AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 82 8. Risk Management 8.1 Internal Control The Board is responsible for maintaining a system of internal control that covers inancial and operational controls and risk management. The system provides reasonable but not absolute assurance against material misstatement of management and inancial information or against inancial losses and fraud. 8.2 Conlict of Interest The Manager has established the following procedures to deal with potential conlicts of interest and related party transactions which it (including its Directors, executive oicers 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 oicer 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. TheManager shall avoid instances of conlict of interest in any transaction and shall ensure that Al-SalāmREIT 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 and Recurrent 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. 8.4 Internal Audit The Internal Audit function is outsourced to Crowe Horwath Governance Sdn Bhd. However, the primary obligation, accountability and responsibility with regards to the scope of internal audit services shall remain with the Board and the Manager at all times. 9. Annual General Meeting (AGM) • The Board regards the AGM as an important event in the corporate calendar of which all Directors and key personnel should attend. The Board regards the AGM as the principal forum for dialogue with Unitholders and aims to ensure that the AGM provides an important opportunity for efective communication with, and constructive feedback from the Unitholders. • The Chairman encourages active participation by the Unitholders during the AGM. The Chairman and where appropriate, the Chief Executive Oicer responds to Unitholders’ queries during the AGM. 10. Communication And Investor Relations The Board values constant dialogue and is committed to clear communication with Unitholders and investors. In this respect, as part of Al-Salām REIT’s active investor relations programme, discussions and dialogues are held with fund managers, inancial analysts, Unitholders and the media to convey information about Al-Salām REIT’s performance, corporate strategy and other matters afecting Unitholders’ interests.