Corporate Governance

Responsible Entities

 

As at 15 March 2012, 360 Capital RE Limited is the Responsible Entity for the following Managed Investment Schemes regulated by the Australian Securities and Investments Commission (ASIC) under the provisions of the Corporations Act 2001:

Scheme ARSN
360 Capital Development Fund No. 1 127 156 718
360 Capital Developments Income Fund 103 700 956
360 Capital Havelock House Property Trust 100 593 548
360 Capital Industrial Fund 099 680 252
360 Capital Office Fund 106 453 196

 

As at 15 March 2012, 360 Capital Investment Management Limited is the Responsible Entity for the following Managed Investment Schemes regulated by the Australian Securities and Investments Commission (ASIC) under the provisions of the Corporations Act 2001:

Scheme ARSN
360 Capital 441 Murray Street Property Trust 097 139 207
360 Capital Canberra Trust 105 380 685
360 Capital 111 St George’s Terrace Property Trust 098 126 660
360 Capital Subiaco Square Shopping Centre Property Trust 094 189 732
360 Capital Retail Fund 107 250 420
360 Capital Diversified Property Fund 117 509 921

 

The Directors of the Responsible Entities are responsible for the corporate governance practices of the Responsible Entities. The Responsible Entity Boards recognise the importance of strong corporate governance and are committed to high standards of compliance. This is achieved through the highly experienced Responsible Entity Boards determining appropriate governance arrangements for each Fund and Trust and continually monitoring those arrangements. The governance framework which sets out the obligations of the Boards of the Responsible Entities is embedded in the Board Charter, Policies and Compliance Plan for the Funds and Trusts. The governance culture and framework of the Responsible Entities are based where applicable on the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (“ASX Principles and Recommendations”). The Responsible Entities comply with the majority of ASX Principles and Recommendations where the Responsible Entities consider that a recommendation is appropriate for the circumstances of the Funds/Trusts, or the Responsible Entities.

 

Relationships between the Responsible Entities and 360 Capital Property Group

360 Capital RE Limited and 360 Capital Investment Management Limited are wholly owned by 360 Capital Property Limited the company that, together with 360 Capital Investment Trust, forms the stapled security known as 360 Capital Property Group. Relationships exist between the Responsible Entities and 360 Capital Property Group that have implications for the Responsible Entities’ governance practices and the Board Charters. The Boards of 360 Capital RE Limited and 360 Capital Investment Management Limited are separately comprised to the Board of 360 Capital Property Group. As sole shareholder of the Responsible Entities, 360 Capital Property Group appoints the Directors of 360 Capital RE Limited and 360 Capital Investment Management Limited.

 

Role of the Boards

The role and responsibilities of the Boards as they relate to the Responsible Entities and the Funds and Trusts are set out in the Board Charters. The role of the Boards of the Responsible Entities is to ensure that the Funds and Trusts are managed in a manner which protects and enhances the interests of Unitholders and takes into account the interests of officers of the Responsible Entities, customers, suppliers, lenders and the wider community. The Boards have overall responsibility for corporate governance, including setting the strategic direction, establishing goals for management and monitoring the achievement of these goals.

This entails:

  • reviewing the investment objectives for the Funds and Trusts to ensure they are consistent with each Fund’s strategic direction;
  • adopting annual operating budgets for the Funds and Trusts and the Responsible Entities and monitoring progress against budgets;
  • monitoring and overseeing the Fund and Trusts’ and Responsible Entities’ financial positions;
  • ensuring compliance with Chapter 2M of the Corporations Act 2001 (the Act), (financial reporting);
  • ensuring compliance with Part 5C.7 and Chapter 2E of the Act (related party matters);
  • determining the net income of the Funds and Trusts available for distribution, the distribution amount per unit and the price of units offered in accordance with any distribution reinvestment plan;
  • evaluating the performance of the Managing Director and senior executives;
  • determining that satisfactory arrangements are in place for auditing the Fund and Trusts’ and Responsible Entity’s financial affairs;
  • approving the Responsible Entity’s risk management strategy;
  • ensuring that appropriate policies and compliance systems are in place, and that the Responsible Entity and its officers act legally, ethically and responsibly on all matters; and
  • complying with the statutory duties and obligations as imposed by the law.

In protecting the rights and interests of Unitholders, the Boards are responsible for ensuring that the Responsible Entities:

  • act honestly;
  • exercise the degree of care and diligence that a reasonable person would exercise if they were in the Responsible Entities’ position and role;
  • act in the best interests of Unitholders and, if there is a conflict between the interests’ of Unitholders and its own interests, give priority to the interests of the Unitholders;
  • treat Unitholders who hold units of the same class equally and Unitholders who hold units of different classes, fairly;
  • do not make use of information acquired through being the Responsible Entities in order to gain an improper advantage for itself or any other person, or cause detriment to the Unitholders;
  • ensure at all times that the Fund and Trust Constitutions meets the requirements of Part 5C.3 of the Act and that the Compliance Plan also meets the requirements of Part 5C.4 of the Act;
  • comply with the Compliance Plan;
  • ensure that Fund and Trust assets are clearly identified as “Fund and Trust property” and held separately from property owned or controlled by the Responsible Entities and the property of any other managed investment scheme;
  • ensure that Fund and Trust properties are valued at regular intervals;
  • ensure all payments out of Fund and Trust properties are made strictly in accordance with the Constitution and the Act; and
  • (as soon as practical after it becomes aware of any breach of the Act or Constitution that relates to the Scheme and that has had or is likely to have a materially adverse effect on the interests of Unitholders) report that breach to the ASIC.
Board composition

The Boards of the Responsible Entities are required to comprise a sufficient number of Directors (but not less than four) to ensure the balance of skills, knowledge and experience required. If at any time the number of Directors falls below the minimum, the Board will endeavour to return the number to the minimum in a reasonable period of time. It is the Responsible Entities’ policy that the Boards should have a majority of non-executive Directors and that not less than half of the Directors are external (as defined in section 601JA of the Act). The Directors appoint as Chairman of the Boards one of the non-executive, external Directors. The role of the Chairman and Chief Executive Officer (i.e. the Managing Director), should not be exercised by the same individual. Persons nominated as non-executive Directors shall be expected to:

  • have qualifications, experience and expertise of benefit to the Responsible Entities; and
  • evaluate continually their other commitments to ensure they have sufficient time to fulfil their duties and responsibilities as Directors of the Responsible Entities; and
  • undertake continuing professional development to the extent necessary to ensure they maintain the skills required to discharge their obligations; and
  • be of sufficient stature and security of employment to express independent views on any matter.
Director independence

Directors of the Responsible Entities are expected to bring an independent view to the Boards’ deliberations. A majority of non-executive Directors are required to be “independent”. Under the regulations applicable to managed investment schemes, that “independence” is determined according to the definition of “external Directors” in section 601JA of the Corporations Act (“the Act”). Under section 601JA of the Act, a Director of the Responsible Entity is an external Director if they:

  • are not, and have not been in the previous two years, an employee of the Responsible Entities or a related body corporate; and
  • are not, and have not been in the previous two years, a senior manager of a related body corporate; and
  • are not, and have not been in the previous two years, substantially involved in business dealings, or in a professional capacity, with the Responsible Entities or a related body corporate; and
  • are not a member of a partnership that is, or has been in the previous two years, substantially involved in business dealings, or in a professional capacity, with the Responsible Entities or a related body corporate; and
  • do not have a material interest in the Responsible Entities or a related body corporate; and
  • are not a relative of a person who has a material interest in the Responsible Entities or a related body corporate.

The Boards regularly assesses those relationships that may affect independence.

 

Delegation to management

The Boards have delegated responsibility for the day to day management of the Funds and Trusts to the Managing Director and Responsible Managers as stated under the AFSLs. The Managing Director delegates a number of the functions, activities and duties required to be performed by the Responsible Entities to Managers and external service providers.

 

Conflicts of interest

The Boards of the Responsible Entities have adopted a Managing Conflicts of Interest Policy that ensures there are adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to the provision of financial services by the Responsible Entities, or their representative, as part of the financial services business of the Responsible Entities or their representative. This policy applies to all Responsible Entity Directors and Officers.

 

Independent professional advice

Subject to prior approval of the Chairman, Directors may obtain independent professional advice at the expense of the Responsible Entities on matters arising in the course of their Board duties.

 

Code of conduct

The Responsible Entities have adopted a code of conduct that sets out the minimum acceptable standards of behaviour. Directors and employees are committed to and bound by the 360 Capital Code of Conduct which provides a framework of principles for conducting business and dealing with investors, financial planners, colleagues and other stakeholders. These are:

  • to act with integrity and professionalism and to be scrupulous in the proper use of company information, funds, equipment and facilities;
  • to exercise fairness, equity, proper courtesy, consideration and sensitivity in dealing with investors, financial planners, colleagues and other stakeholders; and
  • to avoid real or apparent conflict of interests

Securities dealings by Directors are subject to the restrictions of the Responsible Entities’ Personal Dealing — Share Trading Policy. All dealings in Fund and 360 Capital Group securities are reported to the Board in a Register of Directors’ Interests.

 

Committees and other delegations

The Boards may from time to time establish committees to assist it in carrying out their responsibilities, and shall adopt charters setting out matters relevant to the composition, responsibilities and administration of such committees, and other matters that the Boards may consider appropriate.

 

Audit Committee

The Boards have appointed an Audit Committee, the membership of which constitutes at least three non-executive Directors with all being independent Directors. The chairperson will be appointed by the Audit Committee and must be a nonexecutive Director and not the chairperson of the Boards of the Responsible Entities. The chairperson will report the activities of the Audit Committee to the Board of the Responsible Entity after each meeting. The Committee’s Charter sets out its role and responsibilities.

 

Nominations Committee

Due to the small size of the Boards, the duties of a nominations committee relevant to the Responsible Entities are met by the full Boards.

 

Remuneration Committee

The Boards consider that the establishment of a remuneration committee is not necessary given that:

  • the Boards are not of a size sufficient to justify the formation of a separate remuneration committee; and
  • as Directors and officers of the Responsible Entities are not remunerated by the Fund, Unitholders have no direct exposure to those remuneration expenses.
Compliance Committee

Under the Act, if less than half of the Directors are external (as defined in Section 601JA), then a registered scheme must have a Compliance Committee. The Responsible Entities do not intend to establish a Compliance Committee and as a consequence, ensure that not less than half of their Directors are Independent Directors (as defined in the Act). Provision is made at each regular meeting of the Boards for the consideration of critical compliance and risk management issues as they arise. Standard compliance and risk management reporting to the Boards occurs on a quarterly basis in the month following each quarter end viz., July, October, January and April. The Managing Director is responsible for the appointment of a Compliance Manager to assist in the performance and maintenance of the Responsible Entities’ risk management and compliance framework.

 

Meetings

The Board should hold a minimum of six meetings each year. In practice, the Board generally holds between nine and 11 meetings each year. Along with matters of strategic importance, the agenda for regular meetings of the Directors comprises “standard” business items designed to assist in the process of ensuring that the Responsible Entities are complying with Fund and Trust Compliance Plans, their Constitutions and the Act. The agenda also includes regular reports relating to property investment performance, valuation reports, Fund and Trust performance, income distributions, funding issues, borrowing levels, liquidity, hedging arrangements, compliance with banking covenants and budgets. Board papers are required to be circulated to Directors in accordance with Board approved procedures. Minutes of meetings and resolutions are required to be circulated to Directors for approval and entered into the minute books in accordance with Board approved procedures. The Board makes site visits to selected Fund properties every year. A Board planning meeting is held at least annually at which the Board reviews and endorses strategies designed to ensure the continued profitable growth of the Funds and Trusts.

 

Board performance

The Board of the Responsible Entities review their performance and that of their committees on average once every two years. Performance is reviewed against the Board Charter and any other Board responsibilities.

 

Board Charter review

The Board Charter is reviewed annually and any corresponding amendments are made to the Charter where appropriate. Notwithstanding the above review, this Charter is reviewed separately by the Board at least once every two years.

 

Company Secretary

The company secretary supports the effectiveness of the Board by monitoring that Board policy and procedures are followed. The appointment and removal of the company secretary is a matter for decision by the Boards of the Responsible Entities. All Directors have access to the company secretary. The company secretary is accountable to the Boards of the Responsible Entities on all governance matters.

 

Continuous Disclosure Policy and Unitholder communication process

The Boards of the Responsible Entities are committed to providing relevant information to Unitholders about the operations of the Fund and Trusts and to fulfil their duties to comply with continuous disclosure obligations to the market generally. The Boards of the Responsible Entities have adopted a Continuous Disclosure Policy which is designed to ensure compliance with continuous disclosure obligations. The Boards of the Responsible Entities are responsible for:

  • making decisions on what information should be disclosed to the market; and
  • ensuring disclosure is made in a timely and efficient manner.

The Responsible Entities are committed to ensuring Unitholders receive clear, concise and effective information on a timely basis and intends to facilitate the delivery of financial services disclosures through existing and emerging electronic means. The express agreement of Unitholders will be obtained before delivering financial services disclosures by electronic means. Unitholders will receive an annual report and a half yearly report. Newsletters and updates may also be provided from time to time.

 

Complaints handling process

The Responsible Entities have implemented a Complaints Handling Policy that has been prepared in accordance with Australian Standard. The Responsible Entities have established a complaints resolution procedure, and are members of the Financial Ombudsman Service. The Compliance Committee monitors compliance with the Responsible Entities’ Complaints Handling Policy.

If you have a complaint, you may contact the Complaints Officer by phoning 1800 182 257, by emailing investor.relations@360capital.com.au, or by writing to

The Complaints Officer

360 Capital Investment Management Limited

GPO Box 5483

Sydney NSW 2001

360 Capital will acknowledge receipt in writing within two business days of receiving a complaint and will try to resolve all issues within a maximum of 45 days of receipt, but in a shorter period if possible. If it is impossible to substantially respond to the complaint within 45 calendar days, the complainant will, before the end of that period, be:

  • informed of the reasons for the delay;
  • advised of their right to complain to the Financial Ombudsman; and
  • provided with the contact details of the Financial Ombudsman Service.
Risk Management

As an AFS Licensee, 360 Capital Investment Management Limited is mindful of its obligations to have in place a Risk Management Strategy (RMS) to specifically deal with the risk that its financial resources will not be adequate to ensure that it is able to carry on its business in compliance with its AFS Licence obligations, or to wind-up its business in an orderly manner.

Accordingly, directors and managers continually assess and evaluate risks that may affect 360 Capital Investment Management Limited as a Responsible Entity and its Schemes in the market and the likely impact of risks on existing and potential investors. 360 Capital’s RMS reflects our efforts to ensure longevity of the Responsible Entity and its Schemes.

 

AFS Licence 

360 Capital’s AFS Licence (No: 340304) authorises it to carry on a financial services business to:

(a) provide general financial product advice for:

(b) deal in a financial product by:

– derivatives;

– interests in managed investment schemes excluding investor directed portfolio services; and

– securities;

– deposit and payment products limited to:

• basic deposit products

• deposit products other than basic deposit products;

– derivatives;

– general insurance products;

– debentures, stocks or bonds issued or proposed to be issued by a government;

– interests in managed investment schemes excluding investor directed portfolio services;

– securities; and

– superannuation; and

– interests in managed investment schemes; and

– an issue of securities;

(c) operate the following kinds of registered managed investment schemes (including the holding of any incidental property) in its capacity as responsible entity:

– a scheme which only holds the following types of property:

• direct real property; and

• financial assets; and

(d) provide the following custodial or depository services other than investor directed portfolio services;

 

Compliance Plan

The purpose of the compliance plan is to clearly set out key processes, systems and measures 360 Capital carries out in managing the Schemes. It provides an outline of the compliance procedures, monitoring and reporting undertaken to ensure 360 Capital and its service providers comply with Scheme Constitutions, financial services laws and other statutory and ASIC requirements. The compliance plan is central to 360 Capital’s risk and compliance management framework and is supported by underlying policies and procedures that provide more detail about how certain tasks will be performed. The current compliance plan is under ongoing evaluation to ensure its relevance to the AFS Licensing regime.

 

Plan Audit

The Responsible Entity must ensure that at all times a “registered company auditor” is engaged to audit compliance with the compliance plan. This requirement is separate from the obligation under the Corporations Act to appoint an auditor of a Scheme’s financial statements. The compliance plan auditor is required to report annually on compliance with the plan and whether the plan continues to meet requirements of Part 5C.4 of the Act. The role, responsibilities and powers of the compliance plan auditor are set out in s601HG of the Corporations Act. The scope of work presented by the responsible entity to the plan auditor includes:

  • annual audit of the plan in line with Auditing Guidance Statement AGS 1052 “Special Considerations in the Audit of Compliance Plans of Managed Investment Schemes”;
  • review of 360 Capital’s monitoring of service providers of the responsible entity in relation to their compliance with the plan, service providers agreements and ASIC requirements;
  • review of proposed changes to the compliance plan prior to adoption by the 360 Capital Board; and
  • provision of guidance to the compliance manager and the Board from time-to-time on how to resolve issues arising out of the operation of the plan.

Internal monitoring of compliance with the plan, evaluation that policies and procedures are operating as expected and assessment of the adequacy of 360 Capital’s compliance framework is undertaken periodically by the compliance manager.

 

Custodian

The Trust Company Limited and 360 Capital RE Limited are custodians for the Schemes and hold Scheme assets on behalf of Unitholders.

 

AML/CTF Act

360 Capital RE Limited and 360 Capital Investment Management Limited are "reporting entities" under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) that provides designated services to customers (as those terms are defined in the AML/CTF Act). 360 Capital has procedures in place to identify and report suspicious transactions to the AUSTRAC as required under the AML/CTF Act.

 

Privacy Policy

360 Capital recognises how important your privacy is to you. Our firm commitment to comply at all times with the prevailing privacy laws and regulations underpins our policy to safeguard the confidentiality and security of your personal information. While we have an obligation to identify investors under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, we only request and keep information that we need to maintain your account and to process your enquiries effectively. For example, when you complete a prospectus application form, the personal information we ask for may include your name, address, telephone number and email address; tax file number, Australian business number or exemption code and bank account details (for direct credit of distributions).

At 360 Capital, we have in place a range of security methods and technologies to protect your personal details from unauthorised access, modification, misuse, loss, or disclosure. Access to your personal details is restricted to those who require the information to provide you with a complete administration service for your investment. Our registrar, Boardroom Pty Limited, uses your personal details to maintain investor registers and to facilitate distribution payments and unitholder communications. Boardroom Pty Limited has a privacy policy and has undertaken to keep your information confidential.

If you’d like to know what personal information we or Boardroom Pty Limited hold about you or would like us to amend your details, please ring on Freecall 1800 182 257 or by email to investor.relations@360capital.com.au. Depending on the nature of your request, we may ask you to complete a personal information request form.

 

Valuation Policy

360 Capital has a framework in place for the valuation of all investment properties managed by the 360 Capital Property Group. The policy outlines the process of how we determine the fair market value of our assets.

Valuations for unlisted funds/trusts are used for unit pricing purposes. Investment properties are generally carried at their fair market value in accordance with applicable accounting standards. Independent external valuations of direct property investments are obtained at least once in a two year period or earlier if an internal valuation differs materially from the current carrying value of a property. A formal selection process applies with an approved panel of valuers. The panel of valuers must meet pre-determined criteria required by the Corporations Act, financier requirements and surety of business. A rotation policy is embedded into the valuation process. As such, an external valuer may undertake the valuation on a property no more than three times within a 36 month period from the date they first undertook the valuation after which a new external valuer must be appointed.

 

unit pricing policy

The Board approved Unit Pricing Policy aims to ensure that investors understand how the unit prices for their investments are determined. The overriding principle in unit pricing is to act honestly, diligently, impartially and in the best interest of all Unitholders. 360 Capital’s Unit Pricing Policy has been written with regard to the requirements of the Constitutions of the Trusts or Schemes managed by us, the Corporations Act 2001 and ASIC’s RG94 “Unit pricing: Guide to good practice”.



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