NetLink NBN Trust (also referred to as the "Trust") is a business trust managed by NetLink NBN Management Pte. Ltd., as trustee-manager of NetLink NBN Trust (the "Trustee-Manager"), in accordance with the trust deed constituting NetLink NBN Trust (the "Trust Deed").
The Trustee-Manager is incorporated in Singapore, and its shares (the "TM Shares") are held by DBS Trustee Limited on trust (i.e. the Singapore NBN Trust) for the benefit of unitholders of the Trust (the "Unitholders") in proportion to such Unitholders' respective percentage of units held or owned in the Trust (the "Units").
Further, subject to the terms of the trust deed constituting Singapore NBN Trust (the "TM Shares Trust Deed"), DBS Trustee Limited (as trustee of Singapore NBN Trust and the legal owner of the TM Shares) will exercise its rights and powers over the Trustee-Manager in such manner as the Unitholders may direct by way of resolutions passed at general meetings. This means that Unitholders are empowered to, among others, by ordinary resolution at the AGM of the Trustee-Manager direct DBS Trustee Limited to approve the appointment or re-election of the directors of the Trustee-Manager ("Directors") (each Director of the Trustee-Manager being required to retire from office at least once every three years).
The "internalised" Trustee-Manager structure presents us with several advantages, including:
- The interests of the Trustee-Manager are aligned with that of Unitholders since the Trustee-Manager is ultimately owned beneficially by the Unitholders and does not have separate shareholders to answer to.
- The appointment and re-election of Directors of the Trustee-Manager are subject to Unitholders' approval and therefore, the Directors of the Trustee-Manager are held accountable by Unitholders. This is different from trustee-managers of business trusts which are not beneficially owned by all unitholders and whose unitholders therefore do not have the right to approve the appointment and re-election of directors of such trustee-managers.
- As the Trustee-Manager is ultimately owned beneficially by the Unitholders, its management of NetLink NBN Trust provides the Trust with cost savings. The fees payable to the Trustee-Manager are primarily used to defray the Trustee-Manager's expenses (for example, director's fees payable to the Directors of the Trustee-Manager, as well as certain statutory and administrative costs incurred by the Trustee-Manager). Also, as we are not in the business of acquiring, managing, and/or divesting property, the Trustee-Manager is not entitled to any acquisition fees and/or divestment fees. In short, the management fees payable to the Trustee-Manager are less than would be typically expected if a third-party trustee-manager is appointed.
- There is stability and continuity in the management of the Trust. While the Business Trusts Act (Chapter 31A of Singapore) ("BTA") and the Trust Deed provide for the removal of the Trustee-Manager, this is unlikely to happen as the interests of the Trustee-Manager and the Unitholders are aligned, and the Directors of the Trustee-Manager are held accountable by the Unitholders.
Notwithstanding the above, Unitholders may remove the Trustee-Manager by an extraordinary resolution (with no Unitholder being disenfranchised) under the BTA and the Trust Deed.
In addition, pursuant to Info-communications Media Development Authority of Singapore's ("IMDA") requirements, the Trust Deed provides that no appointment or removal of the Trustee-Manager shall be effective unless:
- IMDA has approved such appointment or removal; and
- such appointment or removal is not contrary to the control and ownership restrictions under the licence held by the Trustee-Manager to provide facilities-based operations.
The Trust does not have a Sponsor. Further, the Trustee-Manager does not hold any Units in the Trust, and so does not have a blocking stake in the event of a takeover. However, the prior approval of IMDA is required for any amalgamation, reconstruction or change to the trust structure of NetLink NBN Trust and its subsidiaries.