Embassy REIT reaffirms its commitment to the highest standards of Corporate Governance practices. Corporate Governance is an integral part of the values, ethics and the business practices followed by Embassy REIT. The core values of Embassy REIT are:
In short, the philosophy can be described as observing of business practices with the ultimate aim of enhancing long-term shareholders value and commitment to high standards of business ethics. Embassy REIT has in place a Code of Corporate Ethics and Conduct reiterating its commitment to maintain the highest standards in its interface with stakeholders and clearly laying down the core values and corporate ethics to be practiced by its entire management cadre.
Embassy REIT seeks to ensure a high standard of corporate governance consistent with global best practices. Our governance framework emphasises accountability, transparency and integrity, with a view to maximising Unitholder value. Embassy REIT has in place a comprehensive set of compliance policies to implement this corporate governance framework.
Authorization Structure
In short, the philosophy can be described as observing of business practices with the ultimate aim of enhancing long-term shareholders value and commitment to high standards of business ethics. Embassy REIT has in place a Code of Corporate Ethics and Conduct reiterating its commitment to maintain the highest standards in its interface with stakeholders and clearly laying down the core values and corporate ethics to be practiced by its entire management cadre. Embassy REIT seeks to ensure a high standard of corporate governance consistent with global best practices. Our governance framework emphasises accountability, transparency and integrity, with a view to maximising Unitholder value. Embassy REIT has in place a comprehensive set of compliance policies to implement this corporate governance framework.
Board of Directors and Management
The Board of Directors consists of eight Directors as of 31 March 2019, of which four are Nominee Directors and four are independent Directors. [Five Board Meetings have been held during the reporting period – one each in the months of May 2019, Aug 2019, Nov 2019, Jan 2020 and Feb 2020.] The Board periodically reviews Compliance Reports of all laws applicable to the Company and steps taken by the company to rectify instances of non-compliances, if any. The Board is satisfied that plans are in place for orderly succession for appointments to the Board and to senior management. The company has a code of conduct for management cadre staff (including Executive Directors). In terms of the provisions of Regulation 17(5) of the Listing Regulations and contemporary practices of Good Corporate Governance, the Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company and the same is available on the website of the Company. All the Board Members and Senior Management Personnel have affirmed compliance with the said code.
The Board of Directors has made formal annual evaluation of its own performance and that of its committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed under Listing Regulations.
Management committees have been constituted by the board to enable a focussed and quick decision-making in the organisation. Each committee is responsible for handling a specific area. These committees are under direct supervision of the Board. Further, the following committees are having been established and functioning as part of the Governance at Embassy REIT:
The composition and the “Terms of Reference” of the above Committees of Board are in conformity with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. For complete details of the Board of Directors and Committees of the Board, please refer to the section GOVERNANCE: Embassy REIT’s Philosophy on Corporate Governance in the Annual Report for the Financial Year 2019-20.
Embassy REIT has established a well-structured IT-enabled compliance management system that provides comprehensive information on all applicable legal, statutory & regulatory laws and its management. The system enables the management to track the compliance status through comprehensive compliance dashboards & get cognizance of the non-compliances immediately. Based on the nature of task, there are updates on an annual to a daily basis; for conditional tasks on occurrence of any incident; and, for preliminary tasks, during pre-construction, construction and operation stages. These are then reviewed by the reviewer (functional head) & Chief Compliance Officer.
Apart from the comprehensive compliance management system, Embassy REIT also has an established risk management framework that allows identification of business risks in various segments & tracking of applicable laws in the relevant areas. Embassy REIT has also put in place strong internal control systems to evaluate compliance, efficiency & effectiveness of key processes and risks. The formal risk assessment and management system driven by the Risk Management Committee helps to periodically review the risk areas, evaluate the consequences, initiate risk mitigation strategy and implement corrective action wherever required. The risk assessment standards are reviewed regularly or as and when any change in system or process takes place or any incident takes place.
In addition to all policies, procedures and internal audit mechanisms, Embassy REIT engages external experts to carry out an independent review of the effectiveness of various business processes. All internal audit processes are web-enabled and managed online by the Management Committee and the Audit Committee. Accordingly, necessary compliance reports are developed & submitted to various regulatory authorities in accordance with applicable regulations.
The following policies not only govern the conduct of the Board but also the entire fraternity of Embassy REIT:
- Code of Conduct and Ethics
- Distribution Policy
- Whistle Blower Policy
- Policy on Related Party Transactions
- Stakeholders Grievances and Redressal Policy
- Corporate Social Responsibility Policy
- Risk Management Policy
- Board Evaluation Policy
- Business Continuity Policy
- Anti-Money Laundering Policy and Anti-Corruption Compliance Policy
- Prevention of Sexual Harassment Policy
Strong regulatory framework that protects Unitholder interest
Asset
- Minimum 80% of value in completed and income producing
- Minimum 90% of distributable cash flows to be distributed
- Restrictions on speculative land acquisition
Debt
- Majority Unitholder approval required if debt exceeds 25% of asset value
- Debt cannot exceed 49% of asset value
Manager
- 50% Independent Directors, with 50% representation on all committees
- Minimum 90% of distributable cash flows to be distributed
- Restrictions on speculative land acquisition
Related Party Safeguards
- Sponsors are prohibited from voting on their related party transactions
- Majority Unitholder approval required for acquisition or disposal of asset which exceeds 10% of REIT value/li>
- Acquisition or sale price of new asset cannot deviate from average valuation of two independent valuers by + / - 10%
- Fairness opinion from independent valuer required if related party leases exceed 20% of the underlying asset’s rentals