Basic Policies Concerning Compliance
Hankyu Hanshin REIT, Inc. (hereinafter "Hankyu Hanshin REIT") and Hankyu Hanshin REIT Asset Management, Inc. (hereinafter the "Asset Management Company"), the asset management company that Hankyu Hanshin REIT has selected to manage its assets, strive to contribute to social and economic development through engagement with business partners, those using our properties, local communities and such considering the public nature of real estate investment trusts, while responding to the expectations of unitholders by complying with laws and regulations and sincerely acting in accordance with corporate ethics. In order to achieve this goal, Hankyu Hanshin REIT and the Asset Management Company have prepared the following compliance arrangements as the most important business agenda.
- Hankyu Hanshin REIT
Hankyu Hanshin REIT is aware of the importance of comprehensive compliance and regularly conducts discussions concerning compliance issues at its Executive meetings. At these meetings, which are held roughly once a month, in addition to deliberating matters for resolution, we also receive matters of resolution including a report regarding the deliberation process for determinations made by the Compliance Committee of the Asset Management Company (defined in (2) below). Additionally, as part of the supervision of the executive director on the part of the supervisory directors, a letter of intent is prepared upon the execution of duties within the exclusive jurisdiction of the executive director and confirmation is subsequently obtained from the supervisory directors. Furthermore, two experts from outside the company who are not considered interested parties of the sponsor company have been appointed as supervisory directors for the purpose of improving Hankyu Hanshin REIT's supervisory and check functions.
- Asset Management Company
At the Asset Management Company, for the purpose of ensuring legitimate and fair management of overall operations and to prevent fraudulent practices, and toward robust growth of the Asset Management Company and Hankyu Hanshin REIT and the drastic protection of unitholders, the Compliance Department has been formed independently from the Corporate Affairs Division as an organization that fulfills the check function. The Compliance Department formulates a compliance manual and compliance program as a basic action guideline, ensures awareness of compliance requirements in accordance with the compliance program implementation plan, verifies the status of compliance and cultivates awareness in a systematic manner.
Additionally, as the organization responsible for compliance issues concerning asset management, it has established a Compliance Committee for the purpose of determining the propriety of transactions involving conflicts of interest in accordance with applicable rules and regulations. The Compliance Committee appoints invited experts, and at present comprises one attorney and one certified public accountant that are not considered interested parties of the Asset Management Company or the sponsor company. These two experts and the Compliance Officers attend the Compliance Committee meetings, and on the condition that no less than three-fourths of all the committee members including the committee chair are present, deliberation and decisions concerning conflict of interest issues are made with approval of all attendees. Furthermore, in addition to Auditors, and part-time directors, with the endorsement of the committee chair and the approval of the committee, an observer may be present at the committee meetings and offer opinions (the observer is not permitted to participate in resolution).
The Investment Management Committee exists as the organization responsible for deliberation and decisions concerning asset management and operational evaluation, and the participation of a member of the Compliance Department appointed by a Compliance Officer or Compliance Committee in the Investment Management Committee is required (the member must be the assistant to the General Manager of the Compliance Department), and this person is responsible for confirming that there are no compliance issues concerning matters for resolution or the resolution process.
Additionally, the content of a request for decision concerning execution of duties, which serves as a letter of intent, is closely inspected under required consensual decision making by Compliance Officers prior to a final determination.
Establishment of a structure for the elimination of anti-social forces
The Asset Management Company has formulated a compliance manual to serve as the basic policies to which all executives and employees are required to adhere, and ensuring practice in accordance with the compliance manual is one of the key responsibilities of the Asset Management Company. The code of behavior in the Compliance Manual stipulates "Resolute confrontation of anti-social forces and associations" and sets forth the Asset Management Company's basic stance concerning the elimination of anti-social forces.
Additionally, the Asset Management Company has selected a person to be responsible for the prevention of unreasonable demands in accordance with the Act on Prevention of Unjust Acts by Organized Crime Group Members, and has registered with the public safety commission in order to acquire the necessary knowledge and skill to handle unreasonable demands by crime syndicates.
Furthermore, selecting new tenants, we are endeavoring to eliminate anti-social forces by checking for relationships with anti-social forces in accordance with established standards.
Procedures for the "Reporting system of suspicious transactions" are formulated as part of Operational Guidelines and, in accordance with the Act on Prevention of Transfer of Criminal Proceeds, we routinely undertake "confirmation at time of transaction," "creation and maintenance of records of confirmation at time of transaction" and "creation and maintenance of records of transactions" as well as properly reporting suspicious transactions, etc. to the supervisory authorities.