【H1】Sustainability

Governance Initiatives

Governance Initiatives

Corporate Governance

Policy and Approach

In order to contribute to the realization of a sustainable society, we aim to maximize unitholder value over the medium to long term. We believe that it is absolutely imperative to remain as a company trusted by society.

By firmly acknowledging this belief, MHR and MIM work on building fair and effective corporate governance and strive to enhance internal control through thorough compliance and risk management based on an appropriate compliance and internal control structure.

Corporate Governance

In addition to a general meeting of all unitholders, MHR’s governance structure consists of one executive director, two supervisory directors, the board of directors and an accounting auditor as required by Act on Investment Trusts and Investment Corporations.

The executive director undertakes executive management and represents MHR. The supervisory directors oversee the executive director's performance of the position’s duties. 

The board of directors is comprised of the executive director and the supervisory directors and makes important decisions regarding the execution of MHR’s duties, such as approval of the executive director's execution of MHR’s important duties and approval of financial statements.

The executive director reports to the supervisory directors from time to time regarding the status of asset management, compliance and risk management and other matters. Each supervisory director oversees the execution of duties by the executive director through the reporting on investigation requested by the supervisory directors.

The Accounting Auditor performs the audit of financial statements etc. of MHR and reports to the supervisory directors in the event of discovering the serious actions in violation of laws and regulations or actions violating the proper execution of duties by the executive director.

Management Fees

Remuneration to Directors

The criteria for payment of remuneration to directors of MHR and the timing of such payments shall be as follows:

(1)
MHR shall pay monthly remuneration to executive directors at an amount decided by the board of directors that it determined reasonable in light of general price and wage trends, etc., up to an amount equivalent to one million (1,000,000) yen per month for each executive director, no later than the last day of the relevant month.
(2)
MHR shall pay monthly remuneration to supervisory directors at an amount decided by the board of directors that it determined reasonable in light of general price and wage trends, etc., up to an amount equivalent to fifty-hundred thousand (500,000) yen per month for each supervisory director, no later than the last day of the relevant month.
Unit Holding Policy

Directors of MHR may not buy or sell investment units of MHR in order to prevent insider trading as stipulated in the Insider Trading Management Regulations of MHR.

Structure of Asset Management for the Investment Corporation

MHR entrusts the management of its assets to its asset management company.
The following is the organizational structure of MHR’s asset management company.

Criteria for Electing Directors

Directors of MHR are elected based on the following criteria and on the condition that they are not disqualified per the stipulations in the Act on Investment Trusts and Investment Corporations, and related laws. Directors are appointed as a result of the resolution of a General Meeting of Unitholders.

Title Name Reasons for Election Attendance during the 23rd period ended January 31, 2018
Executive
Director
Hideyuki
Isobe
Mr. Isobe was elected with the expectation that he would be able to undertake business management as Executive Director based on his knowledge and experience, etc. in the real estate financing business from a broad perspective. 7/7 times
Supervisory
Director
Masakuni
Tamura
Mr. Tamura was elected with the expectation that he would be able to oversee the Company’s management based on his knowledge and experience, etc. as a Real Estate Appraiser from a broad perspective. 7/7 times
Supervisory
Director
Koji
Nishimura
Mr. Nishimura was elected with the expectation that he would be able to oversee the Company’s management based on his knowledge and experience, etc. as a lawyer from a broad perspective. 7/7 times
The executive director of MHR concurrently serves as the President & CEO of MIM in order to facilitate fully understanding the operation of MHR and deepening communication between MHR and MIM. We believe the same person serving concurrently, while being overseen by the supervisory directors is the proper structure for smooth operation. 

The supervisory directors emphasize their independence from the MB Group from the perspective of avoiding conflicts of interest in transactions sponsored by the MB Group and ensuring an adequate check and balance system as external experts. The criteria for appointing the supervisory directors are that there is no conflict of interest or continuous business relationship between the supervisory directors or their relatives and the MB Group.

Internal Audit Structure

MIM has set up its Internal Audit Regulations and the General Manager of Compliance Department works as Internal Audit Manager under President & CEO. Internal audit shall be conducted after the internal audit plan is formulated.

If problems are found, the Internal Audit Manager will give recommendations and instructions for improvement to the relevant departments, and the results of the audit will be reported to the directors of MIM.

In addition, we outsource part of the internal audit work to external specialized agencies to seek an external perspective for evaluation.

Compliance and Corporate Ethics

Policy and Approach

From the viewpoint of securing the trust of financial markets and individual investors, financial institution business operators are required to have a management attitude that emphasizes compliance. MHR and MIM recognize that failure to ensure compliance is as an extremely serious risk factor and could diminish our public confidence and business base. 

By firmly acknowledging this fact, MHR and MIM strictly adhere to various laws and regulations in order to fulfill our public obligations and to faithfully and fairly engage in corporate activities as a basic principle of management. MHR and MIM strive for thorough compliance, holding a high ethical sense in our operations.

Status and efforts for compliance with laws and regulations

The team at MIM, with the board of directors at the top, along with the President & CEO, the Compliance Department, the Compliance Officer and the Compliance Committee determine and verify various matters concerning compliance in accordance with their respective authorities and responsibilities.

MIM has established a "Compliance Manual" which states the compliance-related principles, as well as internal regulations to control major risks related to compliance such as prevention of transactions involving conflicts of interest and blocking of relations with anti-social forces. MIM strives to prevent problems by maintaining and thoroughly informing all executives and employees through periodic training etc. In addition, MIM introduced monitoring and consultation systems such as internal audit and internal reporting procedures to find and correct problems proactively.

The status of these efforts is reported to the board of directors and utilized for periodic risk assessment.

Initiatives Against Transactions Involving Conflicts of Interest

MIM shall perform its business in good faith and with the due care of a prudent manager for MHR in line with the purpose of the investment management business, and is well aware that failure to ensure thorough compliance, especially inappropriate transactions or transactions involving conflicts of interest with the sponsor company group, may undermine investors’ trust in the securities markets, the corporate management base of MHR and MIM. Therefore, MIM will use its efforts to prevent any negative impact from transactions involving conflicts of interest and carry out strict compliance as follows.

Process to Counter Transactions Involving Conflicts of Interest

(Note)
Director (Part-time) is unable to participate in the resolution of the Board of Directors since the personnel will be concerned as a board member of related party when acquiring from a related party.

Blocking relations with Anti-Social Forces

MIM provides a statement on “severing all ties, including business ties, with anti-social forces” in its “basic rules on response to anti-social forces.”

Accordingly, MIM endeavors to develop an internal structure, such as assigning a person responsible for overseeing and managing responses to anti-social forces and a person responsible for preventing unjust demands, and also periodically ensuring that all officers and employees are thoroughly informed of how to respond to anti-social forces, etc._through in-house training, etc.

Preventing Fraud and Corruption

MHR and MIM recognize bribery, corruption and other fraud as an extremely serious risk factor which significantly impairs trust from society. To maintain a strong relationship with our stakeholders and to earn the trust, we have formulated a "Compliance Manual" that sets forth the principles of compliance-related behavior, strict compliance with various laws and regulations including banning bribery and prohibiting corporate entertainment, gifts and acceptance of benefits that may cause conflicts of interests.

With regard to these prohibited acts, we regularly conduct sessions raising awareness for all officers and employees, and have established a monitoring and consultation system incorporating internal auditing and internal reporting system for prevention of problems as well as early detection and correction steps under the supervision of the President & CEO and the Compliance Officer.

The status of these efforts is reported to the board of directors and utilized for periodic risk assessment.

Whistleblower System

We have established a Whistleblower Protection System which allows all employees of MIM and its business partners to report directly to external attorneys regarding acts that violate laws, internal rules, action principles and other acts that may be contrary to corporate ethics etc. We strive to thoroughly inform all officers and employees to prevent, to detect and to correct problems at an early stage.

In the event of whistleblowing, the Investigation Committee with members appointed by external lawyers will conduct necessary investigations and countermeasures in accordance with MIM’s "Whistleblower Protection Regulations" by considering the confidentiality of the whistleblower and the privacy of the concerned parties.

We prohibit retaliatory actions such as detrimental treatment and harassment due to whistleblowing and take appropriate measures to protect whistleblowers and to make "Whistleblower Protection Regulations" works properly. Appropriate measures will be taken so that the work environment will not deteriorate after whistleblowing.

(Number of reports and outline of corrective measures)
  • Fiscal 2016: 0 cases

Risk Management

Policy and Approach

There are various risks in corporate activities. When these risks materialize it may lead to a decline in business performance and a decrease in social confidence.

MHR and MIM are well aware that various risks in business execution may undermine our corporate value.
We identify risks according to changes in public perceptions and the business environment as well as implement appropriate monitoring and responses to prevent and minimize damage at the time of occurrence of incident.

Risk Management Structure

MIM has established Risk Management Regulations. The Board of Directors oversees the development of risk management policies and the development of an appropriate risk management system.

The Compliance Officer will be the supervisor and the General Manager will be responsible for risk management of each department. We will identify various risks related to the tasks involved and monitor the appropriate level of each risk. Furthermore, the Compliance Officer periodically reports the status of risk management to the Board of Directors of MIM.

Information Security

Leakage of information will compromise the trust of the company and it will be a great inconvenience to various stakeholders including our unitholders.

MIM has established Information Management Regulations and has adopted to prevent the leakage of information to implement appropriate management of information handled in business. The Information Manager makes efforts to strengthen information security by monitoring usage and strengthening systems.