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Dealings with Related Parties, Review of Procedures for Related Party Transactions

The Manager has established internal control procedures to ensure that all Related Party Transactions are undertaken at arm's length basis and on normal commercial terms, which are generally no more favourable than those extended to unrelated third parties. In respect of such transactions, the Manager would have to demonstrate to the Audit Committee that the transactions are undertaken on normal commercial terms which may include obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining a valuation from an independent valuer (in accordance with the Property Funds Appendix of the CIS Code). The internal control procedures also ensure compliance with Chapter 9 of the Listing Manual and the Property Funds Appendix.

In addition, the following procedures are followed:

Role of the Audit Committee for Related Party Transactions

The Manager maintains a register to record all Related Party Transactions which are entered into by CCT (and the basis, including the quotations obtained to support such basis, on which they are entered into). The Manager incorporates into its internal audit plan, a review of all Related Party Transactions entered into by CCT. The Audit Committee reviews the internal audit reports to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with. The review includes the examination of the nature of the transaction and its supporting documents or such other data deemed necessary by the Audit Committee. In addition, the Trustee will also review such audit reports to ascertain that the Property Funds Appendix have been complied with.

If a member of the Audit Committee has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction.

Details of all Related Party Transactions (equal to or exceeding S$100,000 each in value) entered into by CCT during the financial year are disclosed on page 138 of this Annual Report.

Dealings with conflicts of interest

The following procedures have been established to deal with potential conflicts of interest which the Manager (including its Directors, executive officers and employees) may encounter in managing CCT:

• the Manager is a dedicated manager to CCT and will not manage any other REIT or be involved in any other real property business.
• all executive officers of the Manager are employed by the Manager.
• all resolutions at meetings of the Board of the Manager in relation to matters concerning CCT are decided by a majority vote of the Directors, including at least one Independent Director.
• in respect of matters in which CapitaLand and/or its subsidiaries have an interest, direct or indirect, any nominees appointed by CapitaLand and/or its subsidiaries to the Board abstain from voting. In such matters, the quorum comprises a majority of Directors which excludes such interested Directors.
• if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of CCT with an affiliate of the Manager, the Manager is obliged to consult with a reputable law firm (acceptable to the Trustee) on the matter. If the said law firm is of the opinion that the Trustee, on behalf of CCT, has a prima facie case against the party allegedly in breach under such agreement, the Manager is obliged to pursue the appropriate remedies under such agreement. The Manager is required to inform the Trustee as soon as it becomes aware of any breach of any agreement entered into by the Trustee for and on behalf of CCT with an affiliate of the Manager, and the Trustee may take such action as it deems necessary to protect the rights of Unitholders and/or which is in the interest of Unitholders. Any decision by the Manager not to take action against an affiliate of the Manager shall not constitute a waiver of the Trustee's right to take such action against such affiliate.
• at least one third of the Board shall comprise Independent Directors.

The Directors of the Manager are under a fiduciary duty to CCT to act in its best interests in relation to decisions affecting CCT when they are voting as members of the Board. In addition, the Directors and executive officers of the Manager are expected to act with integrity and honesty at all times.

In addition, the Trustee has been granted a right of first refusal by CapitaLand Commercial Limited (CCL) over properties with certain specified characteristics which may in the future be identified and targeted for acquisition by CCL or any of its subsidiaries.

Risk assessment and management of business risk

Effective risk management is a fundamental part of CCT's business strategy. CCT operates within the overall guidelines and specific risk parameters set by the Board from time to time. Transactions are analysed to understand the risks involved, and appropriate controls and measures are put in place before the Manager proceeds to execute these transactions.

The Board generally meets quarterly, or more often if necessary, to review the financial performance of the Manager and CCT against a previously approved budget. The Board also reviews the risk to the assets of CCT and acts upon any comments by the auditor of CCT. In assessing business risk, the Board takes into consideration the general economic environment and property industry risk. Management also reviews the operations of the Manager and CCT regularly together with the Property Manager where appropriate.

The Manager has determined that significant risk for CCT will most likely arise when making property investment decisions. Accordingly, the Board and/or the Executive Committee reviews and approve all major investment decisions. Management is required to conduct due diligence in relation to any proposed property investment and in addition, the Property Manager, third party consultants with the requisite specialised knowledge are also engaged to assist in due diligence exercises when necessary. The Board also requires that each major investment proposal submitted for decision includes a detailed risk assessment, including where appropriate, sensitivity analysis and management's proposed risk mitigation or control strategies.

Dealings in securities

The Manager has complied with the best practices under the Listing Manual and pursuant thereto has issued guidelines to its Directors and employees which prohibit dealing in the Units while in possession of material unpublished price-sensitive information, and during the two weeks before and up to (and including) the time of announcement of CCT's results for the first three quarters and during the one month before and up to (and including) the time of announcement of CCT's full year results. Under these guidelines, Directors and employees have been directed to refrain from dealing in Units on shortterm considerations. They are also made aware of the applicability of the insider trading laws at all times.

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