【H1】Compliance and Risk Management

Compliance and Risk ManagementCompliance

Compliance

Basic Policy

The directors of MHR ensure thorough compliance by complying with the Act on Investment Trusts and Investment Corporations (the “Investment Trust Act”), the Financial Instruments and Exchange Act (the “Financial Instruments and Exchange Act”), and other relevant laws and regulations and internal rules.

Mori Building Investment Management Co., Ltd. (MIM) is required to perform its business operations in good faith and with due care of a prudent manager for MHR in line with the purpose of the investment management business, and accordingly performs sincere asset investment and management pertaining to real estate properties based on an appropriate compliance structure and internal control structure in order for MHR to gain high trust from the securities market and investors.

In addition, well aware that failure to ensure thorough compliance can undermine investors’ trust in the securities market and the corporate management base of MHR and MIM, MIM positions thorough compliance as a basic principle of corporate management and, headed by MIM’s Board of Directors, the President & CEO (the person responsible ultimately for compliance), Compliance Department, Compliance Officer (the person responsible for overseeing compliance), and Compliance Committee make decisions on the various matters concerning compliance and conduct inspections of compliance (inspections of compliance with laws and regulations, etc.) under their respective authority and responsibility.

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.