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Corporate Governance

Parkway Trust Management Limited, in its capacity as the manager of PLife REIT ("Manager") recognises that an effective corporate governance culture is critical to the performance of the Manager and consequently, the success of PLife REIT. The Manager is firmly committed to good corporate governance and has adopted a comprehensive corporate governance framework that meets best practice principles. In particular, the Manager has an obligation to act with due care and diligence, and in the best interests of the unitholders of PLife REIT ("Unitholders").

The following sections describe the Manager's main corporate governance policies and practices with reference to the Code of Corporate Governance 2018 (as amended, "CG Code"). The Manager confirms that it has complied with the CG Code in all material respects and to the extent that there are any deviations from the CG Code, the Manager will provide explanation for such deviation and details of the alternative practices which have been adopted by the company which are consistent with the intent of the relevant principle of the CG Code.

THE MANAGER OF PLIFE REIT

PLife REIT, constituted as a trust and has no personnel of its own, is externally managed by the Manager in accordance with the terms of the trust deed constituting PLife REIT dated 12 July 2007 (as amended, the "Trust Deed"). The Manager appoints experienced and well-qualified management personnel to handle its day-to-day operations. All directors and employees of the Manager are remunerated by the Manager, and not PLife REIT.

The Manager has general powers of management over the assets of PLife REIT. The Manager's main responsibility is to manage PLife REIT's assets and liabilities for the benefit of Unitholders.

The Manager sets the strategic direction of PLife REIT and makes recommendations to the trustee of PLife REIT ("Trustee") on the acquisition, divestment and enhancement of assets of PLife REIT in accordance with its investment strategy.

Other main functions and responsibilities of the Manager are as follows:

  1. using its best endeavours to carry on and conduct its business in a proper and efficient manner, to ensure that the business of PLife REIT is carried on and conducted in a proper and efficient manner, and to conduct all transactions with or for PLife REIT at arm's length and on normal commercial terms;
  2. ensuring compliance with the applicable laws and regulations, including the Securities and Futures Act 2001 of Singapore ("SFA"), the listing manual ("Listing Manual") of the Singapore Exchange Securities Trading Limited ("SGXST"), the Code on Collective Investment Schemes ("CIS Code") issued by the Monetary Authority of Singapore ("MAS") which includes the Property Funds Appendix in Appendix 6 of the CIS Code (the "Property Funds Appendix"), the tax ruling issued by the Inland Revenue Authority of Singapore on the taxation of PLife REIT and its Unitholders, as well as the Trust Deed; and
  3. attending to all regular communications with Unitholders.

The Trust Deed outlines certain circumstances under which the Manager can retire in favour of a corporation approved by the Trustee to act as the manager of PLife REIT or the Manager can be removed by notice given in writing by the Trustee upon the occurrence of certain events. A copy of the Trust Deed is available for inspection by the Unitholders at the registered office of the Manager during usual office hours1.

BOARD MATTERS

The Board's Conduct of Affairs

Principle 1: The company is headed by an effective Board which is collectively responsible and works with Management for the long-term success of the company.

The board of directors of the Manager ("Board") is responsible for the overall leadership and oversight of the management and corporate governance of the Manager, including setting strategic corporate strategy and directions of the Manager, overseeing the proper conduct of the Manager and ensuring that senior management provides business leadership and demonstrates the highest quality of management skills with integrity and enterprise. All Board members participate in matters relating to corporate governance, business operations and risk management, financial performance and the nomination and review of directors. The Board has approved a framework for the management of the Manager including a system of internal controls and business risk management process which enables risks to be assessed and managed.

The Board meets regularly, at least once every quarter, to deliberate the strategic objectives and policies of PLife REIT. Matters requiring the Board's decision and approval include investments, acquisitions and disposals, major leases and assets enhancement works, operating/capital expenditure, loan or debt financing or refinancing taking into consideration PLife REIT's commitment in terms of capital and other resources, the annual budget, the release of the quarterly business updates, semi-annual and full year results, the appointment of directors and other material transactions. Such matters have been clearly communicated to the management in writing. The Board also reviews the financial performance of PLife REIT against approved budget, assesses the material risks to the assets and business operations of PLife REIT, examines liability management, and acts upon any comments from the auditors of PLife REIT. Where necessary, additional Board meetings are held to address significant transactions or issues.

In discharge of its functions, the Board is supported by an Audit and Risk Committee ("ARC") that provides independent oversight of the Manager. The Board is also supported by a Nominating and Remuneration Committee ("NRC") which oversees the remuneration matters of the directors and key management personnel of the Manager, nomination of directors and the effectiveness of the Board. Each of these Board committees operates under delegated authority of the Board and is governed by its respective terms of reference approved by the Board.

The Board has adopted a set of internal controls which it believes is adequate in safeguarding Unitholders' interests and PLife REIT's assets. Appropriate delegation of authority has been provided to management to facilitate operational efficiency.

The Board recognises that all directors of the Manager have fiduciary duties to act objectively in the best interest of PLife REIT and hold the management accountable for performance. As such, any director who has or appears to have direct or indirect interest which may conflict with any subject matter under discussion by the Board shall declare his interest and recuse himself from the information flow and discussion of the subject matter. He shall also abstain from any decisionmaking on the subject matter. The Manager has in place a code of conduct which core basic values include upholding of ethical standards of professional practice, treating all internal and external parties with mutual respect and without prejudice, prohibition on any form of bribery and corruption, maintaining the confidentiality relating to its business and avoiding conflict of interest. All Manager's employees are required to abide by the code of conduct, policies and guidelines pertaining to employment and accountability.

The number of Board and Board committee meetings during the financial year ended 31 December 2023 ("FY2023"), as well as the attendance of each Board member at these meetings, are set out below.

Changes to laws, regulations, accounting standards and commercial risks are monitored closely. To keep pace with regulatory changes where these changes have an important bearing on the Manager's or directors' obligations, the directors will be briefed either during Board meetings or at specially-convened sessions involving the relevant professionals. The directors are also encouraged to participate in seminars and/or trainings to keep abreast of the latest developments which are relevant to the Manager and PLife REIT. During FY2023, the directors were briefed on the updates to the sustainability regulatory requirements by the sustainability consultant engaged by the Manager; and the ARC was briefed on the updates to the accounting requirements (such as IESBA Code of Ethics) by the external auditors of the Manager.

All newly-appointed directors receive letter of appointment setting out their roles, duties and obligations as a director of the Manager. Orientation and induction programme will be conducted to provide each new director with information on the Board structure and responsibilities, the overall strategic business plans and direction of PLife REIT, as well as duties and statutory obligations as a director of the Manager. Newly-appointed director who has no prior experience as a director of Singapore listed company ("First-time Director") shall also attend mandatory training prescribed under the Listing Manual within a year from his appointment date. Dr. Prem Kumar Nair and Dr. Chow Chorng Ann Peter who are First-time Directors will complete the training programme prescribed under the Listing Manual by 16 November 2024 and 4 December 2024 respectively. Four (4) new directors who were appointed in FY2023 were provided with an overview of PLife REIT and the Manager by the management as part of the orientation and induction programme.

The management provides the Board with complete and adequate information on the business and operations of PLife REIT and the Manager, on a regular and quarterly basis, at Board meetings.

The annual calendar of the Board meetings is scheduled in advance. Board papers are circulated to directors approximately 5 days in advance before the scheduled meetings so that directors have sufficient time to review and consider matters which are being tabled and discussed at the meetings. The senior executives are also invited to attend the Board meetings to provide insights into matters which are being discussed and to respond to any queries from the directors.

The Board has separate and independent access to management and the company secretary at all times. The Board is entitled to request from management and is provided with such additional information in a timely manner as needed to make informed decisions. The company secretary attends to corporate secretarial administration, ensures that procedural matters relating to the Board are adhered to and that applicable rules and regulations are complied with. The company secretary also attends all Board meetings. The appointment and removal of the company secretary is a Board reserved matter. The Board also has access to independent professional advice where appropriate, at the Manager's expense.

BOARD COMPOSITION AND GUIDANCE

Principle 2: The Board has an appropriate level of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company

The Board presently consists of eight members, seven of whom are non-executive directors (including three independent directors). The Chairman of the Board is Mr. Ho Kian Guan. None of the directors has entered into any service contract directly with PLife REIT.

Current Director's Appointment and Membership on Board Committees

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

  1. the Chairman of the Board and Chief Executive Officer ("CEO") should in principle be separate persons;
  2. the Board should comprise directors with a broad range of expertise and commercial experience (including expertise in funds management and the property industry), and knowledge of PLife REIT; and
  3. at least one-third of the Board should comprise independent directors.

Independent Directors

The Board has three independent directors, namely Mr. Ho Kian Guan, Dr. Jennifer Lee Gek Choo and Ms. Cheah Sui Ling. None of the independent directors has served beyond nine years on the Board.

When evaluating the independence of the directors, the Board takes into account the guidance in the CG Code where an "independent" director is defined as one who is independent in conduct, character and judgement, and has no relationship with the Manager, its related corporations, its substantial shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of a director's independent business judgement in the best interests of the Manager and PLife REIT. Further, additional independence requirements are imposed under Regulations 13D to 13H of the Securities and Futures (Licensing and Conduct of Business) Regulations ("SFLCB Regulations"). Under the SFLCB Regulations, a director is considered to be independent if the director (i) is independent from the management of the Manager and PLife REIT; (ii) is independent from any business relationship with the Manager and PLife REIT; (iii) is independent from every substantial shareholder of the Manager and every substantial unitholder of PLife REIT; (iv) is not a substantial shareholder of the Manager or a substantial unitholder of PLife REIT; and (v) has not served as a director on the Board for a continuous period of 9 years or longer. The Chairman of the Board shall also not be an executive director or a person who is a member of the immediate family of the CEO.

As part of the annual review process, each independent director is required to provide declaration of independence with regard to the independence criterion set out in the CG Code and the SFLCB Regulations, and these declarations are provided to the NRC and the Board for review. The NRC and the Board will also take into consideration each independent director's view and conduct at both Board meetings and Board committee meetings in their assessment, as to whether such independent director possesses personal attributes such as independent thinking and keen observation, and demonstrated the ability to maintain integrity and strong principles, the ability to question management and to exercise constructive skepticism and judgment.

For FY2023, the NRC has conducted an annual review of the directors' independence taking into consideration the independence criterion given in the CG Code and the SFLCB Regulations. The NRC considered that Mr. Ho Kian Guan, Dr. Jennifer Lee Gek Choo and Ms. Cheah Sui Ling are independent as they have each demonstrated independence of view and conduct at both Board meetings and Board committee meetings and have been exercising independent judgment in the best interests of PLife REIT. Based on the review and recommendation of the NRC, the Board concurred that Mr. Ho, Dr. Lee and Ms. Cheah are considered independent. In view of the above, at least one-third of the Board comprises independent directors.

The Board has considered the relevant requirements under the SFLCB Regulations and its views in respect of each of the directors as follows:

The Board of the Manager is satisfied that, as at 31 December 2023, each of them was able to act in the best interests of all Unitholders of PLife REIT as a whole. For the purposes of Regulation 13E(b)(ii) of the SFLCB Regulations, as at 31 December 2023, each of the abovementioned directors was able to act in the best interests of all the Unitholders as a whole.

The Board has not appointed a lead independent director given that the Chairman is an independent director who is not part of the management team, as described under section of "Chairman and CEO" below.

Non-executive Directors

Non-executive directors exercise no management functions in the Manager or PLife REIT or any of its subsidiaries. Although all the directors have equal responsibility for the performance of the Manager and PLife REIT, the role of the nonexecutive directors is particularly important in ensuring that the performance of management in meeting agreed goals and objectives is reviewed and the reporting of performance is monitored; and the strategies proposed by management are fully discussed, rigorously examined and developed, taking into account the long-term interests of PLife REIT's assets and the Unitholders. The non-executive and/or independent directors meet regularly without the presence of the management on a need-to basis, and feedback will be communicated by the chairman of such meetings to the Chairman of the Board or the Board, as appropriate.

The majority of the directors are non-executive and/or independent of the management. This enables the management to benefit from their external, diverse and objective perspective on issues that are brought before the Board. It would also enable the Board to interact and work with the management through a robust exchange of ideas and views to help shape the strategic process. This, together with a clear separation of roles of the Chairman and CEO described below, provides a healthy professional relationship between the Board and the management, with clarity of roles and robust oversight as they deliberate the business activities of the Manager.

Board Diversity

The Manager recognises and embraces the benefits of having a diverse Board, and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. The Board has adopted, with the recommendation of the NRC, a board diversity policy, which sets out the approach to diversity on the Board including gender, age, cultural background and ethnic diversity. The Board Diversity Policy is considered in determining the optimum composition of the Board with appropriate balance, when possible. All Board appointments are made on merit, in the context of skills and experience, and the Board recognises that Board diversity is an essential element in contributing to the sustainable development of the Manager and emphasises on Board diversity so as to cope with the diversified portfolio of the Manager's and/or PLife REIT's businesses. The Board takes the necessary measures to ensure that in every possible event, Board diversity will be taken into consideration in Board appointment(s) as well as annual assessment.

The composition of the Board is reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience and is of the appropriate size. In carrying out this review, the Board looks to achieve a balance in matters such as skill representation, experience, age, cultural background and gender on the Board.

The current Board comprises eight members with two female directors, and the Board members have varied backgrounds, expertise and experience including in finance, banking, investment, legal, real estate, healthcare business and operations, business and general management. For Board appointment, the Board will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board. At the recommendation of the NRC, the Board has committed to maintaining at least 25% women directors on the Board with best effort and with a view to increasing to 30% over time to achieve greater gender parity, and to work towards having appropriate age diversity and ethnic and cultural background diversity on the Board. The measures set to achieve the appropriate Board diversity will be reviewed from time to time, and the NRC will recommend changes to the Board where appropriate.

The Board composition in terms of age group, independence, tenure and gender as at 31 December 2023 are as follows:-

During FY2023, the Board has reviewed its composition, the level of independence and diversity of the Board and is satisfied that the existing size and composition is appropriate in facilitating effective decision-making and constructive debate, taking into account the scope and nature of operations of the Manager and PLife REIT, the requirements of the business and the need to avoid undue disruptions from changes to the composition of the Board and its committees.

The profiles of the directors are set out on pages 16 to 21 of this Annual Report.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: There is a clear division of responsibilities between the leadership of the Board and the Management, and no one individual has unfettered powers of decision-making.

The positions of Chairman and CEO are separately held by two persons in order to maintain an effective check and balance and ensure increased accountability and greater capacity for the Board for independent decision making. The Chairman of the Board, Mr. Ho Kian Guan is an independent director. The CEO is Mr. Yong Yean Chau who is also an executive director of the Manager. The Chairman and the CEO are not immediate family members and are not related to each other.

There is a clear and written separation of the roles and responsibilities between the Chairman and the CEO. The Chairman is responsible for the overall management of the Board as well as ensuring that the directors and the management work together with integrity and competency, and that the Board engages the management in constructive debate on strategy, business operations, enterprise risk and other plans. The Chairman also ensures effective communication with the Unitholders and takes a leading role in promoting high standards of corporate governance with support of the Board and the management.

The CEO has full executive responsibilities over the business directions and operational decisions in the day-to-day management of the Manager and PLife REIT.

BOARD MEMBERSHIP

Principle 4: The Board has a formal and transparent process for the appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board.

The Board has a formal and transparent process for appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board. The Board is supported by the NRC on matters relating to Board members' appointment and succession, Board effectiveness and directors' independence.

The NRC of the Manager currently comprises Dr. Jennifer Lee Gek Choo (Chairman of the NRC) and Ms. Cheah Sui Ling, both of whom are non-executive and independent directors, and Dr. Prem Kumar Nair, a non-executive director. The NRC members meet, at least once every year to deliberate the remuneration matters and matters relating to Board members' appointment and succession, Board performance evaluation and directors' independence.

The NRC has a set of terms of reference defining its scope of responsibility and authority, which includes the following:

  1. reviewing and recommending to the Board a framework of remuneration for key management personnel, and to determine specific remuneration packages for the Board and key management personnel covering all aspects of remuneration including but not limited to director's fees, salaries, allowances, bonuses, options, unit-based incentives, awards and benefits-in-kind;
  2. reviewing the appropriateness of remuneration awarded to attract, retain and motivate the executive director and key management personnel needed to manage the Manager and PLife REIT successfully;
  3. reviewing the remuneration and employment conditions within the industry and those of the peer companies to ensure that the executive director and key management personnel are adequately remunerated;
  4. reviewing the adequacy and form of remuneration to the directors and key management personnel to ensure that the remuneration realistically commensurate with the responsibilities and risks involved in being an effective member, as well as corporate and individual performance;
  5. considering the eligibility of the executive director and key management personnel for benefits under long-term incentive schemes and the administration thereof;
  6. reviewing the use of long-term incentives, including share schemes, for the executive director and key management personnel;
  7. recommending to the Board on the selection, appointment and re-appointment of directors (including alternate directors, if applicable);
  8. recommending to the Board the review of the Board succession plans for the directors, in particular, the Chairman and the CEO;
  9. undertaking the assessment of effectiveness of the Board as a whole and the Board committees and assessing the contribution by the Chairman and each individual director to the effectiveness of the Board;
  10. recommending the training and professional development programs for the Board; and
  11. determining the independence of each director annually, and as and when circumstances require, and to provide its views to the Board for Board's consideration.

The appointment of director is a matter reserved for Board approval. The search for candidates is conducted through contacts and recommendations. The NRC will evaluate and assess the candidate based on the directors' criteria approved by the Board, candidate's academic and professional qualifications, expertise, commercial experience and knowledge, taking into account the scope and nature of operations of the Manager and PLife REIT. Suitable candidates are recommended by the NRC to the Board for approval. The Board will deliberate and review the proposed appointment of a new director taking into account the recommendation by the NRC. Such appointment is subject to the approval of MAS. A formal letter setting out the director's duties and responsibilities will be given to the new director upon his/her appointment to the Board.

As the Manager is not a listed company, directors of the Manager are not subject to periodic retirement by rotation. Pursuant to an undertaking given by Parkway Holdings Limited as the sole shareholder of the Manager to the Trustee on 16 March 2017 ("Undertaking"), Unitholders are given the right to endorse the appointment of the directors of the Manager by way of ordinary resolution at the annual general meetings ("AGM") of Unitholders. Accordingly, one-third of the directors of the Manager are put forth for the Unitholders' endorsement of appointment during PLife REIT's AGM since 2017. If any director's appointment is not being endorsed by the Unitholders at the AGM, such director shall resign from the Board either (i) within 21 days from the date of the relevant AGM or (ii) in the event that the Board determines that a replacement director has to be appointed, no later than the date when such replacement director is appointed. Pursuant to Rule 720(6) of the Listing Manual, information relating to the directors who will be subject to Unitholders' endorsement or re-endorsement at the upcoming AGM is provided on pages 82 to 91 of this Annual Report.

The Board, through the NRC, reviews the succession plans of the Board and the management on annual basis, in particular the succession planning for the independent directors of the Manager. In view of the regulatory requirement that an independent director of the Manager shall not be appointed for a continuous period of 9 years or longer on the Board, the NRC has set an internal timeline to commence the search of the replacement independent director as early as one year before the retirement of the existing independent director, to ensure sufficient time be allocated to search for a suitable replacement director such that the Board continuity and sustainability are maintained.

The management continuity is also a key priority to the Board for business continuity and sustainability of the Manager. As part of the management succession plan, the business critical roles ("BCR") of the Manager and their successors are identified. The BCR and the identified successors have been undergoing on-going on-the-job development assigned with increased job responsibilities and are given wider exposure to the Board. In addition to the on-going job development, a leadership development plan approved by the NRC is also in place to enhance the readiness of the identified successors for the BCR. The leadership development plan comprises short courses focus in specific area such as leadership skill, people management and business management, and also executive or advanced management programme offered by well-established universities or service providers.

BOARD PERFORMANCE

Principle 5: The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors.

A review of the Board's performance is conducted annually to assess the effectiveness of the Board and the Board committees. The review of the Board's performance includes the Board composition, directors' contribution and commitment at board meetings, access to information, procedures, accountability and standards of conduct, skills and any specific areas where improvement may be made by an individual director and the Board collectively. Attendance at meetings as well as the contributions of each director to the Board are also considered. The Board has not engaged any external facilitator to facilitate the assessment. Each of the directors are required to complete a questionnaire evaluating the Board and the Board committees for the financial year under review. A summary of the feedbacks and recommendations from the directors was prepared and presented to the NRC and the Board respectively. The NRC has reviewed the summary and put forward its comments and recommendations, if any, to the Board for approval.

The Board has also set a general policy that a director should not have more than five listed company board representations taking into account the market practices and the level of commitment required. This helps to ensure that the Board is effective as a whole and that each director is capable of contributing time and attention to the affairs of PLife REIT and the Manager, including attendance and contribution at Board meetings.

The Board and the NRC assessed the effectiveness and performance of the Board and the Board committees on an annual basis. Based on the attendance and level of participation at the meetings of the Board and the Board committees held during the financial year, the Board is satisfied with the effectiveness of the Board and that all directors have demonstrated commitment to their roles and contributed effectively to the Board, and that all directors were able to adequately and diligently carry out their duties.

REMUNERATION MATTERS

Principle 6: The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.

Principle 7: The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company

Principle 8: The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

As highlighted above, the NRC reviews and recommends to the Board a general framework of remuneration for the Board and the key management personnel. Based on current practice, the NRC reviews and recommends to the Board the specific remuneration packages for each director and key management personnel to ensure that the remuneration payable is in line with the objectives of the Manager's remuneration guidelines. For the avoidance of doubt, the NRC members do not participate in any decisions concerning their own remuneration.

The directors' fees and remuneration of employees of the Manager are paid in its own capacity using its own funds and fees received from PLife REIT and not from the funds of PLife REIT.

The Manager advocates a performance based remuneration system for the CEO/executive director and key management personnel (collectively, "KMP"). The NRC, which has an independent majority, helps to ensure that there is an effective and formal process to establish the remuneration system. The remuneration of the KMP is reviewed by the NRC on an annual basis based on the financial and non-financial key performance indicators ("KPIs") linked to the performance of PLife REIT for the financial year under review, and individual performance of each of the KMP in contribution to the longterm strategic goals of PLife REIT and the Manager. The financial KPI entails distributable income of PLife REIT and the non-financial KPIs entail analyst coverage, tenant satisfaction, retention of key employees and regulatory compliance ("Performance Criteria").

The remuneration for the KMP comprises fixed pay and short-term and long-term incentives. The fixed pay component includes fixed salary and allowances. The short-term and long-term incentives are tied to the individual performance based on their value creation capability, being the ability in contributing and achieving the Performance Criteria in their respective roles, and the overall performance of PLife REIT for the financial year.

The Performance Criteria and its target were approved by the Board prior to each financial year. Under the long-term incentive plan ("LTI Plan"), the eligible employee will be awarded with the PLife REIT's units owned by the Manager based on the achievement of the Performance Criteria for the financial year under review.

The LTI Plan is designed to enhance executive performance, encourage talent retention and provide eligible employees with a personal direct interest in PLife REIT, so as to create better alignment of the interest between management and the interest of the Unitholders. The LTI Plan will also serve to motivate eligible employees to achieve the performance targets of PLife REIT. The Manager believes that the LTI Plan will make the Manager's remuneration package sufficiently competitive to recruit, reward, retain and motivate outstanding employees which are paramount to the Manager's longterm objective of achieving sustainable returns for the Unitholders.

The non-executive directors receive their directors' fees in accordance with their various levels of contributions, taking into account factors such as their responsibilities, effort and time spent for serving on the Board and the Board committees, and their value creation capability, being the directors' ability to provide valuable experiences and expertise in various aspects of PLife REIT's operations and providing stewardship to PLife REIT and the management of the Manager. The fees received by non-executive directors are at fixed rates and determined by the shareholder of the Manager on an annual basis. In addition to their basic fee, the non-executive directors who hold the position of chairman in the Board and any Board committee will be paid an additional fee. For the avoidance of doubt, the CEO of the Manager who is also an executive director does not receive any director's fee. None of the directors was involved in any decisions concerning their own remuneration. The NRC also ensures that non-executive directors are not over-compensated to the extent that their independence may be compromised. In discharging their duties, the NRC may seek advice from external consultants, whenever it deems necessary.

During the financial year under review, an external independent remuneration consultant, HR Guru Pte. Ltd. was engaged to review the competitiveness of the remuneration payable to the Manager's employees. The remuneration consultant does not have any relationship with the Manager and its directors which would affect its independence and objectivity.

Directors' Fees

The current directors' fee structure of the Manager is as shown in the table below:-

The director's remuneration paid to the following non-executive directors for FY2023 is as follows:

The Board has assessed and decided against the disclosure of (a) the breakdown (in percentage or dollar terms) of the CEO/executive director's remuneration earned through base/fixed salary, variable or performance-related income/ bonuses, benefits-in-kind, stock options granted, share-based incentives and awards, and other long-term incentives, (b) the breakdown (in percentage or dollar terms) of each key management personnel's remuneration earned through base/fixed salary, variable or performance-related income/bonuses, benefits-in-kind, stock options granted, sharebased incentives and awards, and other long-term incentives, and (c) the total remuneration paid to the top five key management personnel (who are not directors or the CEO), on a named basis whether in exact quantum or in bands of S$250,000, for the following reasons:

  1. The remuneration of directors and employees of the Manager are not paid out of the deposited property of PLife REIT (which is the listed entity), but is remunerated directly by the Manager from the fees that it receives.
  2. The Manager is of the view that disclosure of specific remuneration information may give rise to recruitment and talent retention issues in light of the competitiveness between REIT managers in Singapore because there are relatively few REIT manager companies compared to the number of listed companies in Singapore so there are competitiveness issues in recruiting and retaining competent personnel in this limited space.
  3. There is already full disclosure of the total amount of fees payable to the Manager on page 184 of this Annual Report

The Manager does not consider it prejudicial to unitholders' interests if the remuneration of the KMP is not specifically disclosed. Instead, the Manager believes that such disclosure would be disadvantageous given the highly competitive conditions in the REIT industry where poaching of executives is commonplace. As the retention of the KMP is crucial for continuity and a stable management platform for the interest of PLife REIT, the Manager does not wish to disclose such specific remuneration information.

No director or KMP of the Manager is paid in the form of shares or interests in the Manager's controlling shareholder or its related entities.

The NRC considers all aspects of remuneration, including termination terms, to ensure they are fair. For FY2023, there were no termination, retirement and post-employment benefits granted to directors and the KMP other than the payment in lieu of notice in the event of termination in the employment contract of the KMP.

No employee of the Manager was a substantial unitholder of PLife REIT or an immediate family member of a director and CEO/executive director and whose remuneration exceeded S$100,000 during the FY2023. "Immediate family member" means the spouse, child, adopted child, stepchild, sibling and parent.

RISK MANAGEMENT AND INTERNAL CONTROLS

Principle 9: The Board is responsible for the governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.

The Board acknowledges that it is responsible for the overall internal control framework and the maintenance of a sound system of internal controls. The system includes, inter alia, enterprise risk management and internal auditing. However, the Board recognises that no cost-effective internal control system and risk management will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

The Manager has appointed experienced and well-qualified management personnel to handle the day-to-day operations of the Manager and PLife REIT. In assessing business risks, the Board will consider the economic environment and risks relevant to the property and healthcare industry. It reviews management reports and feasibility studies on investment risks prior to approving all investment decisions. The Board meets regularly to review the operations of the Manager, the business risks of PLife REIT, examine liability management and will act upon any comments from the auditors of PLife REIT.

To ensure a robust risk management system is maintained, the Manager has put in place an Enterprise Risk Management ("ERM") framework and policies to determine the nature and the extent of the significant financial, operational, compliance and information technology risks in order to achieve strategic objectives and value creation of PLife REIT. An outline of the Manager's ERM framework and policies is set out on pages 56 to 59 of this Annual Report. Any material non-compliance and internal control weakness, together with the recommendations to address them, the mitigating controls or gaps (if any) are also presented to the ARC and the Board accordingly.

The system of risk management is embedded in the internal control system of the Manager to address on-going changes and challenges and to reduce uncertainties to PLife REIT. The ARC, through the assistance of internal and external auditors and the external risk consultant, reviews and reports to the Board on the adequacy and effectiveness of the Manager's internal control systems, including financial, compliance, operational and information technology controls.

The ARC and the Board review the adequacy and efficiency of the risk management system and internal controls on an annual basis. Based on the up-to-date evaluation of the controls conducted by the internal and external auditors and the external risk consultant, the CEO and the Chief Financial Officer ("CFO") of the Manager have provided written assurance to the Board that the financial records of PLife REIT have been properly maintained and the financial statements give a true and fair view of the operations and finances of PLife REIT for FY2023. The CEO, the CFO and the Chief Investment Officer (acting also as cover for the Chief Portfolio Officer who resigned in FY2023) (collectively, the "KMP") have also provided the Board with written assurance that the Manager's internal controls and risk management systems are effective and adequate for the year under review.

Nonetheless, the ARC will:

  1. satisfy itself, by such means as it shall consider appropriate, that adequate counter measures (i.e. mechanisms and processes, such as sound internal control systems) are in place to identify and mitigate any material business risks associated with the Manager and PLife REIT;
  2. ensure that a review of the effectiveness and adequacy of the Manager's internal controls, including financial, operational, compliance and information technology controls, and risk management policies and systems, is conducted at least annually. Such review can be carried out by internal auditors, external auditors and/or the ERM committee;
  3. ensure that the internal control recommendations made by internal auditors, external auditors and/or the ERM committee have been implemented by the Manager; and
  4. ensure that the Board is in a position to comment on the adequacy of the internal controls of the Manager.

The Board believes that the ERM framework is adequate and effective taking into account the size of PLife REIT and the business environment it operates in. The Board has also observed that the management, being familiar with the ERM framework, implements it effectively and provides the ARC and the Board with timely updates on risk management activities. In relation to the Manager's internal controls, the Board derives comfort that such internal controls are being audited by both internal and external auditors on an annual basis and any lapses in internal controls are promptly brought to the attention of the Board in order for corrective measures to be implemented as soon as practicable.

Taking into account the abovementioned evaluation of the controls conducted by the internal and external auditors and the external risk consultant, the review performed by the Manager's ERM committee, and the assurance received from the KMP of the Manager, the Board is of the opinion that PLife REIT's internal controls (including financial, operational, compliance and information technology controls) and risk management systems in place were adequate and effective as at 31 December 2023. The ARC concurs with the Board's comment regarding PLife REIT's internal controls (including financial, operational, compliance and information technology controls) and risk management systems provided in the foregoing. For the financial year ended 31 December 2023, the Board and the ARC have not identified any material weaknesses in the Manager's internal controls and risk management systems.

AUDIT AND RISK COMMITTEE

Principle 10: The Board has an Audit Committee which discharges its duties objectively.

The Audit and Risk Committee ("ARC") of the Manager comprises Ms. Cheah Sui Ling (Chairman of the ARC), Dr. Jennifer Lee Gek Choo and Mr. Ho Kian Guan, all of whom are independent non-executive directors. The members of the ARC collectively have recent and relevant expertise or experience in financial management and are appropriately qualified to discharge their responsibilities.

The ARC have oversight responsibilities in the key areas including, financial reporting process and integrity, risk management and internal controls (including financial, operational, compliance and information technology controls), management of financial and fraud risks, internal and external audit process (including scope, resources effectiveness and independence), whistle-blowing policies, processes and reporting, interested parties transactions and reporting and the Manager's process for monitoring compliance with the laws and regulations and its code of business conduct. The ARC members meet, at least once every quarter to deliberate matters under its responsibility.

The ARC has a set of terms of reference defining its scope of responsibility and authority, which includes the following:

  1. reviewing the adequacy and effectiveness of the internal controls and risk management systems, including financial, operational, compliance and information technology controls, at least annually;
  2. reviewing with the management the effectiveness of the system for monitoring compliance with laws and regulations (including the Listing Manual and the Property Funds Appendix) and the results of the management's investigation and follow-up (including disciplinary action) of any fraudulent acts or non-compliance;
  3. reviewing the policy and arrangements for concerns about possible improprieties in matters of financial reporting or other matters to be safely raised, and ensuring that arrangements are in place for such concerns to be safely raised, independently investigated, and for appropriate follow-up action to be taken;
  4. monitoring the procedures established to regulate related party transactions, including ensuring compliance with the provisions of the Listing Manual relating to "interested person transactions" and the provisions of the Property Funds Appendix relating to "interested party transactions";
  5. reviewing the assurance from the CEO and the CFO on the financial records and financial statements and the assurance from the KMP on the adequacy and effectiveness of the risk management and internal control systems;
  6. reviewing the adequacy, effectiveness, independence and objectivity, scope and results of the external auditors;
  7. reviewing external audit reports to ensure that where deficiencies in internal controls or significant findings have been identified, recommendations made by external auditors are received and discussed, and to ensure that appropriate and prompt remedial action is taken by the management;
  8. reviewing the nature and extent of non-audit services performed by external auditors;
  9. making recommendations to the Board on the appointment, re-appointment and removal of the external auditors and the remuneration and terms of engagement of the external auditors;
  10. reviewing, on an annual basis, the adequacy, effectiveness, independence, scopes and results of the internal audit function by ensuring that the internal audit function is adequately resourced and staffed with persons with the relevant qualifications and experience and has unfettered access to all documents, records, properties and personnel, including access to the ARC;
  11. reviewing internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor related party transactions have been complied with;
  12. meeting with external and internal auditors, without presence of the KMP annually;
  13. investigating any matters within the ARC's terms of reference, whenever it deems necessary;
  14. reporting to the Board on material matters, findings and recommendations; and
  15. assisting the Board in the review of the Manager's sustainability issues and approach to sustainability reporting, reviewing the Manager's environmental, social and governance ("ESG") framework, monitoring and managing the ESG factors identified as material to the business, overseeing and managing the standards, management processes and strategies to achieve the sustainability practices with the management, and assisting the Board in ensuring the management establishes and maintains a sound system of sustainability governance and an appropriate sustainability framework, and reporting to the Board and providing appropriate updates and recommendations on the sustainability issues.

The ARC has authority to investigate any matter within its terms of reference. It also has full access to and co-operation of the management and full discretion to invite any director or executive officer to attend its meetings.

During the year under review, the ARC has reviewed:

In addition, the ARC has conducted a review of all non-audit services provided by the external auditors and is satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. For FY2023, the aggregate amount of fees paid and payable by PLife REIT to the external auditors was S$345,000, comprising non-audit service fees of S$66,000 and audit service fees of S$279,000. In appointing the audit firms for the Group, the ARC is satisfied that PLife REIT has complied with the Listing Rules 712 and 715 of the Listing Manual.

The ARC meets with the external auditors, without the presence of management, at least once a year.

The ARC is briefed regularly on the impact of the new accounting standards on PLife REIT's financial statements by the external auditors.

The ARC does not comprise former partners or directors of the Manager's and PLife REIT's external auditors, within a period of two years, or who holds any financial interest in the existing auditors engaged by PLife REIT and the Manager.

INTERNAL AUDIT

The Manager has put in place a system of internal controls of procedures, including financial, operational, compliance and information technology controls, and risk management systems to safeguard PLife REIT's assets, Unitholders' interests as well as to manage risk.

The internal audit function of the Manager is outsourced to an independent assurance service provider, BDO LLP, Singapore, a member of the BDO International Limited, United Kingdom and forms part of the international BDO network of independent member firms. BDO conducts their internal audits based on the BDO Global Internal Audit Methodology which is consistent with the International Standards for the Professional Practice of Internal Auditing adopted by The Institute of Internal Auditors. The internal audit team is well-resourced and is led by an engagement partner who is also the Head of Risk Advisory Services in BDO Singapore with more than 20 years of audit and advisory experience and is a Chartered Accountant (Singapore), Certified Internal Auditor and Certified Information System Auditor.

The ARC reviews the adequacy and effectiveness of the internal auditor at least once a year. The ARC is satisfied that the internal auditor has the relevant qualifications and experience and has met the standards established by internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The internal auditor reports directly to the ARC on audit matters and the ARC approves the hiring, removal, evaluation and fees of the internal auditor. The internal auditor has unfettered access to all documents, records, properties and personnel in the Manager, including unrestricted access to the ARC, the Board and the management. The ARC also reviews and approves the annual internal audit plan and reviews the internal audit reports and activities. The ARC meets with the internal auditor, without the presence of management, at least once a year.

For FY2023, the ARC has reviewed the adequacy and effectiveness of the internal audit function performed by BDO LLP and is satisfied that the internal audit function is independent, effective and adequately resourced.

WHISTLE-BLOWING POLICY

The Manager has put in place a fraud and whistle-blowing policy (the "Whistle-Blowing Policy") which reflects the Manager's commitment to conduct its business within a framework that fosters the highest ethical and legal standards. In line with this commitment and PLife REIT's commitment to open communications, the Whistle-Blowing Policy provides for procedures and mechanisms by which employees and external parties may, in confidence, raise their concerns about possible improprieties in financial reporting or other matters relating to the Manager and its staff. The WhistleBlowing Policy aims to foster and maintain an environment where employees of the Manager and external parties can act appropriately, without fear of retaliation, and provides reassurance that the report will be independently investigated and the whistle-blower will be protected from reprisals or victimisation for whistle-blowing in good faith.

Whistle-blowers may report any matters of concern by email at whistleblow@parkwaylifereit.com. The report submitted through this channel would be received by the ARC who has the absolute discretion to set up an investigation team independent from the alleged person to investigate the report. The investigation team shall investigate the alleged misconduct and report the findings directly to the Chairman of the ARC. The ARC, who is responsible for oversight and monitoring the implementation of the Whistle-Blowing Policy, reviews and ensures that independent investigations and any appropriate follow-up actions are carried out.

The Manager is committed to ensuring that whistle-blowers in good faith will be treated fairly and protected from reprisals and victimisation. All reports and related communications, including the identity of the whistle-blower will be documented and kept in confidence provided that it does not hinder or frustrate the investigations, and except where disclosure is required to the relevant authorities. The whistle-blow report should be as precise as possible so as to allow for proper investigation to be made. The whistle-blower shall provide contact details so that the investigation team may contact for more information if need be.

The ARC reviewed the Whistle-Blowing Policy and was satisfied that the arrangements are in place for the independent investigation of such matters and for appropriate follow-up action. All employees of the Manager are informed of the Whistle-Blowing Policy and are required to confirm their understanding of the Whistle-Blowing Policy.

UNITHOLDER RIGHTS AND RESPONSIBILITIES

Principle 11: The company treats all shareholders fairly and equitably in order to enable them to exercise shareholders' rights and have the opportunity to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.

Principle 12: The company communicates regularly with its shareholders and facilitates the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the company.

Principle 13: The Board adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served.

Communication with Unitholders

The Listing Manual of the SGX-ST requires that a listed entity discloses to the market, among others, matters that would likely have a material effect on the price or value of the entity's securities. The Manager upholds a strong culture of continuous disclosure and transparent communication with Unitholders, various stakeholders and the investing community, and has put in place an investor relations policy which sets out the policies and practices which the Manager adopted. Investors can also subscribe to email alert of all announcements and press releases issued by PLife REIT or submit questions at their convenience via an enquiry form on PLife REIT's corporate website.

The investor relations function is headed by the CEO and the CFO of the Manager. The Manager adopts a proactive approach in reaching out to the Unitholders, existing and potential investors, analyst and media through various communication channels and programmes such as the corporate website, corporate literature, annual general meeting and investor outreach programmes, throughout the year. The sustainability report of PLife REIT set out on pages 96 to 116 of this Annual Report provide PLife REIT's approach to address stakeholders' concerns and methods of engagement and also set out the key areas of focus in relation to the management of stakeholders for the financial year ended 31 December 2023.

In line with the Manager's objective of transparent communication, timely and full disclosure of all material information relating to PLife REIT are disclosed by way of public releases or announcements through the SGX-ST via SGXNET at first instance and uploaded on PLife REIT's website at https://www.plifereit.com thereafter. The Manager ensures that unpublished price sensitive information are not disclosed selectively, and in the event of any inadvertent disclosure of such information, the Manager shall make necessary disclosure to the public via SGXNET and release on PLife REIT's website promptly.

It is the aim of the Board to provide the Unitholders with a balanced and comprehensive assessment of PLife REIT's performance, position and prospects.

The Unitholders are encouraged to attend the annual general meeting ("AGM") of PLife REIT to ensure a high level of accountability and to stay informed of the strategies and goals of PLife REIT. All Unitholders are entitled to attend and vote at general meetings in person or by proxy. During the AGM held in 2023, all directors of the Manager attended the AGM and the external auditors were also present to address Unitholders' queries.

The notice of AGM is dispatched to the Unitholders in the manner set out in the Listing Manual. The Board welcomes questions from the Unitholders who have an opportunity to raise issues either informally or formally before or at the AGM.

Each item of special business included in the notice of AGM is accompanied, where appropriate, by an explanation for the proposed resolution and a proxy form with instructions on the appointment of proxies. Separate resolutions are prepared for substantially separate issues at the AGM. The resolutions approved in the AGM will be announced on or after the day AGM is held. The minutes of general meetings, which include substantial comments or queries raised by Unitholders and the responses from the Board and management are published on the SGXNET and made available on PLife REIT's corporate website within one month from the date of the AGM.

In support of greater transparency of voting in AGM and good corporate governance, the Manager employed electronic polling whereby all resolutions are voted by poll and detailed results showing the number of votes cast for and against each resolution and the respective percentage are published at the meeting. Prior to voting at the AGM, the voting procedures will be made known to the Unitholders. The votes cast by each Unitholder are in direct proportion to their respective unitholdings in PLife REIT. If any Unitholder is unable to attend the AGM, the Trust Deed allows for a Unitholder to appoint up to two proxies to attend, speak and vote on his/her behalf at the general meeting.

Distributions

PLife REIT has a distribution policy, with more information of the distribution policy is set out on page 167 of this Annual Report and the "Distribution Statements" are provided on pages 127 and 128 of this Annual Report.

DEALINGS IN PLIFE REIT'S UNITS

The Trust Deed requires each director 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 units which he holds or in which he has an interest. This is in line with the requirements of Section 137Y of the SFA (relating to notification of unitholdings by directors and CEO of the Manager). The CEO of the Manager is also required to give similar notice under the section.

All dealings in units by the directors and the CEO will be announced via SGXNET, with the announcement to be posted on the SGX-ST website at https://www.sgx.com.

Further, Section 137ZC of the SFA (relating to notification of unitholdings by responsible persons) requires the Manager to, inter alia, announce via SGXNET the particulars of any acquisition or disposal of interest in PLife REIT's units by the Manager no later than the end of the business day following the day on which the Manager became aware of the acquisition or disposal.

The Manager has put in place a securities dealing policy for its directors and employees. As a matter of internal policy, the directors and employees are subject to pre-trade approval for any dealing of PLife REIT units. The directors and employees of the Manager are encouraged to hold units and not deal with the units on short-term considerations. The directors and employees are prohibited from dealing in the units:

  1. in the period commencing one month before the public announcement of PLife REIT's semi-annual and annual results and (where applicable) property valuations, and ending on the date of announcement of the relevant results or as the case may be, property valuations; and

  2. at any time while in possession of unpublished price sensitive information.

For better corporate governance, the Manager has voluntary adopted a prohibition period of two weeks before the public announcement of PLife REIT's quarterly business updates, and ending on the date of announcement of the relevant business updates.

DEALINGS WITH CONFLICTS OF INTEREST

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

  1. The Manager will be a dedicated manager to PLife REIT and will not manage any other REIT which invests in the same type of properties as PLife REIT.

  2. All resolutions in writing of the Board in relation to matters concerning PLife REIT must be approved by a majority of the directors, including at least one independent director.

  3. At least one-third of the Board shall comprise independent directors.

  4. All related party transactions are reviewed by the ARC. Where a related party transaction is subject to approval by ARC, majority approval of ARC is required. If a member of the ARC has an interest in a transaction, he or she will abstain from voting.

  5. In respect of matters in which Parkway Holdings Limited, the sponsor of PLife REIT ("Sponsor") and/or its subsidiaries have an interest, direct or indirect, any nominees appointed by the Sponsor and/or its subsidiaries to the Board to represent its/their interest will abstain from voting and recuse from meetings and decisions in respect of such matters. In such matters, the quorum must comprise a majority of the independent directors and must exclude the nominee directors of the Sponsor and/or its subsidiaries.

  6. In respect of matters in which a director or his associates have an interest, direct or indirect, such interested director will abstain from voting. In such matters, the quorum must comprise a majority of the Board and must exclude such interested director.

  7. Under the Trust Deed, the Manager and its associates are prohibited from being counted in a quorum for or voting at any meeting of Unitholders convened to approve any matter in which the Manager or any of its associates has a material interest. For so long as the Manager is the manager of PLife REIT, the controlling shareholders (as defined in the Listing Manual) of the Manager and their respective associates are prohibited from being counted in the quorum for or voting at any meeting of Unitholders convened to consider a matter in respect of which the relevant controlling shareholders of the Manager and/or their associates have a material interest.

  8. 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 PLife REIT with a related party of the Manager, the Manager shall be obliged to consult with a reputable law firm (acceptable to the Trustee) which shall provide legal advice on the matter. If the said law firm is of the opinion that the Trustee, on behalf of PLife REIT, 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 Board (including its 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 PLife REIT with a related party of the Manager and the Trustee may take such action as it deems necessary to protect the rights of Unitholders and/or which is in the interests of 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.

PLife REIT's properties are located in Singapore, Japan and Malaysia and its strategy is to invest primarily in incomeproducing real estate and/or real estate-related assets in the Asia-Pacific region (including Singapore) that are used primarily for healthcare and/or healthcare-related purposes (including, but not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices), whether wholly or partially owned, and whether directly or indirectly held through the ownership of special purpose vehicles whose primary purpose is to own such real estate. The Sponsor has interests in several healthcare and/or healthcare-related properties in the Asia-Pacific region such as those located in Malaysia. Potential conflicts of interest between the Sponsor and PLife REIT may arise in respect of acquisition and ownership of healthcare and/or healthcare-related assets in the Asia-Pacific region, including Singapore where PLife REIT's initial properties are located, and where PLife REIT's investment strategy is to invest in healthcare and/or healthcare-related properties located therein.

In order to mitigate any conflict of interest between the Sponsor and PLife REIT in the Asia-Pacific region, the ARC will, during the course of its review of transactions to be entered into by PLife REIT in the future, take into account the expiry of the right of first refusal granted by the Sponsor, together with any other relevant factors that may arise during the assessment process and arrive at its view based on all relevant factors. The existing internal control systems on dealings with conflict of interest will be reviewed periodically to ascertain its effectiveness and suitability and further measures will be considered and implemented to fine-tune the internal control procedures to deal with potential conflicts of interest issues.

In addition, the nominee directors appointed by the Sponsor to the Board are committed not to disclose to the Sponsor information concerning offers to PLife REIT in respect of potential acquisition of new properties as well as offers made by PLife REIT in respect of the potential acquisition of new properties, save for properties which the nominee directors are in a position to confirm that the Sponsor has no intention of acquiring.

The Manager has also put in place a conflict of interest policy applicable to all its employees to ensure that any conflict of interest or potential conflicts of interest are disclosed and necessary approvals are sought where required.

RELATED PARTY TRANSACTIONS

The Manager's Internal Control System

The Manager has established an internal control system to ensure that all future related party transactions (which term includes an "interested person transaction" as defined under the Listing Manual and an "interested party transaction" under the Property Funds Appendix) will be undertaken on normal commercial terms and will not be prejudicial to the interests of PLife REIT or the Unitholders. As a general rule, the Manager must demonstrate to the ARC that such transactions satisfy the foregoing criteria, which may entail obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining one or more valuations from independent professional valuers (in accordance with the Property Funds Appendix).

The Manager maintains a register to record all related party transactions which are entered into by PLife REIT and the bases, including any quotations from unrelated parties and independent valuations obtained to support such bases, on which they are entered. The Manager also incorporates into its internal audit plan a review of all related party transactions entered into by PLife REIT. The ARC reviews the internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor related party transactions have been complied with. In addition, the Trustee also have the right to review such audit report to ascertain that the Property Funds Appendix have been complied with. Further, the following procedures will be undertaken:

Where matters concerning PLife REIT relate to transactions entered into or to be entered into by the Trustee for and on behalf of PLife REIT with a related party of the Manager or PLife REIT, the Trustee is required to consider the terms of such transactions to satisfy itself that such transactions are conducted on an arm's length basis and on normal commercial terms, are not prejudicial to the interests of PLife REIT or the Unitholders, and in accordance with all applicable requirements under the Property Funds Appendix and/or the Listing Manual relating to the transaction in question. Further, the Trustee has the ultimate discretion under the Trust Deed to decide whether or not to enter into a transaction involving a related party of the Manager or PLife REIT. If the Trustee is to sign any contract with a related party of the Manager or PLife REIT, the Trustee will review the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Appendix (as may be amended from time to time) and the provisions of the Listing Manual relating to interested person transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to REITs.

PLife REIT will, in compliance with Rule 905 of the Listing Manual, announce any interested person transaction if such transaction, by itself or when aggregated with other interested person transactions entered into with the same interested person during the same financial year, is 3.0% or more of PLife REIT's latest audited net tangible assets.

The Manager also discloses in the Annual Report the aggregate value of the related party transactions entered during the relevant financial year as required under the Listing Manual and the Property Funds Appendix. See page 213 of this Annual Report for the disclosure.

Role of the Audit and Risk Committee for Related Party Transactions

All related party transactions must be reviewed by the ARC and where applicable, approved by a majority of the ARC to ensure compliance with the Manager's internal control system and with the relevant provisions of the Listing Manual as well as the Property Funds Appendix. The review will include the examination of the nature of the transactions and its supporting documents or such other data deemed necessary to the ARC.

1 Prior appointment with the Manager is appreciated.


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