Governance Initiatives (G)

■ Basic Philosophy on Governance

Mitsui Fudosan Accommodations Fund Management Co., Ltd., the asset management company of NAF, provides its basic philosophy on governance below as described in its "Sustainability Policy."

Thorough Compliance

The Company has established an organizational structure that should secure compliance with laws and regulations and implement fair transactions at any time. At the same time, the Company works to ensure that its officers and employees will act based on high ethical values and win the trust of its stakeholders.
Mitsui Fudosan Group Compliance Policy

Establishment of Risk Management Structure

The Company has established a proper risk management structure to appropriately manage a variety of risks for the purpose of avoiding or minimizing risks in conducting asset management.

■ Corporate Structure

It is stipulated that the number of executive directors of NAF shall be no less than one (1), and the number of supervisory directors of NAF shall be no less than two (2) (provided, however, that the number of supervisory directors shall exceed the number of executive directors). Please click here to see the composition of the Board of Directors.
The organization of NAF consists of the General Meeting of unitholders composed of unitholders, two (2) Executive Directors, three (3) Supervisory Directors, the Board of Directors composed of all Directors and Independent Auditors. For details please refer to "Corporate Structure, 1) Matters Related to Corporate Governance (Excerpts from the Securities Report)".

■ Management Structure

NAF entrusts its asset management to Mitsui Fudosan Accommodations Fund Management Co., Ltd., its asset management company. The Asset Management Company is engaged in services under the following management structure in accordance with the Asset Management Agreement with NAF.

For details of Management Structure, please refer to "Corporate Structure, 3) Management Structure of NAF (Excerpts from the Securities Report)."

■ Fair Transactions

The Asset Management Company conducts fair transactions and does not inhibit free competition.

■ Prevention of Bribery and Corruption

The Asset Management Company recognizes bribery and corruption as a material risk that significantly damages the trust of society.
The Asset Management Company does not give, directly or indirectly, monetary or other profits or benefits whether small or large in amount, nor offer or promise such, to public officials or those alike, for the purpose of gaining illegal profits on business activities, in Japan or abroad.
Furthermore, the Asset Management Company maintains a healthy relationship with stakeholders and refrains from excessive business entertainment or gift-sending that could raise suspicion or distrust.

■ Compliance

It is a basic policy that NAF and the Asset Management Company establish an organizational structure that should secure compliance with laws and regulations and implementation of fair transactions at any time, and work to ensure that its officers and employees will act based on high ethical values and win the trust of its investors.
Furthermore, the Asset Management Company recognizes the significance of the investment management operation it conducts for NAF that is deemed as NAF’s act of managing the funds of unitholders. Therefore, in order to establish an appropriate management structure, the Asset Management Company has appointed a full-time Chief Compliance Officer (CCO) to head compliance operations and has also established a Compliance Committee, which, with the CCO as chairperson, deliberates and approves transactions that could cause conflicts of interest as well as important compliance matters including legal compliance.

■ Information Security

Information leakage damages the credibility of the company and causes grave inconvenience to unitholders and other stakeholders.
Based on the information management rules set forth in the internal rules and such, the Asset Management Company appropriately protects and manages information that it handles in its business and maintains a high level of information security system management.

■ Internal Audits

The Chief Compliance Officer (CCO) conducts internal audits across all sections and businesses to confirm whether the business and operation of each section is carried out appropriately and efficiently in accordance with laws and regulations as well as other rules and bylaws, based on the internal audit rules set forth in the internal rules. The results of audits are reported to the relevant teams audited and to the Compliance Committee and the Board of Directors.

■ Risk Management

NAF and the Asset Management Company aim to avoid and minimize risks in investment and management of its assets under management.
For details please refer to "Investment Risks, (2) Risk Management System for Investment Risks (Excerpts from the Securities Report)".