【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

MHR shall have at least one executive director and at least two supervisory directors (or, at least one more than the number of the executive directors), and the board of directors shall be comprised of the executive directors and supervisory directors.

In addition to a general meeting of unitholders, which shall be composed of unitholders, MHR’s structure consists of one executive director, two supervisory directors, the board of directors and an accounting auditor.

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 22nd period ended July 31, 2017
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. 4/4 times (Note)
(Note)
This describes the attendance at the Board of Directors after Mr. Nishimura’s inauguration.

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

Policy and Approach

We are well aware that failure to ensure compliance could diminish our social confidence and business base.

By firmly acknowledging this fact, MHR and MIM strive for thorough compliance, holding a high ethical sense in our operations, complying with various laws and ordinances.

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

Development of Structure for Elimination of 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 ensures 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

We recognize bribery and corruption as an extremely serious risk factor which significantly impairs trust from society. We maintain a strong relationship with our stakeholders and do not offer corporate entertainment or gifts that may lead to doubts or distrust. This is set up in MIM’s Our Principles of Action and Working Rules.

Whistleblower System

We have established the Public Notification System which allows all employees to report directly to external attorneys regarding acts that violate laws, internal rules, action principles, etc.

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 social situations 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.