Corporate Governance

SF REIT is a collective investment scheme authorised by the SFC under section 104 of the SFO and regulated by the Code on Real Estate Investment Trusts (“REIT Code”). It was constituted by the Trust Deed entered into between the REIT Manager and the Trustee on 29 April 2021.

The REIT Manager is licensed by the SFC under section 116 of the SFO to conduct the regulated activity of asset management. The Trustee is a trust company registered under section 77 of the Trustee Ordinance (Chapter 29 of the Laws of Hong Kong) and is qualified to act as a trustee for collective investment schemes authorised under the SFO pursuant to the REIT Code.

The Trustee and the REIT Manager are independent of each other. The Trustee is responsible under the Trust Deed for the safe custody of the assets of SF REIT on behalf of the Unitholders and for overseeing the activities of the REIT Manager for compliance with the relevant constitutive documents of, and regulatory requirements applicable to, SF REIT. The REIT Manager is to manage SF REIT and its assets in accordance with the Trust Deed in the sole interest of the Unitholders and to fulfil the duties imposed on it under general law as the manager of SF REIT and, in particular, to ensure that the financial and economic aspects of SF REIT’s assets are professionally managed in the sole interest of the Unitholders.

The Board principally oversees the day-to-day management of the REIT Manager’s affairs and the conduct of its business, and is responsible for the overall governance of the REIT Manager. The Board exercises its general powers within the limits defined by the articles of association of the REIT Manager, with a view to ensuring that the REIT Manager discharges its duties appropriately, and that sound internal control policies and risk management systems are maintained.

Currently, the Board has 10 Directors, including one Executive Director, four Non-executive Directors and five Independent Non-executive Directors. The names and biographies of the Directors are set out in the “Board of Directors” section.

Five out of 10 of the Directors (50%) are Independent Non-executive Directors. This strong independent representation ensures that the Board can effectively exercise independent judgement.

The Board’s composition reflects the necessary balance of skills and experience desirable for effective leadership and execution of the Board’s duties. The role of the Chairman is separate from that of the Chief Executive Officer to reinforce accountability and responsibility. The Chairman is responsible for the overall leadership of the Board and the REIT Manager. The Chief Executive Officer, being an Executive Director, is responsible for the day-to-day management of the REIT Manager and SF REIT, and supervises the management team to ensure that the REIT Manager and SF REIT are both operated in accordance with stated strategies, policies and regulations.

To enhance good corporate governance, the composition of the Board is underpinned by the following key principles:

• the Chairman of the Board should be a Non-executive Director;
• at least half of the members of the Board should be Independent Non-executive Directors, and at least one of whom must have appropriate professional qualifications or accounting or related financial management expertise;
• the re-election and further appointment of any Independent Non-executive Director serving on the Board for nine years shall be subject to a separate Unitholders’ resolution;
• any person appointed by the Board to be an Independent Non-executive Director either to fill a casual vacancy or as an additional Director shall hold office only until the next Unitholders’ meeting of SF REIT and shall then be subject to re-election by Unitholders by way of an ordinary resolution; and
• every Independent Non-executive Director shall be subject to retirement by rotation at least once every three years at the annual general meetings of SF REIT and shall then be subject to re-election by Unitholders by way of an ordinary resolution.

To ensure that the Board comprises Directors with a balance of skill, experience and diversity of perspectives appropriate for the requirements of SF REIT’s business, and any changes to its composition are be managed without undue disruption, a board diversity policy has been adopted with a view to achieving diversity at Board level and promoting the effectiveness of the Board as a whole.

The Board has established four Board Committees, namely, the Audit Committee, the Disclosures Committee, the Investment Committee and the Nomination and Remuneration Committee, to assist the Board in discharging certain aspects of its duties. Each of these Board Committees is governed by its own written terms of reference.

The Audit Committee is mainly responsible for establishing and maintaining effective internal financial reporting system and internal control and risk management systems; ensuring the quality and integrity of financial statements; nominating independent external auditor and reviewing the adequacy of external audit in respect of cost, scope and performance.

Currently, the Audit Committee comprises the following four members:

TAN Huay Lim^#(Chairman)
HO Lap Kee, MH, JP^#
CHAN Ming Tak, Ricky^#
KWOK Tun Ho, Chester^#

^#Independent Non-executive Director

At least one of the Audit Committee members must be an Independent Non-executive Director who possesses appropriate professional qualifications or accounting or related financial management expertise. In this regard, Mr. TAN Huay Lim meets the requirement.

The Disclosures Committee is mainly responsible for reviewing matters relating to the disclosure of information to Unitholders and public announcements to ensure that the disclosure of information is accurate, complete and not misleading.

Currently, the Disclosures Committee comprises the following three members:

CHAN Ming Tak, Ricky^#(Chairman)
TAN Huay Lim^#
HO Lap Kee, MH, JP^#

^#Independent Non-executive Director

The Investment Committee is mainly responsible for evaluating and making recommendations on proposed acquisitions and/or disposals of assets, capital management strategies (such as hedging activities), financing and refinancing arrangements, and investment and financial risks as well as reviewing and recommending changes to financial authorities and policies or procedures in relation to treasury management.

The Investment Committee currently comprises the following four members:

HO Chit^##(Chairman)
Hubert CHAK^###
CHAN Ming Tak, Ricky^#
Michael Tjahja SUSANTO^#

^#Independent Non-executive Director
^##Non-executive Director
^###Executive Director

The Nomination and Remuneration Committee is mainly responsible for reviewing the structure, size and composition of the Board and Board Committees; making recommendations on changes in members of the Board and Board Committees; developing the criteria for identifying and assessing the qualifications of candidates and evaluating candidates for directorship; assessing the independence of Independent Non-executive Directors; reviewing, implementing and monitoring the board diversity policy; reviewing, implementing and monitoring the nomination procedures of Directors; overseeing and establishing the overall compensation strategy and policies, pay level and manpower succession plan; and making recommendations to the Board on the remuneration packages for Directors.

Currently, the Nomination and Remuneration Committee comprises the following four members:

HO Lap Kee, MH, JP^#(Chairman)
Ho Chit^##
TAN Huay Lim^#
KWOK Tun Ho, Chester^#

^#Independent Non-executive Director
^##Non-executive Director

The REIT Manager has adopted the following measures to deal with conflict of interests generally:

• the REIT Manager is a dedicated manager to SF REIT and does not manage any other REIT;
• the REIT Manager will ensure that it is able to function independently from its shareholder, and its senior management is employed on a full time basis solely for the operations of the Group;
• the REIT Manager has established procedures to deal with conflict of interests in its compliance manual;
• the REIT Manager has established control procedures to monitor connected party transactions between SF REIT and its connected persons;
• conflict of interests involving a substantial holder of SF REIT or a Director or other connected person will be managed by a physical Board meeting where all Independent Non-executive Directors having no material interest in the matter shall be present; and
• a Director who has a material interest in a matter shall abstain from voting on the resolution concerned and shall not be counted in quorum at the relevant Board meeting.

The REIT Manager has adopted a “Code Governing Dealings in the Units of SF REIT by Directors” on terms no less exacting than the required standard as set out in the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) to govern dealings in the units of SF REIT by the Directors. The “Code Governing Dealings in Units by Directors” is extended to apply to the REIT Manager and those employees of the REIT Manager who are likely to be in possession of unpublished inside information in relation to SF REIT and the REIT Manager.

Directors who are aware of or privy to any negotiations or agreements related to intended acquisitions or disposals which are notifiable transactions under Chapter 14 of the Listing Rules (as if such rules were applicable to SF REIT) or any connected party transactions under the REIT Code or any inside information must refrain from dealing in the units of SF REIT as soon as they become aware of them or privy to them until proper disclosure of the information in accordance with the REIT Code and any applicable rules and regulations or the lapse of the aforesaid negotiations or agreements related to intended acquisitions or disposals. Directors who are privy to relevant negotiations or agreements or any inside information will caution those Directors who are not so privy that there may be inside information and that they must not deal in SF REIT’s units for a similar period. These restrictions are extended to apply to employees of the REIT Manager who are aware of or privy to such inside information.

The Trust Deed has incorporated certain provisions of Part XV of the SFO in relation to disclosure of interests so that those provisions are deemed to apply to the REIT Manager, the Directors or the chief executive of the REIT Manager and certain persons interested in the units of SF REIT (including

In accordance with the REIT Code, the annual report and accounts of SF REIT will be published and sent to the Unitholders and filed with the SFC no later than four months following each financial year-end of SF REIT and the semi-annual report no later than three months following the end of each period it covers.

The REIT Manager shall ensure that a full valuation of each of the SF REIT’s properties shall be conducted by the principal valuer at least once a year, and the REIT Manager may require the principal valuer to carry out additional valuation or inspection at such other date as it may determine in its sole discretion.

The REIT Manager shall keep the Unitholders informed of any material information pertaining to SF REIT in a timely and transparent manner as required by the REIT Code. The provisions of Part XIVA of the SFO shall have effect on SF REIT, mutatis mutandis, as if SF REIT is a “listed corporation” and if the board of directors of the REIT Manager is the “board of directors of a listed corporation”.

The REIT Manager has adopted a Unitholders’ communication policy which aims to ensure an effective communication with Unitholders and enhance the culture of disclosure of developments of SF REIT. Announcements, circulars and other corporate communications covering financial and non-financial information of SF REIT are disseminated on a timely basis to keep Unitholders and the public informed of SF REIT’s latest developments. To ensure proper dissemination of information, the REIT Manager has also adopted a corporate communication policy to set the standard and guide staff to respond to external enquiries.

Pursuant to the Trust Deed, certain matters require specific prior approval of Unitholders by way of a special resolution and such matters include:

1. changes in REIT Manager’s investment policies or strategies for SF REIT;
2. disposal of any real estate forming part of the assets of SF REIT within two years from the date of acquisition;
3. any increase in the rate above the permitted limit or change in the structure of the REIT Manager’s fees;
4. any increase in the rate above the permitted limit or change in the structure of the Trustee’s fees;
5. any modification, alteration or addition to the Trust Deed, save for certain circumstances specified in the Trust Deed;
6. termination or merger of SF REIT;
7. removal of SF REIT’s auditor and appointment of other auditor; and
8. removal of the Trustee.