A Trusted Steward

Temasek’s role and reputation as a trusted steward depends on our people and values, and our conduct and governance.

Our Temasek Charter defines who we are and our roles as a commercial investment company and a member of the wider community.

We manage our assets and portfolio as a long term investor and owner.

We are governed by the Singapore Companies Act and the Singapore Constitution.

Under the Singapore Companies Act, Temasek is an exempt private company with our own Board.

Under the Singapore Constitution, Temasek is a Fifth Schedule entity with a constitutional responsibility to safeguard our Company’s past reserves.

Temasek does not manage Central Provident Fund (CPF) savings, Government budget surpluses, the foreign exchange reserves of Singapore, or the reserves of any other Fifth Schedule entity. These are independently managed by the relevant Fifth Schedule entities themselves, such as the CPF Board and the Monetary Authority of Singapore. Each Fifth Schedule entity is separately accountable for the protection of its own past reserves.

Temasek’s past reserves are those accumulated by the Company before the current term of Government.

Neither the President of the Republic of Singapore nor the Singapore Government, our shareholder, is involved in our investment, divestment or other business decisions, except in relation to the protection of Temasek’s own past reserves.

Our annual statutory financial statements are audited by a major international audit firm.

Temasek has a constitutional responsibility to safeguard its own past reserves.

Duties to protect our past reserves include ensuring that every disposal of investment is transacted at fair market value.

Relating to the President of Singapore

The Board and CEO of Temasek have the responsibility under the Singapore Constitution to protect our Company’s past reserves.

The Board and CEO of Temasek have a duty to seek the approval of the President before any draw occurs on our Company’s past reserves.

There is no draw on our past reserves if our total reserves equal or exceed our past reserves.

Mark to market declines on existing investments are not a draw on past reserves.

Duties to protect our past reserves include ensuring that every disposal of investment is transacted at fair market value. A realised loss arising from such disposals at fair market value is not a draw on past reserves.

Temasek does not manage Central Provident Fund savings.

Protection of Temasek’s Past Reserves

Protection of Temasek Past Returns

Under the Singapore Constitution, Temasek’s past reserves are those Temasek accumulated before the current term of Government. Temasek’s current reserves are those that Temasek accumulates during the current term of Government.

On the eve of the first day of each term of Government, Temasek’s total reserves – comprising our past reserves and current reserves at the changeover – are locked up as past reserves. This cycle repeats every time there is a change of Government after a General Election.

Relating to Our Shareholder

Incorporated on 25 June 1974, Temasek Holdings is wholly owned by the Singapore Minister for Finance. As an investment holding company, we are the owner of our assets – we are not a fund manager on behalf of our shareholder.

Our shareholder’s right under the Singapore Companies Act to appoint, reappoint or remove our Board members is subject to the President’s concurrence. The Board’s appointment or removal of the CEO is also subject to the President’s concurrence. These constraints are part of the “second key” concept, to safeguard the integrity of our Board and CEO in protecting Temasek’s past reserves.

Temasek declares dividends annually, based on the profits we earn, in accordance with our dividend policy. Our Board ensures that our dividend policy balances the sustainable distribution of profits as dividends to our shareholder with the retention of profits for reinvestment to generate future returns. The policy also takes into account our constitutional responsibility to protect Temasek’s past reserves. Our Board recommends the dividends for our shareholder’s consideration at the annual general meeting.

Under the Net Investment Returns (NIR) framework, the Government is permitted to spend up to 50% of the expected long term real rates of return of GIC, the Monetary Authority of Singapore and Temasek. The NIR framework does not affect, change or impact Temasek’s dividend policy, strategies and operations as a long term investor, and our responsibility to protect Temasek’s past reserves.

Temasek declares dividends annually based on the profits we earn.

The management and business decisions of our portfolio companies are the responsibility of their respective boards and management.

Relating to Our Portfolio Companies

We manage our portfolio as an active investor and asset owner. We increase, decrease or hold our investment positions based on our views on intrinsic values, to enhance our risk - adjusted returns for the long term.

The day - to - day management and business decisions of companies in our portfolio are the responsibility of their respective boards and management. Temasek does not direct their business decisions or operations.

We promote sound corporate governance in our portfolio companies, even as we recognise that corporate governance practices and norms may vary in the different markets where our companies operate.

We support the formation of high calibre, experienced and diverse boards to guide and complement management leadership. This includes encouraging the boards of portfolio companies to identify and consider potential directors with relevant backgrounds and experience, and to conduct annual reviews of their succession plans.

We support the formation of high calibre, experienced and diverse boards to guide and complement management leadership.

We advocate that the Chairman and CEO roles be held by separate persons, independent of each other.

Board directors have a fiduciary duty to safeguard the interests of their respective companies.

Accordingly, we advocate that boards be independent of management in order to provide effective oversight and supervision of management. This includes having mostly non - executive board members with the independence and experience to oversee management.

We advocate that the Chairman and CEO roles be held by separate persons, independent of each other.

This is to ensure a healthy balance of power for independent decision - making, and a greater capacity for management supervision by the board.

We regularly monitor the strategy and performance of our portfolio companies and keep abreast of industry developments that impact them. This informs how we exchange and share views and perspectives with the boards and management of our portfolio companies, so as to better understand their strategies and operating environments.

We protect our interests by exercising our shareholder rights, including voting at shareholders’ meetings.

We comply with our obligations under Singapore laws and regulations, as well as those of the jurisdictions where we have investments or operations.

Likewise, we expect our portfolio companies to comply with all laws and regulations of jurisdictions in which they have investments or operations.

Relating to Our Communities

As a Singapore exempt private company, Temasek is exempted from disclosing financial information publicly. We have nonetheless published our Group Financial Summary and portfolio performance in our annual Temasek Review since 2004.

As a trusted steward, we engage with our communities in Singapore and around the world based on the twin pillars of sustainability and good governance.

We support philanthropic programmes that focus on building people, building communities, building capabilities and rebuilding lives. These programmes enable individuals, families and communities to have sustainable improvements and progress in their lives. In short, we act on the belief of doing good with a hand - up for our fellowmen.

To support our community contributions, we instituted a policy, more than a decade ago, of setting aside a share of our net returns above our risk - adjusted cost of capital. This policy is founded on the concept of sustainable and responsible contributions.

We advocate that boards be independent of management in order to provide effective oversight and supervision of management.

The skills required for the financial management of endowment funds are very different from those for developing and delivering community and social programmes. This was why we established Temasek Trust in 2007 – to oversee the financial management and distribution of endowments and gifts from Temasek, which have been earmarked for the six non - profit philanthropic Temasek Foundations.

This governance model separates the financial management of endowments from the programme design and delivery responsibilities of the Foundations. This enables the Foundations to focus on developing programmes for the community, with the reassurance that their endowment fundings are professionally managed to provide them a sustainable source of support over the years.

Our engagement with our communities is based on the twin pillars of sustainability and good governance.

Alongside the work of the Foundations, our staff volunteers also play an active role in contributing to their communities. Through our staff - driven volunteer T-Touch initiative, our employees commit ideas, time and money to support their chosen charities and community projects, and pursue philanthropic and public good causes.

We follow developments in international investment and trade agreements, and engage with thought leaders and authorities. We also aim to promote a better understanding of how we operate based on commercial principles, independent of government interference.

An example is our active participation in support of the International Monetary Fund, to develop best practices for responsible investing for investors and host countries, under the Santiago Principles for sovereign investments.

Temasek exceeds the applicable standards of disclosure and other guidelines under the Santiago Principles.

From time to time, we may seed institutions to develop capabilities which promote good governance and community stewardship. We collaborate with like - minded partners, such as universities and multilateral agencies, to build these institutions.