14 Corporate governance and Fund policies

14

Section 14 Corporate governance and Fund policies

14.1 CORPORATE GOVERNANCE

Responsibility for the Fund’s proper corporate governance rests with the Responsible Entity. The Responsible Entity’s guiding principle in meeting this responsibility is to act honestly, in good faith and in the best interests of the Fund as a whole.

The Responsible Entity has entered into the Fund IMA with the Investment Manager pursuant to which the Investment Manager will provide certain investment management services to the Fund.

The Responsible Entity, with reliance upon the Investment Manager, will monitor the operational and financial position and performance of the Fund. The Directors of the Responsible Entity are committed to implementing high standards of corporate governance in operating the Fund.

Accordingly, the Responsible Entity has created a framework for managing the Fund, including adopting relevant internal controls, risk management processes and corporate governance policies and practices, which it believes are appropriate for the Fund’s business and which are designed to promote the responsible management and conduct of the Fund. Under the Fund IMA, the Investment Manager agrees to assist the Responsible Entity to comply with all relevant laws, including the Listing Rules and the Corporations Act.

The Responsible Entity is a wholly-owned subsidiary of 360 Capital Group.

The Responsible Entity is reliant on 360 Capital Group for access to adequate resources, including directors, management, staff, functional support (such as company secretarial, responsible managers, legal, compliance and risk, finance) and financial resources. 360 Capital Group has made such resources available to the Responsible Entity.

14.2 CORPORATE GOVERNANCE POLICIES

The Responsible Entity has adopted the following policies and charters, which have been prepared having regard to the ASX Corporate Governance Principles and Recommendations.

• Code of Conduct – This policy sets out the standards of ethical behaviours and integrity that the Responsible Entity expects of its Directors, officers and any employees. • Continuous Disclosure – The Fund must comply with the continuous disclosure requirements of the Corporations

Act to ensure the Fund discloses any information concerning the Fund which is not generally available and which a reasonable person would expect to have a material effect on the price or value of the Stapled Units. This policy sets out the Fund’s procedures and measures which are designed to ensure that the Fund complies with its continuous disclosure obligations. • Risk Framework – This framework is designed to assist the Fund to identify, evaluate, monitor and manage risks affecting the Fund’s business. • Securities Trading Policy – This policy is designed to maintain investor confidence in the integrity of the Responsible

Entity’s internal controls and procedures and in particular to provide guidance to Directors, executives and any employees on avoiding any conflicts of interest or breaches of insider trading laws. • Communications Policy – This policy sets out the practices which the Fund will implement to ensure effective and efficient communication with its Unitholder. • Diversity Policy – This policy sets out the Fund’s objectives for achieving diversity amongst its Directors, executives and any employees. • Compliance Plan – Sets out the procedures for the Responsible Entity to comply with the Corporations Act and the

Constitution. This plan is overseen by the Board and the Responsible Entity’s compliance with it is audited annually. • Compliance Committee – The Board comprises a majority of independent members (in accordance with 601JA of the Corporations Act). Accordingly there is no Compliance Committee. The Board considers breaches arising during the course of the operation of the Fund, any audit issues raised, and reports of managers, key employees and service providers throughout the reporting year. Provision is made in the Board’s ordinary meeting agenda for the consideration of critical compliance and risk management issues as they arise. Standard compliance and risk management reporting to the Board occurs on a quarterly basis, generally in February, June, August and November of each year.

Section 14 Corporate governance and Fund policies

14.2.1 Hedging 14.2.1.1 Foreign Currency Risk Hedging Policy The Fund may be exposed to foreign currency risk arising from investment in non-AUD denominated assets. This means that a portion of distribution income attributable to the Fund may fluctuate in line with a change in AUD/global exchange rates.

To the extent possible, corresponding debt will be taken out in the same currency of the asset to manage foreign currency risk.

The Fund may enter into derivatives to facilitate foreign currency hedging to manage AUD/global exchange rate risk. The Fund will not enter into derivative products for speculative purposes. The Fund will always ensure that it will have enough cash to meet any derivative obligations.

14.2.1.2 Interest Rate Risk Hedging Policy The Fund may have exposure to interest rate risk, as the Fund may take on debt which is set on a floating benchmark rate plus a margin. This means that a portion of distribution income attributable to the Fund may fluctuate in line with a change in interest rates.

The Fund may enter into derivatives to facilitate interest rate hedging, to hedge the underlying floating rate risk arising from distribution income. The Fund will not enter into derivative products for speculative purposes. The Fund will always ensure that it will have sufficient cash to meet any derivative obligations.

14.2.2 Reporting to Unitholders

For accounting and reporting purposes, the Fund will operate on a financial year basis, with a year end of 30 June. The Fund will formally report to Unitholder on a half yearly basis as at 30 June and 31 December. Amongst other things, the report will detail: • the amount of distributions for the period; • the current NAV per Stapled Unit at the end of the reporting period; • the significant activities during the period; and • a portfolio update.