The Board is responsible for the overall corporate governance of the Manager including establishing goals for management and monitoring the achievement of these goals. The Manager is also responsible for the strategic business direction and risk management of DHLT. All members of the Board participate in matters relating to corporate governance, business operations and risks, financial performance and the nomination and review of performance of directors.

The Board will establish a framework for the management of the Manager and DHLT, including a system of internal audit and control and a business risk management process. The Board consists of six members, three of whom are independent directors. None of the Directors has entered into any service contract with DHLT.

The composition of the Board is determined using the following principles:

• the Chairman should be a non-executive director of the Manager;
• the Board should comprise directors with a broad range of commercial experience including expertise in funds management, legal matters, audit and accounting and the property industry; and
• at least one-third of the Board should comprise Independent Directors.

The Chairman of the Board is an independent director. However, in the future, in the event where the Chairman is not an independent director, independent directors are to make up a majority of the Board in accordance with Provision 2.2 of the Code of Corporate Governance 2018.

The composition of the Board will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience.

The positions of Chairman and Chief Executive Officer will be held by two separate persons in order to maintain effective oversight. Currently, the Chairman is Mr Tan Jeh Wuan and the Chief Executive Officer is Mr Takeshi Fujita.

The ARC is appointed by the Board from among the Directors on the Board and is composed of four non-executive members, a majority of whom (including the chairman of the ARC) are independent Directors.

The current members of the ARC are Mr Tan Juay Hiang, Mr Tan Jeh Wuan, Mr Takashi Suzuki and Mr Yoshiyuki Takagi. Mr Tan Juay Hiang has been appointed as the chairman of the ARC. All the members of the ARC will be appropriately qualified to discharge their responsibilities, possessing the requisite accounting and related financial management expertise or experience.

The role of the ARC is to monitor and evaluate the effectiveness of the Manager’s internal controls. The ARC also reviews the quality and reliability of information prepared for inclusion in financial reports, and is responsible for the nomination of external auditors and reviewing the adequacy of external audits in respect of cost, scope and performance.

The Board will itself perform the full functions of a nominating and remuneration committee and a separate committee, comprising a majority of independent directors, is not necessary. The current composition of directors in the Board provides sufficiently strong independence to perform the role of a nominating and remuneration committee. The Board will perform the various functions of the nominating and remuneration committee, including tabling nominations to the Board, reviewing the structure size, composition, performance, appointment, remuneration and renewal of the Board, reviewing the independence of the Board members, ensuring that there is professional development of the Board and approving the remuneration of key management personnel.

The SGX-ST has issued a Practice Note which provides that Rule 210(5)(e) of the Listing Manual does not apply to REITs if the REIT complies with regulations made under the SFA relating to board composition of a REIT manager. As the Manager complies with Regulation 13D of the Securities and Futures (Licensing and Conduct of Business) Regulations relating to the composition of the Board of the Manager, the Manager is of the opinion that the corporate governance requirements relating to the nominating and remuneration committee have been substantively addressed. The MAS has also issued Guideline SFA04-G07 “Guidelines to all Holders of a Capital Markets Services Licence for Real Estate Investment Trust Management” which provides that a REIT manager which does not set up a nominating and remuneration committee should clearly explain the rationale in the annual report of the REIT. The requisite disclosures setting out the rationale for the non-establishment of a nominating and remuneration committee, including the criteria and process put in place by the Manager for selecting and appointing new directors and for reviewing the performance of and re-electing existing directors, and for developing policies on remuneration and determining remuneration packages for directors and executive officers will be set out in the annual reports.

The Board will be undertaking all the responsibilities of the nominating and remuneration committee and is able to do so because:

1. the Manager does not manage any other REIT and in general, REITs (including DHLT) 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 by reason of it undertaking the responsibilities of the nominating and remuneration committee and the Board would be able to give adequate attention to such issues relating to nomination and remuneration matters; and
2. the independent directors form half of the Board and the Chairman is an independent director, which demonstrate that the independent directors play a substantive role and assure the objectivity and independence of the decision making process concerning nomination and remuneration.

In order for the Manager to efficiently and fully comply with relevant laws and regulations for its operations of DHLT, the Manager has outsourced its compliance function to a service provider with relevant experience and expertise in relation to the Singapore REIT market. In particular, the Manager has engaged KPMG Services Pte. Ltd. to provide compliance support services and assist the Manager in certain compliance functions, which include:

• highlighting deficiencies and/or recommending suitable compliance processes for the Manager to comply with the regulatory requirements under the SFA, the CIS Code (including the Property Funds Appendix), the Listing Manual, the CMS Licence, and applicable laws, regulations, notices and guidelines;
• updating and providing training to the Directors and employees of the Manager on such compliance requirements as and when required by the Manager; and
• reviewing returns to the MAS as required under the SFA.

KPMG Services Pte. Ltd. will report to the Chief Executive Officer and the Board through the Chief Risk Officer. Notwithstanding the outsourcing of the Manager’s compliance function, the Manager is responsible for ensuring compliance with all applicable laws, regulations and guidelines.

Each of the Directors and the Chief Executive Officer of the Manager is to give notice to the Manager of his acquisition of Units or of changes in the number of Units which he holds or in which he has an interest, within two Business Days after such acquisition or the occurrence of the event giving rise to changes in the number of the Units which he holds or in which he has an interest.

All dealings in the Units by the Directors and the Chief Executive Officer will be announced via SGXNET, with the announcement to be posted on the internet at the SGX-ST website: http://www.sgx.com. In addition, the Directors and employees of the Manager are prohibited from dealing in the Units:

• in the period commencing one month before the public announcement of DHLT’s annual results, semi-annual results (if applicable) and property valuations, and (if the issuer announces its quarterly financial statements, whether required by the SGX-ST or otherwise) two weeks before the public announcement of the quarterly results of DHLT, and ending on the date of announcement of the relevant results or, as the case may be, property valuations; and
• at any time while in possession of price sensitive information.

The Directors and employees of the Manager are also prohibited from communicating price sensitive information to any person.

Pursuant to Section 137ZC of the SFA, the Manager will be required to, inter alia, announce to the SGX-ST the particulars of any acquisition or disposal of interest in Units by the Manager as soon as practicable, and in any case no later than the end of the Business Day following the day on which the Manager became aware of the acquisition or disposal.

In addition, all dealings in Units by the Chief Executive Officer will also need to be announced by the Manager via SGXNET, with the announcement to be posted on the internet at the SGX-ST website http://www.sgx.com and in such form and manner as the Authority may prescribe.

The Board will meet quarterly, or more often if necessary, and will review the financial performance of the Manager and DHLT against a previously approved budget. The Board will also review the business risks of DHLT, examine liability management and act upon any comments from both the internal and external auditors of DHLT.

The Manager has appointed experienced and well-qualified management personnel to handle the day-to-day operations of the Manager and DHLT. In assessing business risk, the Board will consider the economic environment and risks relevant to the property industry. It will review management reports and feasibility studies on individual investment projects prior to approving major transactions. The management will meet regularly to review the operations of the Manager and DHLT and discuss any disclosure issues.

The Manager is required to prioritise Unitholders’ interests over those of the Manager and its shareholders in the event of a conflict of interest.

The Manager has also instituted the following procedures to deal with potential conflicts of interest issues:

• the management team of the Manager includes key executives with a strong track record in asset and investment management strategy, and who have extensive experience and strong capabilities to be able to independently source for suitable investments for DHLT;
• the Manager will not manage any other REIT which invests in the same type of properties as DHLT;
• all executive officers will be working exclusively for the Manager and will not hold other executive positions in other entities, save for any wholly-owned subsidiaries of the Manager;
• all resolutions in writing of the Directors in relation to matters concerning DHLT must be approved by at least a majority of the Directors (excluding any interested Director), including at least one independent director;
• at least one-third of the Board shall comprise independent directors, provided that where (i) the Chairman and the Chief Executive Officer are the same person, (ii) the Chairman and the Chief Executive Officer are immediate family members, (iii) the Chairman is part of the management team or (iv) the Chairman is not an independent director, at least half the Board shall comprise independent directors;
• in respect of matters in which a Director or his associates (as defined in the Listing Manual) has an interest, direct or indirect, such interested director will abstain from voting. In such matters, the quorum must comprise a majority of the directors and must exclude such interested director;
• in respect of matters in which the Sponsor and/or their subsidiaries have an interest, direct or indirect, for example, in matters relating to:
  • potential acquisitions of additional properties or property-related investments by DHLT in competition with the Sponsor and/or their subsidiaries; and
  • competition for tenants between properties owned by DHLT and properties owned by the Sponsor and/or their subsidiaries, any nominees appointed by the Sponsor and/or their subsidiaries to the Board to represent their interests will abstain from deliberation and voting on such matters. In such matters, the quorum must comprise a majority of the independent directors and must exclude nominee directors of the Sponsor and/or their subsidiaries;
• save as to resolutions relating to the removal of the Manager, the Manager and its associates (as defined in the Listing Manual) are prohibited from voting or being counted as part of a quorum for any meeting of the Unitholders convened to approve any matter in which the Manager and/or any of its associates (as defined in the Listing Manual) has a material interest; and
• it is also provided in the Trust Deed that if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of DHLT with a Related Party of the Manager, the Manager shall be obliged to consult with a reputable law firm (acceptable to the Trustee) who shall provide legal advice on the matter. If the said law firm is of the opinion that the Trustee, on behalf of DHLT, has a prima facie case against the party allegedly in breach under such agreement, the Manager shall be obliged to take appropriate action in relation to such agreement. The Directors (including the Independent Directors) will have a duty to ensure that the Manager so complies. Notwithstanding the foregoing, the Manager shall inform the Trustee as soon as it becomes aware of any breach of any agreement entered into by the Trustee for and on behalf of DHLT with a Related Party of the Manager, and the Trustee may take such action as it deems necessary to protect the rights of the Unitholders and/or which is in the interests of the Unitholders. Any decision by the Manager not to take action against a Related Party of the Manager shall not constitute a waiver of the Trustee’s right to take such action as it deems fit against such Related Party.