Policy on Product Governance
Policy on Product Governance
The Company endorses the intent of the “Supplementary Principles on Product Governance” announced by the Financial Services Agency on September 26, 2024, and has established the following policy (the “Policy”) for initiatives in accordance with these principles.
1. Basic Philosophy
Under the leadership of its management, the Company engages to formulate the “Policy on Product Governance” in order to provide better financial products to customers and maximize unitholder interests through the offering of financial products and services. Based on the Policy, the Company engages to establishing and implementing a robust governance structure.
2. Establishment of Framework
The Company has developed a framework to ensure the effectiveness of product governance throughout the entire product lifecycle.
Furthermore, the Company engages to establish appropriate quality control procedures and a quality management structure for each process involved in the structuring, offering, and management of financial products.
3. Measures at the Product Structuring Stage
The Company endeavors to anticipate the genuine needs of customers and carefully examines whether the financial products it structure are best suited to those needs. The Company also verifies the sustainability and rationality of each product as a financial instrument.
In addition, information is shared with financial institutions involved in product sales as necessary, taking into account the complexity and characteristics of each product.
4. Measures after Product Structuring
The Company continuously verifies whether the features envisioned at the time of product structuring are being maintained and utilizes the results for product improvement and review. As appropriate, these findings are also reflected in the review of the overall product governance framework, including the processes of structuring, offering, and management.
Furthermore, in order to maximize unitholder interests throughout the value chain from manufacturing to sales, the Company collaborates and shares information with financial institutions involved in product sales.
5. Provision of Easy-to-Understand Important Information to Customers
The Company endeavors to providing easy-to-understand information regarding the operational framework for financial products and the product governance structure.
Status of Initiatives Related to Product Governance
June 2025
Basic Philosophy
The Company formulates the Policy by resolution of the Board of Directors in order to provide better financial products to customers and maximize unitholder interests through the offering of financial products and services. The Policy is posted on the Company’s website.
Establishment of Framework
For the purpose of deliberating and resolving matters related to the investment management of investment corporations and funds entrusted to the Company, an Investment Committee is established for each investment corporation and fund. The committees deliberate and resolve important matters related to asset management (69 meetings held in FY2024).
Each Investment Committee consists of directors, a compliance officer, the head of the internal audit department, and experts appointed by the Board of Directors. Proposals approved by each Investment Committee are subsequently deliberated by the Compliance Committee (13 meetings held in FY2024) from a legal and regulatory perspective before a final decision is made by the Board of Directors. In addition, the Company has established conflict of interest management rules and ensures proper management of transactions with related parties, thereby strengthening quality control.
For private REITs, a Valuation Committee is established for each investment corporation (11 meetings held in FY2024) for the purpose of deliberating and resolving matters related to the valuation of owned real estate.
Measures at the Product Structuring Stage
The Company strives to understand customer needs through IR activities, such as face-to-face and online meetings or teleconferences with domestic and overseas institutional investors, as well as dialogue at seminars for individual investors.
To obtain opinions from unitholders, the Company establishes an Advisory Committee for each private REIT investment corporation entrusted to the Company. The committee is informed of matters related to the acquisition, sale, management, and finance of assets in the asset management business, and their feedback is duly obtained. In FY2024, a total of 14 such meetings were held.
The Investment Committee selects the members of each Advisory Committee for every period, taking into consideration the amount of investment by unitholders, investment track record in similar financial products, reputation, and willingness to participate. At least one director, who is either the chairperson or a member of the Investment Committee, attends meetings of the Advisory Committee.
Furthermore, at the time of product structuring or capital increases, information regarding the product’s characteristics and investment policy is shared with financial institutions involved in product sales.
Measures after Product Structuring
Each investment corporation entrusted to the Company prepares an asset management plan for the target real estate with the aim of implementing systematic asset management and building a portfolio over the medium to long term. Asset management plans are reviewed as necessary.
The Company also conducts periodic internal audits to verify and evaluate the appropriateness and effectiveness of its internal control system and to ensure the sound and proper management of its business, promptly addressing any matters requiring improvement.
In addition, at the time of product structuring or capital increases, the Company collaborates and shares information with financial institutions involved in product sales as necessary.
The Company does not outsource any of its asset management operations.
Provision of Easy-to-Understand Important Information to Customers
The Company has established the Policy and discloses it on its website in pursuit of the best interests of customers.
For further details regarding the “Provision of Easy-to-Understand Important Information” and the “Provision of Products and Services Suited to Customers,” please refer to the following: