CORPORATE GOVERNANCE 90 Al-`Aqar Healthcare REIT | Annual Report 2024 Managing Conflict of Interest The Manager’s policy requires that directors, officers and employees avoid any conflict between their own interests and the interests of the Group in dealing with suppliers, customers and other third parties, and in the conduct of their personal affairs, including transactions in securities of the Manager, any affiliated or any nonaffiliated organisation. A member of the Board who directly or indirectly has by himself, his spouse or children, any interest in any matter under discussion by the Board shall disclose to the Board the existence of such interest and nature thereof. As such, a disclosure shall be recorded in the minutes of the Board, and after the disclosure: (a) the member shall not take part nor be present in any deliberation or decision of the Board; (b) the Director shall be disregarded for the purpose of constituting a quorum of the Board relating to the matter; and (c) no act or proceedings of the Board shall be invalidated on the ground that any member of the Board has contravened the provisions of this section. Board Remuneration The Board acknowledges that MCCG 2021 emphasises that Directors’ remuneration, which is well structured, clearly linked to the strategic objectives of a company, and rewards contribution to the long-term success of the company is important in promoting business stability and growth. The Manager has in place policies and procedures regarding remuneration and aims to set remuneration at level which is sufficient to attract, motivate and retain the Directors needed to achieve the Company’s long-term objectives, taking into consideration all relevant factors including the complexity of the Company’s business and its performance, the skills and experience of the relevant Director and his or her responsibilities, contribution and commitment to the Company. The remuneration packages are also designed on the basis of the directors’ senior management’s merit, qualification, and competence while having regard to the company’s operating results, individual performance, and comparable market statistics. As such the BNRC and the Board has recommended and approved a revised Directors’ remuneration which takes effect in January 2025. The new remuneration was introduced taking into consideration the Board’s performance, competence and comparable market statistics. Practice 8.1 of the MCCG 2021 requires a disclosure on directors' remuneration, where “ detailed disclosure on a named basis for the remuneration of individual directors and the remuneration breakdown of individual directors includes fees, salary, bonus, benefits-in-kind, and other emoluments”. The Manager explained that the Board’s nomination, and appointment remuneration is undertaken by the Manager, a private company in the Johor Corporation Group, and not by the REIT. The appointment, re-appointment, and remuneration of a director of the Company are not subject to the approval by the unitholders of the listed funds. As such in this instance, the required disclosure does not apply to the REIT. Senior Management Remuneration The Manager also adopts the JCorp Group’s Employee Salary Scheme as a guiding principle to provide a competitive level of total compensation to attract and retain qualified and competent staff. It is also driven primarily based on performance as specified in its Performance Management Policy. With regard to application of Practice 8.2 which requires disclosure “on a named basis the top five senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments”, the Board is of the view that such disclosure is not applicable and mandatory because the Manager is not a listed entity; and the senior management’s remuneration is paid by the Manager. Nevertheless, the Board wishes to give assurance that the remuneration of Directors and Senior Management commensurate with their individual performance, taking into consideration of the REIT’s performance as it is benchmarked against the market. The remuneration packages of Senior Management are based on experience, expertise, skills and industry benchmarking. Driving Sustainability The Board Sustainability Committee (BSC) together with Senior Management takes responsibility for the governance of sustainability in setting the company’s sustainability strategies, priorities, and targets. Further, the Board is cognizant of the philosophy promoted by MCCG 2021, effective board leadership and oversight also require the integration of sustainability considerations in corporate strategy, governance and decision-making. As ESG is gaining importance, the BSC has been mandated with oversight functions on ESG including climate change risk. In compliance with the IFRS 1 and 2, the REIT’s Sustainability Report has addressed the issues related to sustainability-related financial disclosures and response to climate-related risks and opportunities The REIT Manager has established the Sustainability Management Committee (SMC) at the management level, which is led by the CEO and comprises the management team of the Manager, the Property Manager, and its counterparts. The SMC is dedicated to managing sustainability strategically, including the integration of sustainability considerations in the operations. CORPORATE GOVERNANCE OVERVIEW STATEMENT
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