed each quarter by management on the conferences and investors meetings which had been held, in order for them to understand the investors' views.
Whenever a unitholders' meeting is to be held, the notice will be disseminated to each unitholder together with the circular and/or report, as well as published in the local newspapers and via SGXNET. Should any unitholder not be able to attend the meeting, he is allowed to appoint up to two proxies to vote on his behalf at the meeting. Where there are separate issues to be put forth for unitholders' approval at the general meetings, such resolutions are separate and not bundled together, unless the resolutions are interdependent and form one significant proposal.
We had one annual general meeting in FY2016, at which the full Board of Directors was present. The external auditor was also present to address unitholders' queries regarding the conduct of audit, preparation and content of the auditors' report. Our company secretary had prepared the minutes of the annual general meeting, which included relevant comments or questions from unitholders, and the minutes is available for unitholders upon request. In the annual general meeting, the voting was conducted by way of a poll in order to promote greater transparency and allow exact and definitive results at the general meeting. The detailed results of the annual general meeting, which included the number of votes cast for and against each resolution, was disclosed via the SGXNET.
It is RHT TM's internal policy that (i) an officer of the Trustee-Manager should not deal in RHT's units on short term considerations; (ii) the Trustee-Manager and its officers should not deal in RHT's units during the period commencing two weeks before the announcement of RHT's quarterly financial results, and one month commencing before the announcement of RHT's fourth quarter and full year results. Reminders are sent to the Board of Directors as well as the staff of RHT TM when such blackout periods for trading in RHT's units commence.
At any point in time, when any of the Directors or officers are in possession of confidential and price sensitive information, they are also reminded not to trade in the units of RHT, and to be mindful of the laws relating to insider trading at all times.
The Board of Directors of RHT TM and the RHT TM (in its capacity as trustee-manager of RHT) are responsible for safeguarding the interests of the unitholders of RHT as a whole and managing the business of RHT. RHT TM is also required to act in the best interests of the unitholders of RHT as a whole, and give priority to the interests of unitholders of RHT over its own interests in the event of a conflict between the interests of all unitholders as a whole and its own interests. The Trustee-Manager has put in place policies and practices in the management and governance of RHT, in order to ensure that RHT is managed in the interests of its unitholders. The policies and practices include ensuring that:
Under the revised Code of Collective Investment Scheme (the "CIS Code") issued by MAS which took effect on 1 January 2016, where fees are payable out of the deposited property of a property fund, the methodology and justifications for each type of fees payable should be disclosed. While RHT is constituted as a Business Trust, and is not required to comply with the CIS Code, management has elected to disclose the fee computation methodology in this report for greater transparency. All the fees below are payable to the Trustee-Manager in the form of cash and/or Units (as the Trustee-Manager may elect) at the prevailing market price.
|Fee Payable by RHT||Rationale for Fee|
|(1) Base Fee
The base fee ("Base Fee") is 0.4% per annum of the value of the Trust Property3 , and paid quarterly in arrears.
|The Trustee-Manager receives a Management Fee (comprising of the Base Fee and Performance Fee) from RHT for managing all aspects of RHT, including but not limited to, managing and enhancing the assets, financing needs, investor relations and ensuring regulatory compliance.
The Base Fee increases in line with any increase in value of RHT's assets, reflecting the increase in work load and scope with a greater volume of assets being managed. In addition, it serves to incentivise the Trustee-Manager to increase the value of the assets through asset enhancement initiatives or other means.
| Performance Fee
The performance fee ("Performance Fee") is 4.5% of the Distributable Income of RHT (as defined in the Trust Deed)4 , and paid quarterly in arrears.
The Base Fee and Performance Fee are payable to the Trustee-Manager in the form of cash and/or Units (as the Trustee-Manager may elect) at the prevailing market price.
|The Performance Fee is pegged to the amount of Distributable Income generated at RHT for unitholders. The ability of RHT TM to generate higher revenue and manage expenses for RHT, the higher the Distributable Income available for unitholders of RHT. This has the effect of directly aligning the interests of the Trustee-Manager with that of the unitholders of RHT.|
| (2) Trustee Fee
The trustee fee is 0.03% per annum of the value of the Trust Property, subject to a minimum of S$15,000 per month, and paid quarterly in arrears.
|As RHT TM performs the dual functions of both a manager and a trustee for RHT, it also charges a trustee fee. This trustee fee is pegged to the value of the assets to reflect the increase in volume and scope of work with an increase in asset value.|
Any other substantial fee or charge (i.e. 0.1% or more of RHT's asset value)
|Fee Payable by RHT||Rationale for Fee|
| Acquisition Fee
(3) The acquisition fee ("Acquisition Fee") will be:
|In connection with the Performance Fee, the Acquisition Fee serves to encourage the Trustee-Manager to look for yield accretive quality assets to add to the portfolio of RHT. When undertaking an acquisition, a fair amount of time and expenses are incurred due to the lengthy process involved when carrying out due diligence and the number of external professionals involved. The Acquisition Fee also serves to compensate the Trustee-Manager for the additional time and expenses outside of that incurred for day to day operating expenses. The lower divestment fees payable to investments acquired from the Sponsor Group or promoter linked companies reflect the reduced effort required in sourcing for the acquisition.|
Notwithstanding the above, in the event that any investment is held by the Religare Group as a nominee or in a fiduciary capacity or otherwise pursuant to any contractual obligation entered into in its ordinary course of business, the Acquisition Fee payable on the acquisition of such investment by RHT (if applicable) shall be 1.0% of the acquisition price of any investment acquired directly or indirectly by RHT (pro-rated if applicable to the proportion of RHT's interest in the investment acquired).
No Acquisition Fee is payable to the Trustee-Manager in connection with the acquisition of the portfolio acquired at the time of the initial public offering (the "Initial Portfolio"), the acquisition of the Sponsor's 51.0% interest in FHTL pursuant to the FHTL Call Option5 and the CCPS Subscription.
Any payment to third party agents or brokers in connection with the acquisition of any asset of RHT shall be paid by the Trustee-Manager to such persons out of the Trust Property of RHT, and not out of the Acquisition Fee received or to be received by the Trustee-Manager.
| Divestment Fee
(4) The divestment fee ("Divestment Fee") will be 0.5% of the sale price of any investment sold, transferred or otherwise disposed of by RHT, whether directly or indirectly (pro-rated if applicable to the proportion of RHT's interest in the investment sold, transferred or disposed).
No Divestment Fee is payable to the Trustee-Manager for the divestment by RHT to the Sponsor or its nominees of (i) the securities in FHTL pursuant to the FHTL Put Option6 and the put option in favour of Fortis Global Healthcare Infrastructure Pte. Ltd. ("FGHIPL") in the FHTL CCD Subscription Agreement, and (ii) the CCPS pursuant to the put option in favour of Kanishka Healthcare Limited ("KHL") in the CCPS Subscription.
Any payment to third party agents or brokers in connection with the divestment of any asset of RHT shall be paid by the Trustee-Manager to such persons out of the Trust Property of RHT, and not out of the Divestment Fee received or to be received by the Trustee-Manager.
|Fee Payable by RHT||Rationale for Fee|
| Development Fee
(5) 2.0% of the total project costs7 for undertaking (directly or indirectly) a
Development Project on behalf of RHT incurred (pro-rated if applicable to the interest of RHT in the Development Project).
"Development Project" means a project involving the development or redevelopment of medical and healthcare assets which are acquired or held by RHT. For the avoidance of doubt, this includes any redevelopment undertaken on the Initial Portfolio.
|A development project involves the construction of new assets which is frequently carried out over a few years. Developing a project requires a dedicated project team to be assigned to oversee the project and often includes the appointment of specialised external project managers as well. The development fee compensates the Trustee-Manager for maintaining a separate team of personnel and the expenses related to the project over the years.|
| Asset Management Fee
(6) 1.0% of the total Gross Revenue8 for asset management services provided in respect of assets in the Trust Property, and paid quarterly in arrears.
No Asset Management Fee will be payable in respect of assets operated by the Sponsor Group. For the avoidance of doubt, no Asset Management Fee is payable to the Trustee-Manager in respect of the Initial Portfolio and the CCPS in EHIRCL held pursuant to the CCPS Subscription.
|In managing RHT's assets, RHT TM incurs expenses, including but not limited to, ensuring the smooth running of assets for the operators, compliance with regulations, negotiations with vendors. This asset management fee will reimburse the Trustee-Manager for such expenses incurred.
By linking the asset management fee of the Trustee-Manager to that of the gross revenue of the operator aligns the interests of the Trustee-Manager with that of the unitholders of RHT. As a portion of RHT's revenue is pegged to the gross revenue of the operator, a higher revenue generated by the operator results in higher revenue for RHT. The Trustee-Manager by being incentivised to manage the assets in such a way that generates more revenue g for the operator, in turn also benefits the unitholders of RHT.
|Fee Payable by RHT||Rationale for Fee|
| Marketing Services Fee
(7) Where the Trustee-Manager secures a lease (outside India) and/or service contract with any person (other than a member of the Sponsor Group) for a particular medical and healthcare asset (or part thereof) on behalf of RHT, the Trustee-Manager will be entitled to a marketing services fee
("Marketing Services Fee ") of:
|The Marketing Services Fee is structured to incentive the Trustee-Manager to secure leases with for RHT's assets with longer lease terms and which command a higher revenue. There is also a higher Marketing Service Fee payable when it involves a new tenant due to the extra work involved in sourcing and attracting new operators for RHT's assets.|
| Marketing Services Fee
(7) If a third party agent secures a lease (outside India) and/or service contract with any person (other than a member of the Sponsor Group) for a particular medical and healthcare asset (or part thereof) on behalf of RHT, the Trustee-Manager will be responsible for all marketing services fee payable to such third party agent, and the Trustee-Manager will be entitled to a Marketing Services Fee of:
For the avoidance of doubt, the Marketing Services Fee includes all commission and fees payable to third party agents.
The Marketing Services Fee may be adjusted accordingly at the time of securing or renewal of a lease and/or service contract by the Trustee-Manager or a third party agent, to be consistent with and no higher than the prevailing market rates of such marketing services fee in the country where the asset is located.
|Board of Directors||Appointed|
|Mr Ravi Mehrotra, Executive Chairman||7 September 20122|
|Mr Gurpreet Singh Dhillon, Executive Director & CEO||22 July 20111|
|Mr Pawanpreet Singh, Executive Director & CFO||1 January 2013|
|Mr Eng Meng Leong, Independent Director||1 July 2013|
|Mr Sydney Michael Hwang, Independent Director||7 September 20122|
|Dr Yogendra Nath Mathur, Lead Independent Director||7 September 20122|
|Mr Peter Joseph Seymour Rowe, Independent Director||7 September 20122|
|1reappointed on 28 July 2014
2reappointed on 6 August 2015
|Board Committees & Members|
|Audit & Risk Management Committee||Nominating Committee||Remuneration Committee|
|1. Mr Peter Joseph Seymour Rowe, Chairman||1. Mr Sydney Michael Hwang, Chairman||1. Mr Eng Meng Leong, Chairman|
|2. Mr Eng Meng Leong||2. Mr Ravi Mehrotra||2. Mr Sydney Michael Hwang|
|3. Dr Yogendra Nath Mathur||3. Dr Yogendra Nath Mathur||3. Mr Peter Joseph Seymour Rowe|
The main objective of the ARMC shall be to assist the Board in fulfilling its responsibilities as the board of the trustee-manager of RHT.
In pursuance of this goal, the ARMC shall:
Roles and Function
The duties and functions of the ARMC shall include the following:
Risk Management and Internal Controls
Internal & External Audit Processes
Interested Person Transactions and Conflicts of Interest
Other areas of responsibility of the ARMC include:
The ARMC's roles and responsibilities will also include the following:
The main objective of the NC shall be to make recommendations to the Board on all Board appointments. The NC shall decide how the Board's performance is to be evaluated and develop objective performance criteria which address how the Board has enhanced long-term Unitholders' value. It shall also implement a process for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual Director to the effectiveness of the Board. The Chairman will review the results of the performance evaluation of the Board, and where appropriate, propose new members to be appointed to the Board of Directors or seek the resignation of Directors, in consultation with the NC.
Roles and Function
The duties and functions of the NC shall include the following:
The primary objective of the RC is to recommend to the Board a framework and specific remuneration package for the Directors and the chief executive officer of RHT TM.
With regard to remuneration, the RC will review the framework of remuneration and the specific remuneration packages for the Directors and the key executive officers of the Trustee-Manager. The RC shall cover all aspects of remuneration, including but not limited to directors' fees, salaries, allowances, bonuses, options and benefits in kind.
Roles and Functions
The main objective of the Executive Committee shall be to assist the Board in fulfilling certain of its responsibilities as the board of the trustee-manager of Religare Health Trust ("RHT"). The purpose of the Executive Committee is to execute the business plan and manage the day to day affairs of RHT and its subsidiaries, jointly-controlled entities and associated companies (collectively, the "RHT Group" and each a "RHT Group Entity").
Roles and Functions
And other major appointments over the last 3 years
|Name of Director||Current Directorships and other major appointments||Past appointments over the last 3 years|
|Gurpreet Singh Dhillon||
|Eng Meng Leong||
|Sydney Michael Hwang||
|Dr Yogendra Nath Mathur||
|Peter Joseph Seymour Rowe||
* Chairman of the Managed Investments Scheme Compliance Committees and AMP Capital China Growth Fund Advisory Committee.