Governance Initiatives

Specific Efforts on Governance

Decision-Making Process (Example)

Rotation Rule

Logistics facilities and Industrial real estate

To avoid conflicts of interest with the private REITs and private funds that it is entrusted with operating, SRM has adopted "rotation rules" whereby SLR is given first priority to view information and discuss acquisition of logistics properties and industrial properties.

Other (Office,residential, commercial facilities, hotel, etc.)

Compliance

Basic Policy for Compliance

SLR and SRM are committed to ensuring compliance with relevant laws and regulations, preventing corruption and conflicts of interest, and ensuring appropriate information management, while taking into consideration human rights and diversity, through the establishment of the following policies and management structure.
SRM understands the importance of SLR's asset management business, where SRM manages the assets of SLR, as a business managing the funds of SLR's unitholders. To build an appropriate management structure, SRM established the Compliance Department in charge of compliance-related matters and appointed a Head of Compliance responsible for supervising compliance-related matters, thereby ensuring the effectiveness of the internal supervision of compliance in the other departments. In addition, SRM has established the Compliance & Risk Management Committee as a part of its establishment of a multilayered compliance system.

Compliance structure

Organizations	Major roles
Board of Directors	The Board of Directors will seek full compliance as the administrative body ultimately responsible for the execution of business, receive reports on matters approved by the Compliance & Risk Management Committee, etc., and adopt resolutions regarding important compliance matters.
Compliance & Risk Management Committee	The Compliance & Risk Management Committee carries out the tasks set out in the Compliance & Risk Management Committee Regulations in cooperation with the Board of Directors, the Head of Compliance, and the Compliance Department.
The Head of Compliance	As the person responsible for supervising the compliance matters of SRM, the Head of Compliance will seek to establish a compliance system and foster an awareness of legal compliance at SRM. To that end, the Head of Compliance will always monitor compliance with laws and regulations in the execution of business in SRM's management of assets for SLR and will monitor and oversee compliance with laws and regulations in the day-to-day execution of business.
Compliance Office	The Compliance Department is in charge of compliance matters at SRM.

Establishment and Implementation of a Compliance Manual

SRM has created a Compliance Manual to ensure compliance.
The Compliance Manual is revised as necessary in response to the enactment, revision, or abolishment of laws and regulations, and all executives and employees are notified of any revisions.

Compliance training

SRM implements thorough compliance through the appropriate operation of internal management systems designed to maintain the high ethical standards of its officers and employees, and ensure compliance with laws and regulations. To build a foundation for implementing these measures, SRM conducts training for its officers and employees to ensure that they have sufficient knowledge of compliance.

Internal Reporting System

When compliance issues arise, they are reported and handled through the established channels. In addition to the normal established channels, SRM has established a system that enables employees who notice issues to report them directly to a contact point when the established channels are difficult for some reason.

Responding to Compliance Violations

Article 12 of SMR's Compliance Regulations stipulate that if officers and employees, etc. become aware of any violation of laws or regulations or an action that is likely to violate laws or regulations at SMR, they shall report the violation or action immediately to the Head of Compliance or the Compliance Department.

Response to Anti-Social Forces

SRM has established regulations banning all relationships with anti-social forces. The regulations stipulate that the Compliance Department shall supervise the establishment of a system that prohibits all relationships with anti-social forces and deals with anti-social forces at SRM and that the Head of Compliance has supervisory responsibility over this. The regulations also stipulate that SRM shall provide internal training to officers and employees on guidelines for handling anti-social forces and the management of information about anti-social forces to increase their awareness.

In addition, SRM has declared a basic policy on anti-social forces to prohibit all relationships with anti-social forces, based on which it strives to develop a system that prohibits all such relationships. It has established regulations and standards for the verification of the customer's identity at the time of transactions and the reporting of suspicious transactions, to set standards for the verification of customers' identities at the time of transactions, the preservation of transaction records, and the reporting of suspicious transactions under the Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism, the Act on Prevention of Transfer of Criminal Proceeds (the "Act"), the Order for Enforcement of the Act, and the Ordinance for Enforcement of the Act.

Prevention of corruption and bribery

Anti-corruption

As a member of the Sumitomo Corporation Group, SRM is engaged in initiatives to prevent bribery when entertaining business partners or giving gifts.
Specifically, in the Compliance Manual, we have established rules for preventing bribery. We have also established detailed rules regarding expenses for entertainment and decision-making authority, and detailed rules for handling of receiving gifts and invitations, which specify specific details.

Prohibition of political contributions

As a member of the Sumitomo Corporation Group, we are engaged in initiatives to prevent illegal political contributions.
Specifically, in the Compliance Manual, we have established rules prohibiting illegal political contributions.

Risk Management

Basic stance on risk management

One of SRM's management priorities is being fully aware of its responsibility to accurately identify and manage an array of risks, particularly those related to asset management, and to execute its businesses in the most effective way possible as an entity specializing in asset management and investment advisory. Another priority is to be fully aware of its responsibility to appropriately manage and control risks related to the possible impairment of assets under management and the potential harm to the interests of customers resulting from inadequate risk management according to the characteristics of the operations and risks. Considering these priorities, SRM takes steps to develop its risk management system.

Risk management system

SRM has established Risk Management Regulations and Risk Management Guidelines to appropriately manage various risks, and has stipulated that, upon identifying the occurrence of a significant risk, employees shall promptly report it to the Chief Risk Management Officer, and to the President and Representative Director.

The Compliance Department is responsible for the overall risk management of SRM's operations, and the Head of Compliance (as the Chief Risk Management Officer), has overall responsibility and authority for risk management across SRM. In addition, department heads are responsible for risk management in their respective departments, as risk management officers.

BCP Response

SRM's business continuity plan (BCP) sets out the roles of the emergency task force to support the fast recovery of priority operations and procedures for the activities of the task force to prevent confusion caused by disasters, including sudden crises (earthquakes, fires, etc.) and progressive crises (flooding, typhoons) and to mitigate damage after a disaster. The BCP also sets procedures for the verification of damage to the properties managed by SRM, the sharing of information with parties involved, and the consideration of disclosure to customers.

Cyber Security

SRM is aware of the importance of cyber security and has developed the arrangements necessary for the BCP (development of an organization, formulation of internal rules, a system to monitor cyber attacks, and the reporting of cyber attacks). SRM regularly provides training for all officers and employees.

Safety Confirmation System

SRM has introduced a dedicated system for early safety confirmation. In the event of a large earthquake, information will be distributed to all officers and employees. The same system is used for disasters other than earthquakes.