Compliance Framework

Today, an array of regulatory changes, including the Financial Instruments and Exchange Law and Investment Trusts and Investment Corporations Law, impact the environment surrounding J-REITs. ADR takes compliance with these regulations and positions the implementation of compliance as a top priority. To meet its goals of exemplary compliance, ADR has established a compliance framework.

One of the first steps taken by ADR was to install a Compliance Officer and Compliance Committee to ensure that compliance is performed. The Compliance Committee serves as the deliberative and decision-making organ for conflicts of interest, related-party transactions, conformity with the law and other compliance issues as well as for the compliance framework.

Compliance officer

Duties

  • Promote and carry out action policies adopted by the Compliance Committee for taking the steps necessary to observe laws, ordinances and other regulations
  • Audit decisions as well as contracts, rules and regulations, Articles of Incorporation, manuals, reports, reference/advertising materials and other documents to determine whether or not they comply with laws, ordinances and other regulations
  • Conduct internal audits and report on the duties of each department
  • Grasp the status of laws and regulations in Japan and abroad, and ensure the compliance with such in the asset manager
  • Instruct and train officers on compliance
  • Discuss and respond to complaints, problems, compliance violations, etc. (encompasses matters concerning operational improvements based on internal audit results)
  • Examine and report on individual projects for the presence/absence of compliance issues, etc.
  • Matters incidental or related to the above items that are required for compliance at the asset management company

Compliance committee

Committee members

President, Compliance Officer (committee chairman), Executive Manager of Finance and Administration Department and outside committee members

Agenda for deliberation

  • Matters concerning transactions with asset management service providers for ADR that are related parties
  • Matters related to approving transactions as stipulated in the Asset Management Guidelines in the case of the acquisition or sale of assets with counterparties being asset management service providers for ADR that are not related parties
  • Matters concerning transactions with counterparties being asset management service providers for ADR that are not related parties, which the Compliance Officer deems as being transactions requiring deliberation by the Compliance Committee
  • Matters concerning conflict of interests in the transactions with related parties for ADR debt financing
  • Matters concerning policies on responding to complaints, which the Compliance Officer deems as requiring deliberation by the Compliance Committee, and measures for preventing recurrence of similar complaints, etc.
  • Matters concerning the asset management policy in relation to asset management service providers for investment corporations (Asset Management Guidelines, Fiscal Asset Management Plans and Medium-Term Asset Management Plan development, amendment, etc.)
  • Matters concerning Compliance Manual development and amendment
  • Matters concerning Compliance Program development
  • Matters concerning proposals to establish, revise, amend or abolish internal rules, regulations, standards, etc.
  • Matters concerning internal compliance and compliance framework
  • Other compliance matters designated as necessary by the Compliance Officer
  • Other incidental business matters

Method of deliberation, etc.

The respective prescribed deliberative procedures for the abovementioned items are executed in the attendance of at least two-thirds of the Committee members, including the Compliance Officer and outside Committee members.

Mechanism of decision-making for investment/asset management

Flow of decision-making for asset acquisition and disposal

(i) Related-party transaction or (ii) Transactions requiring approval as stipulated in Asset Management guidelines

  • If there is a suspensive condition for an ADR’s Board of Directors’ approval, the asset management company’s Board of Directors may deliberate and approve proposals in advance of ADR’s Board of Directors' deliberation and resolution.

For transactions other than (i) and (ii)