We seek to ensure regulatory compliance through the continued awareness of compliance by each individual employee and officer and proper operation of the internal management system.
1.Basic Principles
As an asset manager, we are committed to the asset management business and the fulfillment of our fiduciary responsibility, duty of loyalty, and duty of care to investors according to Sumitomo Business Spirit and Sumitomo Corporation Group’s Management Principles and Activity Guidelines while establishing basic compliance regulations to ensure that all officers and employees will act not only in strict compliance with laws but also in accordance with social norms for business judgment.
2.Operation System
We have established a compliance committee and officers in order to provide and promote a compliance system.
Compliance Committee
The Compliance Committee will deliberate important matters on compliance according to the committee regulations. Submission and approval of the Compliance Committee is essential for organizing funds, acquiring or disposing of properties, and dealing with stakeholders.
Compliance Officer
Compliance Officer is responsible for general control of compliance in routine operations of the Company, who plans and promotes measures for compliance; he also instructs and advises officers and employees to ensure permeation of compliance awareness and compliance with laws.
3.Promotion of Compliance
The following activities allow the compliance system to function effectively.
Compliance Program
Compliance Officer formulates a compliance program as a specific implementation plan each year to promote compliance through decisions of the Compliance Committee; in addition, Compliance Officer reports how the compliance program is implemented to the Compliance Committee.
Management of Regulatory Compliance
Documents such as contracts and risk description for asset management operations will be submitted to the Compliance Officer for confirmation of regulatory compliance; in addition, these documents will be referred to attorneys and regulatory agencies for confirmation of legitimacy as appropriate.
Compliance Training
Compliance Officer formulates annual training plans and trains officers and employees in laws concerning Company operations in order to instill an awareness of compliance as well as to ensure that the officers and employees are well informed of the laws and to prevent regulatory violations; officers and employees of the related departments will be fully informed of any regulatory revisions.
Review of Dealings with Stakeholders
As an asset manager, we may issue instructions or give advice on transactions (trading properties, commissioning property management operations and other similar activities) with Sumitomo Corporation Group companies, etc.; in that case, in order to prevent any conflict of interest with investors, we will review such transactions in advance through the following procedures:
(1) The responsible department prepares a proposal to explain the conditions for business with or consignment to Sumitomo Corporation Group companies, etc. and the adequacy, appropriateness and reasons for selecting them as counterparty and submits it to Compliance Officer.
(2) Compliance Officer checks the proposal from the perspective of regulatory compliance, fiduciary duty, or any other related matter, and request corrections or additional explanations as appropriate from the department.
(3) The department submits the proposal for dealings to the Compliance Committee after it is checked by Compliance Officer.
(4) The department submits the proposal to investors for comments as appropriate.
(5) The Compliance Committee deliberates and determines whether or not to approve the validity or appropriateness of the proposed transactions.
In addition, a decision of disapproval or request for correction by the Compliance Committee will result in returning the proposal to the department.
4.Speak-Up System
If an employee is aware of a possible compliance problem, then the employee can pass the information up the chain of command. In addition, the Speak-Up System has been introduced to allow an individual to report a potential problem directly to the Compliance Committee, outside legal counsel, and Sumitomo Corporation’s Compliance Committee. Although, in principle, reporting individuals are asked to identify themselves so that they can be updated on the outcome of their cases, Company rules state that both the identity of such individuals and the nature of the information provided shall remain confidential, and that the reporting employees will experience no negative repercussions due to such reporting. The Compliance Committees are responsible for appropriately handling all the information received. Similar systems have been implemented at approximately 120 Sumitomo Corporation Group companies.
5.Independent Monitoring
Our management system, including the compliance system and activities, is subject to audits conducted by the Internal Auditor as deterrence and evaluation functions for our management system, business operation and financial soundness, etc., as well as consolidated subsidiary audits by the Sumitomo Corporation Internal Audit Department and voluntary audits according to Companies Act by Audit corporation. Reports and suggestions based on these audits will contribute to objective understanding of present state of Company and improvement or enhancement of the operation system.
