Invista European Real Estate Trust Full Year -9-

Substantial shareholdings - At 30 September 2014 the Board was aware that the following shareholders owned 3% or more of the issued shares of the Company:

 
                                             Number 
                                                 of 
                                           Ordinary       % 
                                             Shares 
--------------------------------------  -----------  ------ 
 Ironsides Partners LLC                  61,495,938   23.65 
 Brooks Macdonald Asset Management       19,827,666    7.63 
 CPP Investment Board                    12,492,125    4.81 
 Investec Wealth & Investment            12,029,798    4.63 
 Weiss Capital LLC                       11,272,646    4.34 
 Barclays Stockbrokers Ltd               11,227,157    4.32 
 Halifax Share Dealing Limited            9,897,210    3.81 
 Hargreaves Lansdown Asset Management     9,327,812    3.59 
 
 
 
                                              Number of 
                                      Preference Shares       % 
-----------------------------------  ------------------  ------ 
 Forum Partners Investment 
  Mgmt LLC                                   12,096,633   41.52 
 Brooks Macdonald Asset Management            5,374,650   18.45 
 Henderson Global Investors                   1,469,489    5.04 
 
 

Independent auditors

KPMG Luxembourg, Société coopérative ("KPMG") has been appointed as independent auditor of the Company with effect from 18 February 2014 and for a duration of one year. The decision on the re-appointment of KPMG will be submitted for approval of shareholders during the AGM to be held on 27 March 2015.

Amendment to the Articles

The Articles may be amended in accordance with the rules set out in article 25 of the Articles.

Status for taxation

The Company is not liable for any Luxembourg tax on profits or income, nor are distributions paid by the Company subject to any Luxembourg withholding tax. The Company is, however, liable in Luxembourg to a subscription tax of 0.05% per annum of its Net Asset Value, such tax being payable quarterly on the basis of the value of the aggregate net assets of the Company at the end of the relevant calendar quarter. No stamp duty or other tax is payable in Luxembourg on the issue of Shares. No Luxembourg tax is payable on the realised capital appreciation of the assets of the Company.

Going concern

The Directors have examined significant areas of possible financial risk and have satisfied themselves that the Group has adequate resources to continue in operational existence for the foreseeable future. After due consideration the Board believes it appropriate to adopt the going concern basis for the preparation of the financial statements. Please see note 2 to the consolidated and separate financial statements and separate accounts.

Related Party transactions

This is detailed in Note 27 in the consolidated financial statements.

Corporate governance

Principles statement

The Directors are committed to high standards of corporate governance and have made it Company policy to comply with best practice in this area and insofar as the Directors believe it is relevant and appropriate to the Company, to comply with the UK Corporate Governance Code published by the Financial Reporting Council or to explain areas of non-compliance.

There is no generally applicable Luxembourg corporate governance code for Luxembourg companies. Whilst the Luxembourg stock exchange has issued a corporate governance code based on international precedents, this code is not applicable to the Company.

The relevant corporate governance rules are the statutory rules of the Luxembourg Companies Act, which are, in essence, reflected in the constitutional documents of the Company. The Company's application of the UK Corporate Governance Code (with which the Company complies, and which is available at (http://www.frc.org.uk/getattachment/a7f0aa3a-57dd-4341-b3e8-ffa99899e154/UK-Corporate-Governance-Code-September-2012.aspx) is discussed in the following paragraphs.

Composition and Balance of the Board

The Board currently consists of four Directors, all of whom are Non-Executive.

Tom Chandos is the Chairman of the Board.

All the Directors (Tom Chandos, Michael Chidiac, Robert DeNormandie, William Scott) are considered independent as they have no links with the Investment Manager, are not significant shareholders in the Company and all have other professional employment.

The Board believes that the Directors have a breadth of property investment, business and financial skills and experience relevant to the Company. Biographical details of all current Board members are set out on the Company's website (www.iere.eu).

The Board acknowledges the Financial Reporting Council's proposed changes to the UK Corporate Governance Code in relation to the consideration of greater diversity within the boardroom as a whole, including that of gender. The Board remains committed to ensuring that the Directors of the Company possess a broad balance of skills, experience, independence and knowledge and that there is sufficient diversity within the composition of the Board. The matter of Board diversity will be considered at regular intervals and will be an integral part of the annual Board evaluation process, however all appointments will be made on merit.

Chairman

The Board considers the Chairman to have sufficient time to commit to the Company's affairs as necessary.

Senior Independent Director

The Board has considered the need to appoint a Senior Independent Director, but believes that this is not appropriate due to the size of the Board. (provision A 4.1)

The Role of the Board

The Board has determined that its role is to consider the following principal matters which it considers are of strategic importance to the Company and to take appropriate decisions thereon:

1. The overall objectives of the Company, as described under Investment Objective and Policy above, and the strategy for fulfilling those objectives within an appropriate risk framework.

   2.   The strategy followed is appropriate in light of the prevailing market conditions. 

3. The capital structure of the company, including consideration of an appropriate use of borrowings is appropriate both for the Company and its shareholders.

   4.   The appointment and monitoring through regular reports and meetings of the Investment Manager, Administrator and other appropriately skilled service providers to ensure their ongoing effectiveness. 

5. Review of the key elements of the Company's performance including NAV growth and the payment of dividends.

Board decisions

At Board meetings, matters listed under the Role of the Board above are considered and resolved by the Board. Some issues associated with implementing the Company's strategy may be delegated by the Board either to the Investment Manager or the Administrator. However matters of strategic importance to the Company are usually reserved for the Board. Generally these are defined as large property decisions affecting either 5% or more of the Group's assets and decisions affecting the Group's borrowings.

A formal schedule of matters reserved to the Board has been adopted which clearly defines the Directors'

Responsibilities and the powers of the Board are further described in articles 6,9,10 and title III of the Articles. In particular, the Board may decide to issue shares and to redeem the Company's own shares subject to the conditions set out in articles 8 and 9 of the Articles of the Company.

Board performance evaluation

The Board continually reviews its performance and that of its Committees and individual members during the financial year. The Board's procedure for evaluating the performance of the Board, its Committees and the individual Directors in respect of the year ended 30 September 2014 has occurred primarily through discussion. The evaluation process is designed to show whether individual Directors continue to contribute effectively to the Board and to clarify the strengths and weaknesses of the Board's composition and processes. The Chairman takes the lead in acting upon the results of the evaluation process. Following the annual review the Board concluded it was operating effectively and that the Chairman and the members of the Board had the breadth of skills required to fulfil their role.

Accordingly, as the individual performance of the respective Directors continues to be effective and the attendance by all Directors at meetings of the Board during the last financial year (see 'Board meetings') demonstrates the continued commitment of all Directors to their respective roles, the Board therefore considers all Directors standing for re-election at the Annual General Meeting on 27 March 2015 should be re-elected for a period of one year.

Re-appointment of Directors and Directors' tenure

Directors' re-appointment is subject to the Company's Articles and UK Corporate Governance Code and the Listing rules. The Company's Articles require that all Directors stand for re-appointment every year.

Directors Training

Directors are provided on a regular basis with key information on the Company's activities, including regulatory and statutory requirements, internal control and operational/portfolio risks.

Conflicts of interest

There are no conflicts of interests between the Directors and the Company. The Prospectus issued in November 2009 discloses the Director's interest in Part XI, Section 3.

Insurance

Directors' and Officers' insurance is currently in place. The Company maintains liability insurance for its Directors and Officers.

Board meetings

The Board meets quarterly and as required from time to time to consider specific issues reserved for the Board.