AL-SALAM REIT ANNUAL REPORT 2017

92 AL-SALĀM REIT ANNUAL REPORT 2017 8. RISK MANAGEMENT 8.1 Internal Control The Board is responsible for 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. 8.2 Conflict of Interest TheManager has established the following procedures to deal with potential conflicts of interest and related party transactions which it (including its Directors, executive officers and employees) may encounter in managing Al-Salām REIT:- a) Any related party transaction must be duly disclosed by the related parties to the Audit Committee and the Board; b) The Audit Committee shall review the terms of the related party transaction before recommending to the Board; c) The Board shall ensure that at least one-third of its Directors are Independent Directors; and d) In circumstances where any Director of officer of the Manager may have a direct or indirect interest in any related party transaction, they will abstain from deliberation and voting at any Board meeting and will require the Trustee’s approval prior to entering into any transaction/agreement. The Manager shall avoid instances of conflict of interest in any transaction and shall ensure that Al-Salām REIT is not disadvantaged by the transaction concerned. In addition, the Manager shall ensure that such transactions are undertaken in full compliance with the SC REIT Guidelines, the Trust Deed and the Listing Requirements. 8.3 Related Party Transactions In dealing with any related party transaction, all related party transactions carried out by or on behalf of Al-Salām REIT should be conducted as follows:- a) Carried out in full compliance with the REIT Guidelines and the Trust Deed; b) Carried out at arm’s length basis; c) In the best interest of Unitholders; d) Adequately disclosed to Unitholders; e) Consented by the Trustee; and f) Consistent with the investment objectives and strategies of Al-Salām REIT. All related party transactions are subject to review by the Audit Committee prior to recommendation to the Board. If a member of the Audit Committee has an interest in a transaction, he/she is to abstain from participating in the review and recommendation process in relation to that transaction. BOARD CHARTER - CONT’D