ESR-REIT Annual Report 2024 117 Furthermore, 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 ESR-REIT. If the Trustee is to sign any contract with a related party of the Manager or ESR-REIT, the Trustee will review the contract to ensure that it complies with the requirements relating to IPTs in the Property Funds Appendix and the provisions of the Listing Manual relating to IPTs, as well as such other guidelines issued by MAS and the SGX-ST that apply to real estate investment trusts. All IPTs and related party transactions (and the basis, quotation obtained to support its basis) entered into are maintained in records by the Manager and reviewed by the ARCC. DEALINGS WITH POTENTIAL CONFLICTS OF INTEREST In dealing with potential conflicts of interest issues which the Manager may encounter in managing ESR-REIT, the Manager has instituted the following procedures: • all executive officers are employed by the Manager; • all resolutions in writing of the Board in relation to matters concerning ESR-REIT must be approved by a majority of the Directors, including at least one Independent Director; • target to have at least half of the Board to be comprised of Independent Directors; • in respect of the matters in which a director or his/ her associates have an interest, direct or indirect, such interested director will notify the Manager of his/her interest and, where appropriate, abstain from voting and recuse himself/herself from any discussion on the matter. In addition, all materials pertaining to the transaction, including but not limited to pitching materials, term sheets, board papers and presentations, discussions relating to the transaction, minutes of meeting, clarifications to Board members and follow ups, etc. will not be distributed or shared with the conflicted Director. In such matters, the Board may also seek external professional advice to assist in its deliberations; In addition, the review and approval procedures include the following: • transactions equal to or exceeding S$100,000 in value but below 3% of the value of ESR-REIT’s latest audited net tangible assets, are subject to review by the ARCC at regular intervals; • transactions equal to or exceeding S$100,000 in value (either individually or as part of a series or if aggregated with other transactions involving the same interested party during the same financial year) and equal to or exceeding 3%, but below 5% of the value of ESR-REIT’s latest audited net tangible assets, are subject to the review and prior approval of the ARCC. Such approval will only be given if the transactions are on normal commercial terms and consistent with similar types of transactions made by trustee with third parties who are unrelated to the Manager; and • transactions equal to or exceeding S$100,000 in value (either individually or as part of a series or if aggregated with other transactions involving the same interested party during the same financial year) and equal to or exceeding 5% of the value of ESR-REIT’s latest audited net tangible assets, are reviewed and approved by the ARCC who may, as it deems fit, request advice on the transaction from independent sources or advisers, including obtaining valuations from independent valuers. Further, under the Listing Manual and the Property Funds Appendix, such transactions are to be approved by the Unitholders at a meeting of Unitholders. Where matters concerning ESR-REIT relate to transactions entered into, or to be entered into, by the Trustee for and on behalf of ESR-REIT with a related party of the Manager or ESR-REIT, the Trustee is also required to ensure that such transactions are conducted on normal commercial terms and are not prejudicial to the interests of ESR-REIT and the Unitholders.
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