Initiatives for thorough compliance
All officers and employees of MFLP-REIT and the Asset Management Company are to conduct corporate activities honestly and appropriately based on high ethical standards beyond mere compliance with laws and regulations.
Pursuant to the Act on Investment Trusts and Investment Corporation and the Articles of Incorporation of MFLP-REIT, MFLP-REIT stipulates in its Board of Directors Regulations that a Board of Directors meeting must be held at least once every three months, at which the executive director must report on the status of business execution to ensure the supervision and control function of the supervisory directors. As of March 31, 2023, there are no cases where the interval between Board of Directors meetings has exceeded three months. The Board of Directors has a structure with one executive director and two supervisory directors, both of whom are selected as experts with external specializations such as a lawyer and a Certified Public Accountant.
Pursuant to the “Operation Policies” and the “Operation Guidelines” setting forth its basic philosophy for the fulfillment of fiduciary responsibility in asset management operations, the Asset Management Company considers compliance to be an important issue in its management in order to increase trust from investors and all other related parties. In addition, as an asset management company that is entrusted with asset management, the Asset Management Company has fiduciary responsibility to strive to manage assets appropriately by setting out concrete standards, strategies, and processes to be observed.
The Asset Management Company considers “Compliance” not only as legal compliance but also as observing its internal rules and taking appropriate actions following social ethics and codes. As such, the Asset Management Company sets internal rules, such as “Compliance Rules” as concrete guidelines and rules. In addition, the Chief Compliance Officer has drawn up a Compliance Program, and is promoting a company-wide culture of compliance that includes compliance awareness-raising and training activities for officers and employees.
The Asset Management Company sets forth in its “Compliance Rules” that when doubts concerning a breach of or conflict with laws, regulations or internal rules, etc. arise, its officers and employees must immediately report the facts to the Chief Compliance Officer. In cases where the Chief Compliance Officer judges that there are problems with the content of a report, the Chief Compliance Officer shall promptly report them to the President & CEO, the Chief Investment Officer, and the Chief Finance Officer, and form an appropriate response after conducting internal deliberations and performing checks with external specialists, as required. Subsequently, after summarizing investigations into the facts of the matter, how the issue occurred, and measures to resolve it, a report is submitted to the Compliance Committee, the Board of Directors, and the Board of Directors of MFLP-REIT. Furthermore, reports will also be made to the relevant government agencies, as required. In light of applicable laws and regulations or internal rules etc., if a compliance violation or an act deemed to be a compliance violation exists, the relevant officer will be subject to necessary measures pursuant to deliberation by the Board of Directors, and the relevant employee will be subject to a disposition under its work rules. (There were no complaints, violations or discipline of officers or employees related to non-compliance from April 1, 2022 to March 31, 2023.)
In addition, the Asset Management Company has established internal and external contact points for consultation based on the Internal Consultation and Whistleblowing Regulations. The system enables officers and employees to anonymously report organizational or individual behavior that violates laws and regulations (behavior that violates or is suspected of violating laws, corporate ethics, and internal rules such as the compliance manual) to the Chief Compliance Officer (or for matters concerning the Chief Compliance Officer, the President) or an external law office. These regulations are designed to help ensure compliance with laws and regulations for the activities of MFLP-REIT and the Asset Management Company. Companies are required to determine and execute appropriate measures for reported matters, and whistleblowers are protected by the Whistleblower Protection Act.
Anti-bribery and anti-corruption policy
MFLP-REIT and the Asset Management Company have positioned thorough compliance as a fundamental principle of management, and are striving to build a compliance system and promote compliance. They ensure thorough compliance and prevention of bribery and corruption by stipulating in the Compliance Manual regarding excluding refusing dealings with anti-social forces, preventing money laundering, ensuring fair competition, prohibiting insider trading, and receiving gifts, entertainment and donation.
Prohibition of bribery and handling of gifts and entertainment
At the Asset Management Company, the Compliance Manual prohibits providing entertainment or gifts that go beyond the bounds of moderation internally or for business partners or relevant parties, providing entertainment or gifts that are intended to influence the decisions of the other party, and, in accordance with the National Public Service Ethics Act, providing entertainment or gifts that are presented to office holders of government offices.
In addition, the Compliance Manual also prohibits accepting entertainment or gifts that go beyond the bounds of moderation internally or for business partners or relevant parties, accepting, requesting, or promising bribes, etc. (entertainment or gifts, etc., that exceed the bounds of moderation) from external business partners or relevant parties, or providing special arrangements based on such bribes.
Anti-corruption initiatives
All officers and employees (including contract employees) receive compliance training, including corruption prevention such as “refusing dealings with anti-social forces,” “prohibition on money laundering,” “fair and transparent decisionmaking,” “prohibition of insider trading,” “entertainment, gifts, and donations,” as set out in the Compliance Manual to ensure that they are fully aware of these. In selecting new business partners and developing business in Japan and overseas, MFLP-REIT and the Asset Management Company strive to evaluate the risk of corruption and prevent it. Through a checksheet for counterparties and confirmation, etc. by the Chief Compliance Officer, new business partners are checked comprehensively for “refusing dealings with anti-social forces,” “prevention of money laundering,” “elimination of unfair trading practices,” “prohibition of insider trading,” and “entertainment, gifts, and donations,” and for businesses deemed to be a high risk of corruption, the response is determined by the Management Committee after discussion by the Compliance Committee. These anti-corruption policies are overseen by the Board of Directors. Specifically, the Compliance Committee oversees and periodically reports to the Board of Directors on corruption prevention such as “refusing dealings with antisocial groups,” “prohibition of money laundering,” “prohibition of insider trading,” and “entertainment, gifts, and donations.”
At least once every three years, an audit is conducted of the entire scope of operating activities, using an internal auditor (including audits using external experts).
Fines, surcharges and settlements related to bribery and corruption
There were no serious violations of laws and regulations due to non-compliance with anti-bribery regulations nor fines, surcharges or settlements related to corruption paid from April 1, 2022 to March 31, 2023.
Employees subjected to discipline or dismissal related to bribery and corruption
No employees were disciplined or dismissed in relation to bribery or corruption from April 1, 2022 to March 31, 2023.
Establishment of systems for refusing dealings with antisocial groups
MFLP-REIT and the Asset Management Company strive to take a firm position on antisocial group and refuse any relationships with them in accordance with the Mitsui Fudosan Group Compliance Policy. Furthermore, when MFLPREIT or the Asset Management Company starts a transaction with a third party, they investigate and confirm that the counterparty is not an antisocial group before starting the transaction. If it becomes clear that the counterparty is an anti-social force, and if the anti-social force makes an unjustified demand, the concrete procedures are set forth in the Compliance Manual and the Regulation for Refusing Dealings with Antisocial Forces for clarifying the firm response to anti-social forces. The Asset Management Company is a supporting member of the Tokyo Center for Removal of Criminal Organizations, and has established a structure for refusing dealings with anti-social forces by appointing a responsible person under Article 14 paragraph 1 of the Act on Prevention of Unjust Acts by Organized Crime Group Members. If it encounters unjustified demands or violent behavior from anti-social forces, the Asset Management Company contacts the police station with jurisdiction and takes necessary legal measures and so forth.
Political contributions
No donations were made related to political activities to people outside of political parties or political foundations. Moreover, when supporting the activities of a political group, MFLP-REIT and the Asset Management Company do so appropriately in accordance with relevant laws and regulations, such as the Political Funds Control Act and the Public Offices Election Act.
Record of donations related to political activities and support for activities of political groups
No political contributions were made in the year from April 1, 2022 to March 31, 2023.
Risk management initiatives
MFLP-REIT and the Asset Management Company aim to evade and minimize risks in investment and management of its assets under management.
Information security management system
The Asset Management Company has established “Information Management Regulations” and “Information Management Rules” to counter information asset risk. These regulations and rules classify information assets and set out a code of conduct for officers and employees as well as judgment criteria and so forth, aiming to protect information assets by maintaining and increasing the level of organizational information management and information security. Specifically, the Asset Management Company strives to manage risk by stipulating the following.
- Establishment of person responsible for overall management of information security
- Periodic revision of information management regulations and rules in line with IT technology innovation and internal promotion throughout the Asset Management Company
- Ensuring rigorous information management regarding outsourcing providers
Occurrence of an information security incident
No information system faults with financially or socially significant impacts occurred during the year from April 1, 2022 to March 31, 2023.
Disaster and terrorism response
MFLP-REIT and the Asset Management Company strive to raise awareness of disaster prevention through ordinary training, inspections, and education, and aim to ensure safety and security by establishing and regularly reviewing crises management manuals for disasters.
Status of unitholders
Of the total number of investment units issued and outstanding, the top 10 ranking companies by percentage of investment units owned is as follows.
As of January 31, 2024
| Name | Number of investment units owned (units) | Number of investment units owned expressed as a percentage of total number of investment units issued and outstanding (%) |
|---|---|---|
| Custody Bank of Japan, Ltd. (Trust Account) | 109,370 | 18.0% |
| The Master Trust Bank of Japan, Ltd. (Trust Account) | 99,333 | 16.3% |
| The Nomura Trust and Banking Co., Ltd. (Investment Trust Account) | 29,560 | 4.9% |
| Mitsui Fudosan Co., Ltd. | 28,900 | 4.8% |
| SSBTC CLIENT OMNIBUS ACCOUNT | 13,577 | 2.2% |
| SMBC Nikko Securities Inc. | 13,569 | 2.2% |
| STATE STREET BANK AND TRUST COMPANY 505103 | 9,869 | 1.6% |
| STICHTING PENSIOENFONDS ZORG EN WELZIJN | 9,834 | 1.6% |
| JP MORGAN CHASE BANK 380072 | 9,375 | 1.5% |
| STATE STREET BANK WEST CLIENT - TREATY 505234 | 9,333 | 1.5% |
*“Number of investment units owned expressed as a percentage of total number of investment units issued and outstanding” is rounded to the first decimal place.