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Compliance Report – T&T Corporate Governance Code Application Summary

The Trinidad and Tobago Unit Trust Corporation (UTC) is committed to implementing Corporate Governance best practice. Our established corporate governance framework is designed to promote the highest standards of professional conduct, prudence and diligent discharge of duties, as well as compliance with applicable laws, regulations, guidelines, and national and international governance standards.

In addition to other guidelines and standards, the UTC adopted the Trinidad and Tobago Corporate Governance Code (TTCGC) in 2016. The TTCGC is a voluntary national code, and therefore, goes above and beyond our current statutory obligations with respect to disclosure and reporting.

According to the TTCGC:

“…adoption (is) on a voluntary ‘apply or explain’ basis. The notion of ‘apply or explain’ recognizes the importance of how the Principles and Recommendations can be applied, to promote the best interest of the Company”

The UTC is fully compliant with the Principles of the TTCGC, as at the end of the 2016 reporting period. This TTCGC Application Summary document provides a high-level report of our application of these Principles and associated Recommendations. Where there is a deviation from the Recommendation, as articulated in the TTCGC, we have provided an explanation of same.

This document supplements our Integrated Annual Report (I-AR) 2016 and should be read in conjunction with same.

Definitions:

TTCGC PRINCIPLES represent high-level concepts that encapsulate the foundation of the good governance. Companies should always maintain consistency with the spirit of each Principle when implementing a Recommendation established in the Code.

TTCGC RECOMMENDATIONS

are specific practices that companies are encouraged to apply as part of their governance system. Companies are expected to disclosed in the annual reports whether they have applied the Recommendations set out in the Code or explain the reasons for departure.

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Principle One: Establish a Framework for Effective Governance

“Every company should be headed by an effective Board, which is collectively responsible for the long-term success of the company”

TTCGC Recommendations Applied Reference Explanation / Comments

1.1 The Board should establish and make publicly available a clear outline of its roles and responsibilities, including any formal delegations to Management.

I-AR p.62 Overview outlined in report. Full scope is articulated in the UTC Act.

1.2 The chairperson of the Board should be a non- executive Director and preferably an independent Director. Where the chairperson of the Board is not an independent non-executive Director, the Board should appoint a lead independent Director.

I-AR p.64 Non-executive Chairman (as articulated in the UTC Act)

1.3 The Board should demonstrate ethical leadership, which includes commitment to high ethical standards and responsible decision-making.

I-AR p.70 Comprehensive Ethics Policy located on website

1.4 The Board should ensure that it is supplied with information in a timely manner, in a form and of a quality appropriate to enable it to discharge its duties effectively.

The Board Charter and Committees’ Terms of Reference outline standards and requirements. The Executive Director’s Charter outlines scope of reporting.

1.5 The Board should take into account the legitimate interests and expectations of all stakeholders. There should be active co-operation between corporations and stakeholders in creating wealth, employment, and the sustainability of financially sound enterprises.

I-AR p.38-43 There is a defined process to engage and obtain the views of all stakeholder groups. This forms part of our Value General Process and is at the heart of Integrated Reporting.

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Principle Two: Strengthen the Composition and Performance of Board and Committees

“There should be a balance between independence and diversity of skills, knowledge, experience, perspectives and gender among Directors so that the Board

works effectively”


2.1 The Board should appoint a sufficient number of independent Directors capable of exercising unbiased judgment, particularly in tasks where there is a potential for conflicts of interest.

I-AR p.63-64 The Board is comprised of 11 Non-executive Directors, three (3) of whom are classified as “Independent”.

2.2 Directors should be selected and appointed through rigorous and formal processes designed to give the Board a balance of independence and diversity of skills, knowledge, experience, perspectives and gender among Directors so that the Board works effectively.

I-AR p.63-64 The Board structure and composition is governed by the UTC Act which ensures diversity within the Board. Members are appointed pursuant to section 7(1) of the Act.

2.3 A Committee with a majority of independent non- executive Directors, should lead the Board’s nomination process and make recommendations to the Board.

Not Applicable – The Appointments to the Board are governed by the UTC Act pursuant to section 7(1). The Board therefore, does not have a Nominations Committee

2.4 All Directors should receive induction training upon joining the Board and should regularly update and refresh their skills and knowledge.

I-AR p.20 Induction process is in place. Provisions for training and education are budgeted annually and continued education is scheduled as required. E.g. Corporate Governance, Strategy etc.

2.5 The Board should undertake a rigorous, transparent and formal annual evaluation of its own performance and that of its committees and of the individual Directors.

I-AR p.69 The Board conducts an annual board evaluation through the use of external Corporate Governance Consultants. The next evaluation is scheduled to commence in July 2017.

2.6 The Board should ensure that the remuneration of Directors and senior management is transparent, fair and reasonable.

I-AR p.64 & 50

The UTC is committed to a remuneration philosophy designed to attract and retain high calibre, professional directors and senior staff. Director and Senior Management remuneration is governed by the UTC Act and internal policy documents respectively. Commissioned compensation surveys to determine the current industry rates are conducted periodically.

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Principle Three: Reinforce Loyalty and Independence

“All Directors should act honestly and in good faith, in the best interest of the company, ahead of other interests”

Recommendations Applied Reference Explanation / Comments

3.1 The Board should undertake an assessment of its independence on an annual basis and disclose in the annual report each non-executive Director it considers to be independent.

I-AR p.64

The Board is comprised of 11 Non-executive Directors, three (3) of whom are classified as “Independent”. In determining directors’ independence, the UTC subscribes to the definition of directors’ Independence as articulated in the TTCGC.

3.2 All Directors should be candidates for re-election, at intervals of no more than three years, subject to continued satisfactory performance.

UTC Act

UTC strongly believes in the spirit of Principle Three of the Code, which seeks to promote director independence and limit undue influence / compromised integrity due to long-term relationships being established with Senior Management and other Directors. Directors’ terms of office are governed by the UTC Act. Members are appointed pursuant to sections 7(3) – (5)A. Independent Directors have a one (1) year term limit. Section 7(4) allows for a maximum of a four (4) year term limit however, for certain director appointments.

3.3 Members of the Board and Senior Management should disclose to the Board whether they, directly or indirectly or on behalf of third parties, have a material interest in any transaction or matter directly affecting the company.

I-AR p.70

In accordance with section 9(3A) of the UTC Act, all Directors are required to disclose any material interest(s) before they can participate in any Board or committee meeting. Further, all Directors, officers and employees are required to adhere to the Conflict of Interests and Related Party Securities Transactions Policies.

3.4 Directors should demonstrate the capacity to commit the time needed to be fully effective in their roles.

I-AR p.67 - 69 Meetings and committee attendance are proxy indicators

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Principle Four: Foster Accountability

“The Board should present an accurate, timely, balances and understanding assessment of the company’s performance, position and prospects”


4.1 The Board should promote accurate, timely and balanced disclosure of all material matters concerning the company.

I-AR p.70

Directors are required to disclose any material interest(s) before they can participate in any Board or Committee meeting. Directors and staff are required to adhere to the Conflict of Interests and Related Party Securities Transactions Policies.

4.2 Directors should state in the annual report their responsibility towards the integrity of the financial reports. This includes a statement from Directors that these reports comply with applicable financial reporting standards and present a true and fair view of the financial affairs of the company.

I-AR p.76

4.3 The Board should, on an annual basis, report to shareholders and stakeholders on the external auditor’s involvement in non-audit work and fees paid to auditors. This disclosure should differentiate between fees for audit work and fees for non-audit work.

I-AR p.70

UTC is audited by the Auditor General of Trinidad and Tobago. Mutual funds are audited by a locally based service provider. This provider has also engaged in some non-audit work for the Corporation. The ACC is satisfied that they have performed their duties in a transparent and independent manner.

4.4 The Board should, on an annual basis, verify that the company has appropriate processes that identify and manage potential and relevant risks.

I-AR p.73 - 75

4.5 Each company should establish an Audit Committee of the Board with responsibilities that include, but are not limited to:

I-AR p.67 - 68 Audit and Compliance Committee is a Board Committee

a. Recommending the appointment of external auditors

I-AR p.67 - 68

b. Assessing the suitability and independence of external auditors

I-AR p.67 - 68

c. Overseeing all aspects of the company-audit firm relationship

I-AR p.67 - 68

d. Monitoring & reviewing the effectiveness of the internal audit function

I-AR p.67 - 68

e. Promoting integrity in financial reporting

I-AR p.67 - 68

4.6 Boards should report annually to shareholders on how the company is implementing the Corporate Governance Principles and explain any significant departure from Recommendations supporting each Principle.

TTCGC Disclosure

and CG Summary

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Principle Five: Strengthen Relationships with Shareholders

“The Board should promote constructive relationships with all shareholders that facilitate the exercise of their ownership rights and encourage their

engagement with the company”


5.1 The Board should facilitate the exercise of ownership rights by all shareholder groups, including minority or foreign shareholders and institutional investors.

I-AR p.39 & 86 UTC does not have shareholders. It is primarily accountable to its Unitholders. We actively encourage participation by all, including remote participation via our online resources.

5.2 The Board should ensure that shareholders have the opportunity to engage with the company and participate effectively in annual and special meetings.

I-AR p.39 & 86 UTC does not have shareholders. It is primarily accountable to its Unit holders. The Corporation actively encourages participation by unitholders at the annual meeting, including remote participation via our online resources.

5.3 During the annual and special meetings, the Board should facilitate questioning of external auditors and Senior Management by shareholders, as moderated by the chairperson.

I-AR p.39 & 86

UTC does not have shareholders. It is primarily accountable to its Unit holders. We actively encourage participation by all, including remote participation via our online resources. Board members, Senior Managers and External Auditors are present at annual and special meetings (where applicable) to respond to questions from Unitholders.

compliance report t&t corporate governance code ... · 4 compliance report – t&t...

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