Monday, 06 September 2010

Stock Quote

Name AMANAHRAYA REITS
Date 9/3/2010
Time 4:42am ET
Trade 0.885
Change 0.01
% Chg 1.14%
Volume 528,500
P/E Ratio N/A
EPS 0.00
Mkt Cap N/A
Intraday 

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Today: 06 Sep, 2010
  
Corporate Governance
STATEMENT ON CORPORATE GOVERNANCE

AmanahRaya Real Estate Investment Trust (“ARREIT”) was established on 10 October 2006 pursuant to a trust deed (“Deed”) entered into between AmanahRaya-JMF Asset Management Sdn Bhd (“ARJMF” or “former Manager”) and CIMB Trustee Berhad (the “Trustee”). ARREIT had been listed on the Main Board of Bursa Malaysia Securities Berhad (“Bursa Securities”) since 26 February 2007.

On 7 September 2009 ARREIT saw another milestone where AmanahRaya-REIT Managers Sdn Bhd (“ARRM” or Manager”) a subsidiary that is 100% owned by Amanah Raya Berhad took over the management of ARREIT from ARJMF.

ARRM as the Manager of ARREIT has established operational policies and guidelines to ensure that effective corporate governance is adopted throughout the organisation and its activities.

ARRM has an obligation to act honestly, with due care and diligence, and in the best interest of ARREIT unitholders. This obligation ties in with the Manager’s responsibility in managing the assets and liabilities of ARREIT for the benefit of unitholders, and the Manager will endeavor to continue enhancing returns to unitholders.

In ensuring the implementation and operation of good corporate governance, ARRM is guided by the measures recommended by the Guidelines on Real Estate Investment Trusts (“SC’s Guidelines”), the Malaysian Code on Corporate Governance (Revised 2007) and the Main Market Listing Requirements of Bursa Securities.


THE MANAGER OF ARREIT

ARREIT is externally managed by the Manager and as a result has no employees. The Manager has appointed experienced and well qualified personnel to handle its day to day operations. All Directors and employees of the Manager are remunerated by the Manager and not by the Fund.

The Manager will be responsible for the following:

  • development business plans, strategic and investment policies for ARREIT;
  • provide recommendations on the acquisition, divestment or enhancement of ARREIT’s assets to the trustee;
  • monitor compliance to all legislation, rules and guidelines issued by the SC and Bursa Securities as well as ARREIT's Deed;
  • ensure appropriate record keeping;
  • formulate risk management policies; and
  • supervision of the Property Manager.

DIRECTORS OF THE MANAGER

The Board

The Board of Directors of the Manager (the “Board”) is responsible for the effective stewardship and control of the Manager.

This responsibility of the Board, at the minimum, includes:

  • the formulation of corporate policies and strategies;
  • overseeing and evaluating the conduct of the Manager’s activities;
  • identifying principal risks and ensuring the implementation of appropriate systems to manage these risk; and
  • reviewing and approving key matters such as financial results, investments and divestment, acquisitions and disposals and major capital expenditure.

Board Balance

The Board currently has nine Directors, where all are non executive directors.   Of all the non-executive members, three are independent directors to ensure compliance with the requirement for at least one-third of the Board to be independent.

The Chairman leads the Board and is responsible for the vision and strategic direction of the Manager.

The Chief Operating Officer is responsible for implementing the policies and decisions of the Board, overseeing the day-to-day operations, setting the plan and direction, benchmark and targets for the Manager, tracking compliance and progress of the operation, initiating innovative business ideas to create competitive edge and development asset enhancement strategies with the aim of enhancing unitholders’ return.

Board Meetings

Board meetings are scheduled at least once every quarter.

Access to and Supply of Information and Advice

All Board members are supplied with information on a timely manner. Board reports are circulated prior to Board meetings and the reports provide among others, financial and corporate information, significant operational, financial and corporate issues, performance of ARREIT and management’s proposals which require the approval of the Board.

All directors have access to the advice and services of the Audit Committee, Compliance Department, Internal Auditor, Company Secretary as well as to independent professional advice.

Appointment to the Board

All new nominations received are accessed and approved by the entire Board in line with its policy of ensuring nominees are persons of sufficient calibre and experience.

Committees under the Board

The Board has established the following committees to assist it in discharging its duties in relation to ARREIT. The committees are:

  • The Audit Committee; and
  • The Investment Committee

AUDIT COMMITTEE

The Audit Committee (“AC”) was formed on 9 June 2009. It operates under the delegated authority from the Board and in-line with the Malaysian Code on Corporate Governance (Revised 2007), consists of three non-executive directors.

Duties and responsibilities of the AC include:

  1. To review all the internal and external reports on Company’s operations and portfolio under management and ensure compliance with all relevant laws and regulations.
  2. To initiate investigation of any activity within its terms of reference and to seek any information it requires from the management and/or any employee.
  3. To obtain external legal or other independent professional advice, opinion and/or reports and to secure the attendance of external parties with relevant experience and expertise whenever necessary.
  4. To review with the external auditors the audit plan, scope of the audit and areas of audit for the Company.
  5. The discuss and highlight any problem arising from the audit and/or any other matter raised by the external auditors.
  6. The review the external auditors’ management letters and reports and Company’s management response.
  7. To review the audit report prepared by the external auditors.
  8. To make appropriate recommendations to the BOD on matters of the resignations, dismissals, replacements of external auditors.
  9. The review and report the adequacy of the scope, functions and resources of the internal audit function and authorise it to carry the audit works.
  10. To review all the financial results and financial statements of the Company and all portfolios under management.
  11. To review and highlight any related-party transactions within the Company and all portfolios under management.
  12. To ensure the Company’s policy, strategy and operations are in compliance with all relevant laws and regulations.
  13. To perform any other operational functions as may be agreed by the Board of Directors.

The AC meetings are scheduled at least once every quarter.


INVESTMENT COMMITTEE

The Investment Committee ("IC") for ARREIT was formed on 4 August 2006. It operates under the delegated authority from the Board and is represented by fully-independent members from various fields including legal, banking and property.

Duties and responsibilities of the IC include:

  1. Review, deliberate and decide on any investment to be made by ARREIT as recommended by the management;
  2. Review, assess and decide on any asset acquisition, disposal and fund raising exercise to be undertaken by the ARREIT before being presented to the Board of Directors for final approval;
  3. Review and deliberate on the following reports;
    • Property Market and Outlook Report
    • ARREIT’s Performance Report
  4. Ensure that ARREIT is managed in accordance with:-
    • ARREIT’s investment objectives;
    • ARREIT’s Trust Deed;
    • ARREIT’s Prospectus;
    • The Securities Commission’s Guidelines on Real Estate Investment Trusts and other securities laws; and
    • The internal investment restrictions and policies.
  5. Recommend to the Board the appropriate strategies to achieve proper performance of ARREIT in accordance with the investment policies;
  6. Ensure the strategies selected are properly and efficiently implemented by the management or its fund management delegate (if any);
  7. Actively monitor, measure and evaluate the performance of the management company or its fund management delegate (if any); and
  8. Carry out other duties as may be determined from time to time by the Board.

The IC meetings are scheduled at least once every quarter.


ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board is responsible for ensuring the proper maintenance of accounting records for ARREIT and that appropriate accounting policies had been consistently applied.

Internal Control

The Board has overall responsibility of maintaining a system of internal control that covers financial and operational controls and risk management. The system provides reasonable but not absolute assurance against material misstatement of management and financial information or against financial losses and fraud.

Relationship with Auditors

An external auditor, independent of the Management and Trustee has been appointed. The appointment has been nominated by the Manager, and approved by the Trustee. The remuneration of the Auditor is approved by the Trustee.

Compliance Department

The Manager, has a designated compliance officer working towards ensuring the compliance with all legislation, rules and guidelines issued by the SC and Bursa Securities as well as ARREIT's Deed.


RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST

The Manager has established procedures that will ensure that related party transactions and conflicts of interest are undertaken in full compliance to the SC’s Guidelines, ARREIT’s Deed and the Listing Requirements of Bursa Securities.

Among the policies adopted by the Manager to deal with potential conflicts of interest issues include:

  • transactions on an arm’s length basis and on normal commercial terms which are no more favourable than those extended to related third parties;
  • ARREIT's cash or other liquid assets should be placed in a current or deposit account of institutions licensed or approved to accept deposits; and
  • the Manager may not act as principal in the sale and purchase of real estate, securities and any other Assets to and from ARREIT.

RISK ASSESSMENT AND MANAGEMENT OF BUSINESS RISK

The Manager operates within overall guidelines and specific parameters set by the Board. Responsibility for managing risk lies initially with the Amanah Raya Berhad Group’s Risk Management Department, working within the overall strategy outlined by the Board.


COMMUNICATION WITH UNITHOLDERS

The Board acknowledges the importance of regular communication with unitholders and investors via annual reports, circulars and quarterly financial reports. Various announcements were also made during the period, through which unitholders and investors can have an overview of ARREIT’s performance and operation. Additionally, the Chief Operating Officer regularly meets with analysts, institutional unitholders and investors.