| Vehicle |
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- The trust is constituted by the trust deed; the trustee has legal ownership of trust assets and holds them on behalf of the REIT.
- The trustee and manager are separate and independent entities. The trustee holds the trust assets and the manager manages the trust assets for unitholders’ benefit.
- The manager is licensed under the Securities and Futures Act (“SFA”). The trustee must be an approved trustee under the SFA, which sets out his duties and liabilities.
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- The trust is constituted by the trust deed; the trustee-manager has legal ownership of trust assets, holds them on behalf of the business trust and manages the trust assets for unitholders’ benefit.
- The trustee-manager is a single responsible entity, being both the trustee and manager of the trust. The Business Trusts Act sets out the duties and liabilities of the trustee-manager.
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| Business Activities |
Acts primarily as a passive investment vehicle (including at least 75% of deposited property in income-producing real estate) |
Business trusts can engage in any type of business activity, including undertaking active business operations. |
| Corporate Governance |
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- The manager can be removed by a simple majority of unitholders’ votes at general meetings.
- One-third of the board of directors of the manager should be independent.
- The audit committee must comprise only non-executive directors, with the majority being independent directors.
- Listed REITs must hold annual general meetings (“AGMs”) within four months of the end of their financial years. Unitholders have the right to attend AGMs, speak and vote on resolutions.
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- The trustee-manager can be removed only if 75% of unitholders vote in favour.
- The majority of board directors must be independent from management and business relationships with the trustee-manager. At least one-third of board directors must be independent from management and business relationships with the trustee-manager and from every substantial shareholder of the trustee-manager.
- The audit committee must comprise at least three directors who must be independent from management and business relationships with the trustee-manager; the majority must be independent from management and business relationships and from every substantial shareholder.
- Listed business trusts must hold AGMs within four months of the end of their financial years. Unitholders have the right to attend AGMs, speak and vote on resolutions.
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| Distributions |
REITs must distribute at least 90% of their specified income to their unitholders to enjoy tax transparency under the Income Tax Act. |
There is no statutory requirement to distribute a certain percentage of its income, but business trusts may pledge to distribute a certain percentage of income to their unitholders. |
| Gearing Limit (Aggregate leverage) |
The Code on Collective Investment Schemes sets a 45% cap on gearing. REITs with minimum adjusted interest coverage ratio of 2.5x may increase their gearing upto 50%. |
There is no statutory gearing limit, but business trusts may commit to a self-imposed borrowing limit. |
