本文へスキップします。

H1

Governance Structure

Governance

Decision-making flow for investment management

As an asset management company of KDR, Kenedix Real Estate Fund Management, Inc. ("the Asset Management Company") establishes management guidelines of the Residential REIT Department ("the Management Guidelines"), and sets forth basic investment management guidelines, including investment policy, related party transaction rules, distribution policy and disclosure policy, regarding the asset management of KDR. Furthermore, as set forth in the Management Guidelines, the Asset Management Company creates asset management plans, etc. (including medium-term business plans and annual business plans other than asset management plans). It also selects investment properties and makes decisions to acquire them, according to investment policy set forth in the Management Guidelines and related party transaction rules. The decision-making flow for establishment / revision of the Management Guidelines and asset management plans, etc. are shown below. Also, the decision-making flow pertaining to acquisition and sale of assets are shown below. Through pursuing highly transparent decision-making flow of the investment management pursuant to these policies and rules, the Asset Management Company is striving to assist in the appropriate functioning of KDR’s check-and-balance system over the Asset Management Company.

■Decision-making Flow
(Note 1) Any transactions that deemed necessary by the Compliance Officer and all transaction such as related party transaction, Conditional transactions set forth in the management guidelines, all non-standard transactions and establishment/ revision of Management Guidelines and asset management plans are discussed and decided at the Compliance Committee prior to the discussion/decision at Asset Management Committee in Residential REIT Department .
(Note 2) The related party transaction and the establishment/ revision of the asset management plans, etc. are discussed and decided at the Board of Directors meeting after the discussion/decision at the Asset Management Committee. In addition, in the case of the related party transaction, consent of Executive officer is required. However, In the case of the related party transaction within the scope of insignificance criteria, the transaction is carried out with the approval of the Asset Management Committee in Residential REIT Department , even without the approval of the Board of Directors meeting and the consent of Executive officer.

Rules Concerning Conflicts Of Interests Among REITs

Since the Asset Management Company manages multiple REITs, it has established a pipeline committee and adopted internal guidelines, in order to prevent the improper allocation of acquisition opportunities, and thus, managing conflicts of interests among REITs.

Executive pay

The criteria and timing for payment of remuneration to directors of KDR shall be as follows.
(1) KDR shall pay monthly remuneration to executive directors at an amount decided by the board of directors, up to an amount equivalent to 800,000 yen per month for each executive director, no later than the last day of the relevant month.
(2) KDR shall pay monthly remuneration to supervisory directors at an amount decided by the board of directors, up to an amount equivalent to 500,000 yen per month for each supervisory director, no later than the last day of the relevant month.

Efforts to ensure compliance

Promoting compliance

The Asset Management Company considers that one of the most important challenges in management is to ensure that compliance duties are fulfilled. With this in mind, the Asset Management Company has a framework whereby compliance is promoted under the leadership of the board of directors, the Compliance Officer and the Compliance Committee. The board of directors determines basic policies in conjunction with the company-wide promotion of compliance, and has the authority to request, if necessary, that the Compliance Officer and Compliance Committee report on progress in the promotion of compliance. The board of directors also discusses and decides on the appointment of outside members of the Compliance Committee, outside members of the asset management committees of the respective departments, and a compliance officer.

Role of Compliance Officer

The compliance officer works on the establishment of compliance system in the Asset Management Company and the creation of a corporate culture that abides by laws and regulations, as well as rules. The compliance officer also ensures that the necessary relevant documents are prepared in conjunction with the presentation of such an agenda as the establishment/revision of the Management Guidelines and asset management plans for the respective departments and the acquisition of individual assets, and conducts preliminary appraisals regarding whether there are any serious problems in terms of compliance, such as the violation of laws and regulations. The compliance officer also administers matters regarding compliance in the Asset Management Company as a chairperson of the compliance committee. Specifically, the compliance officer is tasked with duties such as the drafting and improvement of compliance manuals and compliance programs, as well as the periodical provisioning of instructions/training to executives and employees and the verification of compliance with laws and regulations, based on compliance programs. The formulation and revision of compliance manuals and compliance programs, which are drafted by a compliance officer, are put into practice subject to the decision of the board of directors after being reviewed and approved at the compliance committee's meetings. Compliance programs are formulated every business year, in principle, and the progress is reported promptly to the board of directors by the compliance officer.

Important Matters concerning Compliance

Important matters concerning compliance are discussed/decided at the compliance committee’s meetings and reported to the board of directors. The compliance department, as a supporter of the compliance officer, shall provide every possible support for the duties of the compliance officer according to the instructions by the compliance officer.

Auditing System

The Head of the Internal Audit Department, in the capacity of a person in charge of internal audits, carries out an internal audit once a year pursuant to the internal audit regulations, and produces an internal audit report that accurately reflects the issues found and raised in the internal audit. The person in charge of internal audits shall share such an internal audit report with the president and representative director and the board of directors without delay. The audited departments shall develop and implement remedial programs for issues raised in the internal audit report without delay, factoring in the significance of such issues. The person in charge of internal audits shall administer the progress of corrective measures taken by the audited departments regarding the issues, confirm the achievement of such measures, and ensure that the result is reflected in subsequent internal audit plans. The board of directors or a person in charge of internal audits shall have outside experts conduct an external audit if such an audit is considered necessary to verify appropriateness of the business operations of the Asset Management Company, or for any other reasons.

Counter-measures against bribery and corruption

The Asset Management Company has stipulated in its employment regulations and the compliance manual that it shall not engage in any misconduct such as bribery, embezzlement and money laundering. Any individual who has committed such misconduct shall be subject to stringent actions.

Whistle-blowing system

The Asset Management Company has established a whistle-blowing system applicable to all employees and its operation. It is aimed at preventing and detecting early contravention to laws and regulations and scandals through misconduct or harassment of any kind, enhancing the company's self-cleaning process, controlling reputational risks and securing its social credibility. Employees are obliged to notify, declare to or consult with any of the contacts established in the company, the parent company or outside attorneys. Those who have proactively cooperated with the notification or investigation are subject to protection.

For details of the governance structure of the asset management company, please refer to the Asset Management Company website.