CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 CORPORATE GOVERNANCE 38 39 Principle 2: Board Composition and Guidance Board Independence (Provisions 2.1, 2.2 and 2.3) The Board currently comprises ten members. Based on the NC’s recommendation, the Board has determined seven of them, being more than half of the Board, to be independent, thus providing for a strong and independent element on the Board, capable of exercising objective judgement on the corporate affairs of the Company. No individual or small group of individuals dominate the Board’s decision-making. No alternate Directors have been appointed in respect of any of the Directors. The non-independent Directors are the Board Chairman, the Group CEO, both holding executive appointments in the Company, and Mr Philip Yeo Liat Kok who is an NED. Mr Yeo was considered as non-independent with effect from 1 January 2022 as he has served more than nine consecutive years on the Board. He was accordingly re-designated a non-independent nonexecutive Director with effect from that date. When reviewing the independence of the IDs (excluding Mr Tan who was appointed in March 2023)(“6 IDs”), the NC has considered the applicable Listing Rule 210(5)(d) and the guidelines for independence set out in Provision 2.1 of the 2018 Code and its accompanying Practice Guidance (collectively, the “Independence Guidance”). As part of the consideration of the 6 IDs' independence, the NC has also taken into account the following: • other directorships; • annual declarations regarding their independence; • disclosures of interest in transactions in which they have a direct/indirect interest; • their ability to avoid any apparent conflicts of interest especially by abstaining from deliberation on such transactions; • their ability to maintain objectivity in their conduct as Directors of the Company; and • their ability to objectively raise issues and seek clarification as and when from the Board, Management and the Company’s external advisors on matters pertaining to their area of responsibilities whether on the Board or on the Committees. Each of the IDs on the NC recused himself/ herself from the NC’s deliberations on his/ her own independence. Mr Ong Lian Jin Colin, an ID, is a director of Summervale Properties Pte. Ltd. (“Summervale”) which had entered into an Asset Management and Marketing Agreement with Trentwell Management Pte Ltd (“Trentwell”), a wholly-owned subsidiary of the Company, for Trentwell to manage and market Summervale’s residential units at Nouvel 18. Mr Ong is not involved in the daily operations of and does not hold any executive position in Summervale or its holding company, Green 18 Pte. Ltd., other than being a board member of both companies and a shareholder of Green 18 Pte. Ltd. holding less than 5% shareholding. The Board has concurred with the NC’s determination that Mr Ong’s independence is not affected by this relationship between Trentwell and Summervale. None of the 6 IDs and Mr Tan are currently employed or have been employed at any time during the past three financial years by the Company or any of its related corporations. These IDs also do not have immediate family members who are currently employed or have been employed at any time during the past three financial years by the Company or any of its related corporations, and whose remuneration is determined by the RC. For purposes of determining independence, the 6 IDs and Mr Tan have also provided confirmation that they are not related to the Directors or to any shareholders holding 5% interest in the Company. The NC is satisfied that there is no other relationship which could affect their independence. The Directors undertook a review of their independence, with each ID abstaining from participating CORPORATE GOVERNANCE in his/her own review by the Board and had concurred with the NC’s determination of the independence of the IDs. When considering and recommending Mr Tan for appointment as an ID, the NC also considered his other directorships, the Independence Guidance and the declaration by Mr Tan on his own independence. Board Composition, Size and Diversity (Provision 2.4) The Company has in place a Board Diversity Policy (“BDP”) which sets out the framework for promoting diversity on the Board. The Company recognises that a diverse Board is an important element which will better support the Company’s achievement of its strategic objectives for sustainable development by enhancing the decision-making process of the Board through the perspectives derived from the various skills, business experience, industry discipline and other aspects of diversity (such as gender and age) of the Directors. The BDP, which is available on the Company’s corporate website, provides that the NC shall consider all aspects of diversity when reviewing and assessing the composition of the Board and when making recommendations to the Board for the appointment of Directors to arrive at an optimal balanced composition of the Board. The BDP also provides for the NC to discuss and recommend annually to the Board measurable targets and timelines for promoting and achieving diversity on the Board. The NC has put in place a skills matrix to help identify gaps in the Board and Committees. The skills matrix classifies skills, experience and knowledge of the existing Directors into broad categories such as industry knowledge, namely real estate and hospitality-related businesses and management and fund management; management expertise for example strategic planning, leadership and customer-based experience; professional or skills in specific areas for example, audit/finance, risk, digital/information technology, sustainability and legal. When reviewing and assessing the size and composition of the Board and Committees and making recommendations to the Board annually including the appointment/re-appointment of Directors, the NC will consider all aspects of diversity based on targets and timelines set for promoting and achieving diversity on the Board to arrive at an optimal balanced composition of the Board. As prescribed under the BDP, the final decision on the selection of Directors will be based on merits against objective criteria and targets considered by the NC annually and recommended to the Board for approval. Diversity Targets and Progress in FY 2022 Targets Progress Expand/enhance the Board skill set to achieve the Company’s strategic objectives The NC took diversity into account in its search for new directors to complement the skill set on the Board. Mrs Wong Ai Ai was appointed to the Board in January 2022, bringing valuable skills in the areas of extensive legal knowledge and experience and sustainability in relation to climate change and its consequences. Mr Tan Kian Seng was appointed in March 2023. He has more than 35 years of experience in senior positions, managing various international businesses including hospitality and manufacturing sectors. Mr Tan will be seeking election at the 2023 AGM. Please refer to the ‘Board of Directors’ and ‘Additional Information on Directors seeking election/re-election’ sections in this Annual Report 2022 ("AR") for more information on Mr Tan. Achieve 20% female representation on the Board With Mrs Wong’s appointment in January 2022, the Board has achieved its target of 20% female representation and based on the recommendation of the Council for Board Diversity for listed companies, the Board will strive to increase its female representation to 25% by 2025. In this regard, the NC will try to ensure that: (a) if external search consultants are used to search for candidates for Board appointments, the brief will include a requirement to present female candidates; (b) when seeking to identify a new Director for appointment to the Board, the NC will request female candidates to be fielded for consideration; (c) female representation on the Board be continually improved over time, based on the set objectives of the Board; and (d) at least one female Director continues to be appointed to the NC. Mrs Wong is a member of the NC. Achieve two third independence on the Board. With Mr Philip Yeo’s redesignation as a non-independent non-executive Director and the appointment of Mrs Wong, both in January 2022, the Board has achieved a two-third Board independence. The appointment of Mr Tan in March 2023 has further strengthened the Board independence. Independent Directors make up more than two third of the Board. Maintain age diversity with Directors with age ranging from below 50s to above 70s with majority of the Directors within the above 50s but below 70s age group. The Board has continued to maintain this target.
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