RELATED PARTY TRANSACTIONS The Manager’s Internal Control System The Manager has established an internal control system to ensure that all Related Party Transactions: • will be undertaken on normal commercial terms; and • will not be prejudicial to the interests of MUST and the Unitholders. As a general rule, the Manager must demonstrate to the ARC that such transactions satisfy the foregoing criteria which may entail: • obtaining (where practicable) quotations from parties unrelated to the Manager; or • obtaining two or more valuations from independent professional valuers (in compliance with the Property Funds Appendix). The Manager maintains a register to record all Related Party Transactions which are entered into by MUST and the bases, including any quotations from unrelated parties and independent valuations, on which they are entered into. Interested person transactions undertaken during the financial year are set out on page 192 of this Annual Report. The Manager also incorporates into its internal audit plan a review of all Related Party Transactions entered into by MUST. The ARC reviews the internal audit reports at least once a year to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with. The Trustee also has the right to review such audit reports to ascertain that the Property Funds Appendix has been complied with. The following procedures are undertaken with respect to Related Party Transactions: • transactions (either individually or as part of a series or if aggregated with other transactions involving the same Related Party during the same financial year) equal to or exceeding S$100,000 in value but below 3.0% of the value of MUST’s net tangible assets will be subject to review by the ARC at regular intervals; • transactions (either individually or as part of a series or if aggregated with other transactions involving the same Related Party during the same financial year) equal to or exceeding 3.0% but below 5.0% of the value of MUST’s latest audited net tangible assets will be subject to the review and prior approval of the ARC. Such approval shall only be given if the transactions are on an arm’s length basis, on normal commercial terms and not prejudicial to the interests of MUST and its Unitholders and are consistent with similar types of transactions made by the Trustee with third parties which are unrelated to the Manager; and • transactions (either individually or as part of a series or if aggregated with other transactions involving the same Related Party during the same financial year) equal to or exceeding 5.0% of the value of MUST’s latest audited net tangible assets will be reviewed and approved prior to such transactions being entered into, on the basis described in the preceding paragraph, by the ARC which may, as it deems fit, request advice on the transaction from independent sources or advisers, including the obtaining of valuations from independent professional valuers. Furthermore, under the Listing Manual and the Property Funds Appendix, such transactions would have to be approved by the Unitholders at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed. Where matters concerning MUST relate to transactions entered into or to be entered into by the Trustee for and on behalf of MUST with a Related Party of the Manager (which would include relevant Associates (as defined in the Listing Manual) thereof) or MUST, the Trustee is required to consider the terms of the transactions to satisfy itself that such transactions are conducted: • on normal commercial terms; • are not prejudicial to the interests of MUST and the Unitholders; and • are in accordance with all applicable requirements of the Property Funds Appendix and/or the Listing Manual relating to the transaction in question. CORPORATE GOVERNANCE 130 | MANULIFE US REIT
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