Sustainability

Corporate Governance

The Manager is committed to upholding a high standard of corporate governance. To ensure compliance with all relevant laws and regulations, it has established a robust corporate governance framework supported by five key elements, namely checks and balances, risk management, internal control, communication and transparency.

Governance Framework

Other Compliance And Disclosure Matters

Interest and Dealings in Units

The Manager has adopted a code governing dealings in securities of Sunlight REIT by Directors (the “Dealings Code”), the terms of which are no less exacting than those set out in Appendix C3 of the Listing Rules. The Dealings Code is applicable to the Manager and its Directors, senior executives, officers and employees, and directors of special purpose vehicles of Sunlight REIT. Certain restrictions and notification requirements as provided under the Listing Rules are adopted with modifications in the Dealings Code to apply to unit buyback by the Manager on behalf of Sunlight REIT.

Conflicts of Interest and Business Competition

To ensure that conflicts of interest relating to Sunlight REIT are properly managed, the Manager has adopted various control measures, including but not limited to the following :

  1. the Manager will not manage any real estate investment trust other than Sunlight REIT nor manage any other real estate assets other than those owned by Sunlight REIT;
  2. the Manager has functional units and systems which operate independently of its shareholder(s);
  3. the Manager has established internal control systems to ensure that Sunlight REIT’s connected party transactions are monitored and undertaken in compliance with the REIT Code, the Listing Rules and waivers granted by the SFC;
  4. the Manager has a Conflicts of Interest Policy in place to ensure fairness and good corporate governance. Any situations of actual, potential or perceived conflicts of interest of employees are reported and monitored;
  5. Director(s) with potential conflicts of interest shall disclose his/her interest to the Board and abstain from voting on the relevant matter, as well as not to be counted in the quorum for that resolution; and
  6. registers of other directorships and senior positions held by the Directors are maintained and updated from time to time.

The Manager and the Property Manager are both indirect wholly-owned subsidiaries of HLD. Both Non-Executive Directors of the Manager (including the Chairman) are directors of HLD, which is/may be engaged in, among other things, the development, investment and management of retail, office and other properties in and outside Hong Kong.

Accordingly, the Manager may experience conflicts of interest with HLD when acquiring and disposing of investments, or in connection with transactions between Sunlight REIT and HLD. The Manager and the Property Manager may also experience conflicts of interest with HLD when identifying and competing for potential tenants.

The Manager is of the view that the various control measures in place are sufficient to manage any potential conflicts of interest with HLD as mentioned above and assures that it is capable of performing, and shall continue to perform, its duties for Sunlight REIT in the best interests of Sunlight REIT and Unitholders.

Checks and Balances
Structure of Sunlight REIT

Sunlight REIT is a real estate investment trust authorized by the Securities and Futures Commission (the “SFC”) and constituted by the trust deed dated 26 May 2006 (as amended and restated) (the “Trust Deed”).

The Manager is licensed under Part V of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”) and approved by the SFC to manage Sunlight REIT.

The Trustee is registered as a trust company under Section 77 of the Trustee Ordinance (Chapter 29 of the Laws of Hong Kong), and is licensed by the SFC to conduct the regulated activity of providing depository services to SFC-authorized collective investment schemes.

Role of the Manager and the Trustee

The Manager is responsible for the management and operation of Sunlight REIT, ensuring that the financial and economic aspects of Sunlight REIT’s assets are professionally managed in the sole interest of unitholders of Sunlight REIT (“Unitholders”).

The Trustee has the fiduciary duty to hold the assets of Sunlight REIT in trust for the benefit of Unitholders and to oversee the activities of the Manager to ensure compliance with the Trust Deed and regulatory requirements applicable to Sunlight REIT.  

The Trustee and the Manager are independent of each other.

The Board

The board of directors of the Manager (the “Board”) is responsible for the overall management and corporate governance of the Manager. The Board leads and sets out the corporate strategies and directions of Sunlight REIT.

The Board currently has seven Directors, including one Executive Director (the “ED”) (who is also the Chief Executive Officer (the “CEO”)), two Non-executive Directors (“NEDs”) (including the Chairman of the Board (the “Chairman”)) and four Independent Non-executive Directors (“INEDs”). All Directors shall retire from office at every annual general meeting of the Manager but shall be eligible for re-election in accordance with the articles of association of the Manager. The roles of the Chairman and CEO are separate and performed by two different individuals.

The INEDs are responsible for ensuring that there is a strong independent element on the Board, and for effectively exercising independent judgment with regards to the overall corporate strategy and direction of the Manager, as well as certain specific proposed policies and transactions. In assessing the independence of the INEDS, each INED is required to provide to the Manager an annual written confirmation of his/her independence by reference to factors set out in the Compliance Manual.

A board diversity policy has been adopted with a view to achieving diversity on the Board. The size, composition and structure of the Board is reviewed on a regular basis with due consideration on different aspects of diversity, including but not limited to age, cultural and educational background, gender, knowledge, length of service and professional experience or skills.

Board meetings are held at least four times in each financial year at approximately quarterly intervals. At least 14 days’ notice in writing is given to Directors for regular Board meetings.

The Board has delegated certain functions to four Board committees, namely the Audit Committee, the Investment Committee, the Remuneration and Nomination Committee and the Disclosures Committee.

Transparency
Annual and Interim Reports

Financial statements of Sunlight REIT are prepared in accordance with accounting principles generally accepted in Hong Kong with a financial year end of 31 December* and a financial half-year end of 30 June*. Pursuant to the REIT Code, annual reports and accounts of Sunlight REIT are published and distributed to Unitholders within four months following the end of each financial year, and for interim reports are published and distributed to Unitholders within three months following the end of the relevant period.

*The financial year end date of Sunlight REIT was changed from 30 June to 31 December with effect from 7 February 2024.

Results Announcement and Other Information

Pursuant to the requirements under the REIT Code, results announcements of Sunlight REIT are released on a semi-annual basis. It is customary for the Manager to conduct presentations with Unitholders, investors, analysts and/or the press immediately following the release of results announcements. The relevant presentation materials and results announcements are also available to the public on the website of Sunlight REIT.

To keep Unitholders abreast of the position of Sunlight REIT, public announcements on material information and developments of Sunlight REIT are made by the Manager on a timely basis in accordance with the applicable regulatory requirements. Briefings with analysts and the press may also be convened by the Manager if necessary. The Manager also voluntarily releases the operational statistics of Sunlight REIT twice a year.

Risk Management

Risk management forms an integral part of Sunlight REIT’s operating processes and is fundamental to the achievement of its vision, mission and core values.

Risk Governance Structure

The risk management framework of Sunlight REIT is summarized and illustrated by the “Three Lines of Defence” model below:

Roles and Responsibilities of the Board and Management

The ultimate responsibility for the management of risks and internal control system is assumed by the Board, which shall ensure that appropriate and rigorous systems to manage and mitigate risks are in place, and shall hold senior management responsible for the implementation of risk management activities. The Audit Committee, the Investment Committee and the Disclosures Committee are designated to assist the Board in risk governance by monitoring the risk assessment process and timely communicating to the Board on key risks where necessary, while the internal audit function is tasked with the responsibility of independently appraising Sunlight REIT’s risk management framework and reporting the results annually to the Audit Committee. The Board has also established a Risk Taskforce to monitor and assess the risk environment (and the top risks) of Sunlight REIT on a regular basis. Core members of the Risk Taskforce include the CEO, the Chief Financial Officer, the Assistant General Manager – Human Resources and Operations and the Risk Manager (the role of which is assumed by the Compliance Manager).

Monitoring and Reporting of Risks
Bottom-up Approach

The top risks (normally 5 risks, including any environmental, social and governance risks (“ESG risks”) and fraud risks) identified for each department will be escalated to the Risk Manager quarterly. The Risk Manager is responsible for aggregating the risk factors submitted by each department and preparing the risk register.

The ESG Committee reviews and monitors ESG risks (including climate-related risks) and makes recommendations to the Risk Taskforce which will review the risk register and give direction for action where necessary.

Top-down Approach

At the Risk Taskforce level, in order to have a comprehensive discussion of strategic risks, fraud risks and ESG risks (including climate-related risks), all department heads and responsible officers will be invited to an annual Risk Taskforce meeting to discuss about these risks, together with the top risks identified, to evaluate risks from a top-down approach.

Overall

The Risk Taskforce evaluates and prioritises the risks identified from both the bottom-up and top-down approach and determines the latest top risks of Sunlight REIT. A 5-by-5 risk matrix is used to assess the risks of Sunlight REIT by risk ratings. The risk rating is scored in terms of the impact and likelihood of occurrence. Risks are rated according to their residual and target risk levels.

The top risks are then presented to the Audit Committee and the Investment Committee as appropriate for review and evaluation on a quarterly basis, and may further be escalated to the Board if necessary.

The ESG Committee will report to the Disclosures Committee on ESG-related issues and risks (including climate-related issues and risks), if any, on a semi-annual basis. Material ESG-related issues and risks (if any) will be reported by the Disclosures Committee to the Board.

Investment Management

All acquisition and disposal transactions, as well as other key business transactions, of Sunlight REIT will undergo screening and due diligence procedures. For major decisions or other key business transactions above specified thresholds, risk assessment (covering ESG and climate-related risks) will be conducted during the decision-making process.

An acquisition checklist and a disposal checklist are in place to ensure that all transactions will undergo proper due diligence and approval procedures.

For more information on the risk management framework of Sunlight REIT, please refer to the section on Risk Management on pages from 48 to 51 of the 2025 annual report of Sunlight REIT.

Internal Control
Internal control framework

The Audit Committee assists the Board in overseeing the effectiveness of Sunlight REIT’s risk management and internal control systems. The Internal Audit Department conducts independent reviews to ensure the adequacy, effectiveness and efficiency of operational processes and internal controls. Based on the three-year strategic audit plan approved by the Audit Committee, the Internal Audit Department conducts financial, operations and compliance reviews, recurring and follow-up audits, and process efficiency reviews.

Internal Control System

The risk management and internal control systems of Sunlight REIT are designed to manage rather than to eliminate the risk of failure in achieving business objectives, and thus can only provide reasonable but not absolute assurance against material misstatements or losses. The key control components of the systems include :

  • Control environment
  • Risk assessment
  • Control activities
  • Information and communication
  • Monitoring activities
Communication
Investor Relations

The Manager is committed to providing an open and effective communication platform, and believes that feedback from the investment community is crucial in assisting the Board to formulate the strategic direction of Sunlight REIT. The Manager has in place an Investor Relations Policy which provides guidelines on how information in relation to Sunlight REIT is being disseminated and communicated to the investment community. The investor relations team is responsible for engaging and maintaining dialogues with Unitholders, investors and analysts through a range of interactive means. The Head of Investor Relations is responsible for reviewing and following up on any feedback received from Unitholders and other stakeholders as appropriate, as well as for keeping the board and senior management abreast of such feedback received on a regular basis. Communications with investors are conducted through:

  1. meetings and conference calls; 
  2. post results and non-deal roadshows; 
  3. announcements and press releases; and 
  4. guided property tours. 
Unitholders' Rights

In accordance with the Trust Deed, at least 10 business days’ notice of every meeting shall be given to Unitholders, except that at least 21 days’ notice of the meeting shall be given to Unitholders where a special resolution is proposed for consideration at such meeting; and not less than 20 business days’ notice shall be given to Unitholders for an annual general meeting. The place, date and time of the meeting, details of the electronic facilities for attendance and participation (in case of hybrid meeting) and details of any resolution proposed will be specified in the meeting notice.

As required by the Trust Deed, any resolution put to the meeting shall be decided on a poll, except where the chairman of the meeting may, in good faith, exercise his/her discretion to allow a resolution which relates purely to procedural or administrative matter to be decided on a show of hands. The voting results of the meeting shall be published by way of an announcement and will be posted on the websites of Sunlight REIT and the Stock Exchange.

Pursuant to the Trust Deed, not less than two Unitholders registered as holding together not less than 10% of the outstanding units in issue for the time being are entitled to request the Manager in writing to convene a meeting of Unitholders. Unitholders who wish to direct any such request to the Manager may contact the Manager by email or to the registered office of the Manager by post by referring to Contact Us for contact details. The Trustee or the Manager may at any time convene a meeting of Unitholders.

 

General Meetings

As required under the Trust Deed, Sunlight REIT shall at least once in every calendar year convene an annual general meeting of Unitholders, providing an opportunity for Unitholders to obtain a better understanding of the business and operating performance of Sunlight REIT.

Matters Decided by Unitholders by Special Resolutions

In accordance with the Trust Deed, matters including but not limited to the following require specific approval of Unitholders by way of special resolutions :

  • modification, variation, alteration or addition to the Trust Deed;
  • removal of the Trustee;
  • disposal of a real estate within two years from the date of its acquisition (except for disposal of a Non-qualified Minority-owned Property (the term as defined in the REIT Code));
  • termination or merger of Sunlight REIT;
  • changes in the investment policy and objective of Sunlight REIT; and
  • increase in the maximum remuneration (other than any additional fee as allowed under the Trust Deed) or changes to the structure of the remuneration of the Trustee or the Manager.