Al-`Aqar Healthcare REIT Annual Report 2019

6. REMUNERATION POLICIES The remuneration of the Directors is paid by the Manager and not by the Fund. The remuneration of the Executive Director is structured based on linking rewards to corporate and individual performance. For Non-Executive Directors, they receive a basic fee, an additional fee for serving on any of the committees and a sitting allowance for attending meetings of the Board and any of the committee meetings. 7. FINANCIAL REPORTING 7.1 Compliance Officer The Manager has a designated compliance officer working towards ensuring the compliance with all legislations, rules and guidelines issued by the Securities Commission and Bursa Securities as well as Al- `Aqar’s Trust Deed. 7.2 External Auditors The Board has established formal and transparent arrangements for considering how financial reporting and internal control principles will be applied and for maintaining an appropriate relationship with the External Auditors through its Audit Committee. The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness as well as the independence and objectivity of the External Auditors. The Board ensures that the External Auditors do not supply a substantial volume of non-audit services. The appointment of External Auditors, who may be nominated by the Manager, must be approved by the Trustee. The External Auditors appointed must be independent of the Manager and the Trustee. The remuneration of the External Auditors must be approved by the Trustee. 8. RISK MANAGEMENT 8.1 Internal Control The Board is responsible for maintainingasystemof 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 The Manager has established the following procedures to deal with potential conflicts of interest and related party transactions (including its Directors, executive officers and employees) which it may encounter in managing Al-`Aqar:- a. Any related party transaction must be duly disclosed to the Audit Committee and the Board; b. The Audit Committee shall review the terms of the related party transactionbefore 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-`Aqar is not disadvantaged by the transaction concerned. In addition, the Manager shall ensure that such transactions are undertaken in full compliance with the Listed REIT Guidelines, the Trust Deed and the Listing Requirements. 05 ESSENCE OF CORPORATE GOVERNANCE 82