Corporate Governance
The Board sees strong corporate governance and stewardship as fundamental to the strong performance of the Trust.
The Trust
ING Medical Properties Trust is a unit trust established under the Unit Trust Act 1960 by a Trust Deed dated 11 February 1994, as amended by Deeds of Variation and Restatement dated 1 September 1999, 10 November 2003, 12 November 2007, 12 December 2007 and 5 August 2008.
ING Medical Properties Trust units are listed on the New Zealand StockExchange (NZX code: IMP). A copy of the amended Trust Deed is available from ING Medical Properties Limited (the “Manager”) on request or can be viewed at the Manager’s registered office at Level 27, ASB Bank Centre, 135 Albert Street, Auckland, during normal business hours.
A copy has also been filed with the Companies Office of the Ministry of Economic Development and may be viewed, on payment of a nominal fee, on the Companies Office website at www.companies.govt.nz.
The Trustee
The Trustee of the Trust is Trustees Executors Limited (“Trustees Executors”).
Trustees Executors is empowered as a statutory trust company by its own Act of Parliament and has been re-registered under the Companies Act 1993, and acts as trustee forunit trusts under the Unit Trust Act 1960.
The role of the Trustee is to supervise the administration and management of the Trust in accordance with the Trust Deed, and to ensure that the Manager complies with its duties and responsibilities under the Trust Deed. Where the approval of the Trustee is required, the Trustee is to have regard to the interests of unitholders and has the explicit obligation to veto any proposal that it does not consider to be in the interests of unitholders. The Trustee must also be satisfied that any proposal involves an investment of a type authorised under the Trust Deed and within the investment policies of the Trust.
The Trustee holds title to the assets of the Trust in trust for the unitholders, upon and subject to the terms and conditions of the Trust Deed. The Trustee also has certain discretions and powers to approve investment and divestment proposals recommended to it by the Manager and reviews and authorises all payments made by the Trust.
The Trustee is entitled to receive fees in respect of its services based on the average gross value of the assets of the Trust as follows: 0.10% per annum on the first $100 million, then 0.08% per annum on the next $25 million, then 0.05% per annum on the next $25 million and 0.03% per annum on any amount over $150 million. The Trustee is also entitled to reasonable reimbursement for special attendances.
The Manager
The Manager of the Trust is ING Medical Properties Limited, a company owned 100% by ING (NZ) Limited. On 4 February 2009 ING (NZ) Limited acquired the remaining 50% of the shares in the manager from Symphony Investments (2007) Limited.
The Manager has responsibility for the management of the Trust in accordance with the Trust Deed.
The Manager provides professional management expertise in selecting assets and managing them on behalf of unitholders. The Manager’s role and duties extend to the overall strategic direction of the Trust, portfolio management, selection and review, negotiation of acquisition and disposal of assets, treasury and funding management, property management, ensuring adherence to financial and reporting requirements, and liaison with unitholders.
Day-to-day management of the properties in the portfolio is carried out by ING (NZ) Limited, which provides tenancy management, account management, building management, risk management and property investigation services in respect of the Trust’s properties. Stipulated within the Trust Deed is the basis on which the Manager is entitled to receive management fees and incentive fees. Management fees are charged at 0.75% per annum of the monthly average of the Gross Value of the assets of the Trust Fund. The Incentive Fee is 10% per annum of the average annual increase in the Gross Value of the Trust Fund with the payment being made by way of subscribing for new Units issued at the weighted average price. The remuneration of the Manager shall not exceed an amount of 1.75% per annum of the Gross Value of the Trust and includes the remuneration of the general manager and management team.
Corporate Governance philosophy
Ultimate responsibility for corporate governance of the Trust resides with the Board of Directors of the Manager. The Board sees strong corporate governance and stewardship as fundamental to the strong performance of the Trust and, accordingly, their commitment is to the highest standards of business behaviour and accountability.
Outlined below are the main corporate governance practices in place throughout the year, which, in the Board’s opinion materially comply with the NZX Corporate Governance Best Practice Code (NZX Code) and the Securities Commission’s Principles of Corporate Governance and Guidelines, unless otherwise stated.
Ethical standards
The Board has adopted a Code of Ethics, which sets out the ethical and behavioural standards expected of the Manager’s Directors, officers and employees. The purpose of the Code of Ethics is to uphold the highest ethical standards, acting in good faith and in the best interests of unitholders at all times. The Code of Ethics outlines the Manager’s policies in respect of conflicts of interest, fair dealing, compliance with applicable laws and regulations, maintaining confidentiality of information, dealing with Trust assets and use of Trust information. Procedures for dealing with breaches of these policies are contained in the Code of Ethics, which forms part of every employee’s conditions of employment with the Manager.
Composition of the Board
The Manager is committed to having a Board whose members have the capacity to act independently and have the composite skills to optimise the financial performance of the Trust and returns to unitholders. The Constitution of the Manager provides for there to be not more than six Directors nor less than three Directors. All the members of the Board are Non-Executive Directors. The members of the Board are listed in the table to the right. All bring a significant level of expertise to the Trust. Their brief resumés are included in the Board of Directors section on page 20.
Attendance of Directors
| Director |
Meetings attended |
| William (Bill) Thurston (Chair) |
9 of 9 |
| Graeme Horsley |
9 of 9 |
| Andrew Evans |
9 of 9 |
| Peter Brook |
9 of 9 |
The Board does not impose a restriction on the tenure of any Director as it considers that such a restriction may lead to the loss of experience and expertise from the Board.
Independent Directors
The Manager recognises that Independent Directors are important in assuring unitholders that the Board is properly fulfilling its role and is diligent in holding management accountable for its performance. The procedures in place for determining independence is whether the Director is independent of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement. As required under Rule 3.3.1A, the Board has determined that Bill Thurston (Chairman) and Graeme Horsley are considered to be Independent Directors under the NZSX Listing Rules as neither has a Disqualifying Relationship with the Trust. Andrew Evans and Peter Brook are considered not to be independent.
In December 2007, the Manager announced a policy which provides unitholders with the opportunity to nominate the two Independent Directors of the Manager required by the NZSX Listing Rule 3.3.1. Unitholders are able to nominate and vote on one Independent Director of the Manager each year. The nominee receiving the most votes will be approved as a director of the Manager by the Manager’s shareholders, and will hold the position for a two-year term.
Board and Director performance
The Board has an annual performance assessment, carried out under the direction of the Chairman. Assessment of individual Directors’ performance is a process determined by the Chairman, taking into account attendance, contribution and experience of each individual Director concerned.
Insider Trading and Restricted Persons Trading
The Manager’s Directors, officers and employees, their families and related parties must comply with the Insider Trading policy and the Restricted Persons Trading policy. Amongst other requirements this identifies two “black out periods” where trading in the Trust's units is prohibited, namely between 31 May until the day following the full year announcement date and from 1 December until the day following the half year announcement date each year. Ongoing fixed trading by participation in the Dividend Reinvestment Plan (DRP) is available throughout the year. At all other times trading requires that an application is made and approval obtained from any two Directors or a Director and the Chief Financial Officer in order to buy or sell units. The holdings of Directors of the Manager is disclosed in the section headed Directors Disclosures on page 67 of the 2009 Annual Report.
Directors and officers indemnification and insurance
The Trust has arranged directors and officers liability insurance covering directors, senior executives and employees for their personal liability arising out of duties as directors and officers and reimburse the Trust where it has indemnified its directors.
Board Committees
Board committees assist with the execution of the Board’s responsibilities to unitholders. Each committee operates under a charter agreed by the Board, setting out its role, responsibilities, authority, relationship with the Board, reporting requirements, composition, structure and membership.
Remuneration Committee
The Board does not maintain a Remuneration Committee as the Manager pays the remuneration of the Directors and the senior executives, rather than the Trust.
Nominations Committee
The Board does not maintain a Nomination Committee as it is not deemed necessary as Directors are appointed in accordance with the Manager’s constitution.
Audit Committee
The Board has established an Audit Committee, which is responsible for overseeing the financial and accounting responsibilities of the Trust. The minimum number of members on the Audit Committee is three. All members must be Directors, the majority must be Independent Directors and at least one member must have an accounting or financial background.
The members of the Audit Committee are Peter Brook(Chairman), Bill Thurston and Graeme Horsley.
The Audit Committee assists the Board in fulfilling its corporate governance and disclosure responsibilities with particular reference to financial matters, and internal and external audit, and is specifically responsible for:
- The appointment of the external auditor of the Trust;
- Supervising and monitoring external audit requirements;
- Reviewing annual and interim financial statements prior to submission for Board approvals;
- Reviewing and approving quarterly distributions with recommendation of the same for Board approvals;
- Reviewing the performance and independence of the external auditor; and
- Monitoring compliance with the Unit Trusts Act 1960, Financial Reporting Act 1993, Companies Act 1993 and the NZSX Listing Rules.
Attendance at Audit Committee
| Director |
Meetings attended |
| Peter Brook (Chair) |
6 of 6 |
| Graeme Horsley |
6 of 6 |
| William (Bill) Thurston |
6 of 6 |
External Audit Firm Guidelines
In addition to the formal charter under which the Audit Committee operates, the Audit Committee has also developed a Charter of Audit Independence, which sets out the procedures that need to be followed to ensure the independence of the Trust’s external auditor.
The Audit Committee is responsible for recommending the appointment of the external auditor and maintaining procedures for the rotation of the external audit engagement partner. Under the Audit Charter, the external audit engagement partner must be rotated every five years.
The charter covers provision of non-audit services with the general principle being applied that the external auditor should not have any involvement in the production of financial information or preparation of financial statements such that they might be perceived as auditing their own work. It is however appropriate for the external auditor to provide services of due diligence on proposed transactions and accounting policy advice.
External Audit for ING Medical Properties Trust – following careful consideration and recommendation from the Audit Committee, the Board appointed the firm of Deloitte as the Trust's statutory and compliance auditor. External Audit of the Manager – the firm of Ernst & Young has been appointed as the auditor of the Manager – ING Medical Properties Limited.
Unitholder Relations
The Board aims to ensure that unitholders are informed of all information necessary to assess the Trust’s performance. It does so through a communication strategy which includes:
- Periodic and continuous disclosure to NZX;
- Information provided to analysts and media;
- Annual and interim reports distributed to all unitholders;
- The annual unitholders’ meeting and any other meetings called to obtain approval for Manager actions as appropriate;
- Notices and explanatory memoranda for annual and special meetings;
- Trust newsletters and Investor Roadshow; and
- The Trust’s website www.ingmedicalproperties.co.nz.
Unitholders may raise matters for discussion at annual and special meetings and have the opportunity to question Directors and the external auditor at such meetings.
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