Corporate Governance

Corporate Governance

1. Matters Concerning Governance of the Investment Corporation

(1) Content of the Organization

The organization of the Investment Corporation is comprised of a general meeting of unitholders, Board of Directors and Accounting Auditors. The general meeting of unitholders is comprised of unitholders, whereas the Board of Directors are comprised of Executive Directors and Supervisory Directors.

(2) Organization, Personnel and Procedures of Supervision through Internal Control and by Supervisory Directors

The Board of Directors of the Investment Corporation is comprised of Executive Directors and Supervisory Directors, and in principle, a Board of Directors' meeting is to be held at least once every 3 months. In reality, the Board of Directors meet at least once a month and the Executive Directors report on the status of operations, and the status of clerical work carried out by the General Administrator, as well as on other matters. In addition, the President and Chief Executive Officer and officers in charge of each department of the asset management company also make detailed reports on operations. Through these reports, the Supervisory Directors fulfill their role of supervising whether operations by the Executive Directors and asset management services are being executed appropriately.

(3) Supervision through Supervisory Directors and Mutual Collaboration with Accounting Auditor

At the Board of Directors meetings, Supervisory Directors receive detailed reports from the Executive Directors, the President and Chief Executive Officer of the asset management company (Mi-Casa Asset Management Inc.; hereinafter, the "Asset Management Company") as well as officers in charge of each department (Asset Management Department, Business Management Department and Compliance Office) and carry out active discussions concerning them, and thus carry out their supervisory function. Furthermore, the Accounting Auditor audits financial documents every fiscal period, and submits an auditing report. Moreover, in the event a violation of laws and regulations is discovered during the auditing process, the Accounting Auditor must report the matter to the Supervisory Directors.

(4) Development Status of the Investment Corporation's System for Managing Related Entities

The Board of Directors of the Investment Corporation has developed a system for managing the Asset Management Company. Details are as follows.

  • Approval of the Board of Directors is required for the formulation or amendment of management guidelines which stipulate management policies, rules on dealing with interested parties, disclosure policy, etc. and the formulation of asset management plans.
  • Approval of the Board of Directors is required for acquisitions and sales of assets under management with interested parties to ensure that internal procedures of the Asset Management Company have been appropriately conducted. In reality, all dealings with interested parties besides the acquisition and sale of assets are also reported to the Board of Directors and deliberated accordingly.
  • Results of internal audits conducted at the Asset Management Company are reported to the Board of Directors, and the appropriateness of operations and any problematic issues are deliberated.

Furthermore, in order to appropriately manage General Administration (clerical work concerning institution management, management of the unitholders' registry and other information, accounting work, etc.) and the Asset Custodian, the Investment Corporation reserves the right to receive necessary reports as appropriate from each respective outsourcee and request to look through books, etc. concerning the outsourced operations in line with the outsourcing agreements concluded between itself and the respective outsourcee of each operation.

2. Management System of the Asset Management Company

As mentioned earlier, the Investment Corporation entrusts its asset management services to the Asset Management Company.
The organizational structure of the Asset Management Company is as follows.

投資法人の運用体制

The Asset Management Company provides asset management services outsourced by the Investment Corporation under the above organizational structure. The various operations performed by the Asset Management Company are assigned to each department, viz. the Asset Management Department and the Business Management Department, as well as to the Compliance Office. Each department or office is managed by the respective Executive Director in charge, or a manager.

Furthermore, the Investment Committee was established as an institution for carrying out deliberations and making decisions over asset management and for evaluating management, etc., while the Compliance Committee was established as an institution in charge of compliance issues.

3. Formation of Investment Decision-Making

The Asset Management Company has formulated management guidelines in accordance with the Articles of Incorporation of the Investment Corporation. The guidelines set forth basic policies concerning investment such as the investment policy of the Investment Corporation, rules on dealing with interested parties, disclosure policy, etc. In addition, the Asset Management Company formulates asset management plans and makes decisions concerning the acquisition of assets to be managed, as well as over other asset management matters in accordance with the management guidelines.

4. Risk Management System Concerning Asset Management

The Investment Corporation manages and supervises the Asset Management Company by holding Board of Directors' meetings at least once in 3 months, where it receives reports concerning the status of management, etc. by the Asset Management Company, among others. Furthermore, with respect to dealings with interested parties of the Asset Management Company, approval of the Board of Directors of the Investment Corporation must be obtained over the fact that internal procedures of the Asset Management Company have been properly conducted. Moreover, a management system is maintained by receiving reports on the status of the execution of operations, etc. from the General Administrator and the Asset Custodian.

The Asset Management Company has set forth risk management rules and conducts management such as ascertaining, evaluating, monitoring and analyzing various risks that are inherent to asset management operations, with the aim of minimizing the said risks. The risk management rules classifies risks into one of the categories of operational risk, clerical risk, or system risk, and specifies the department to conduct risk management for each type of risk. The rules also set forth risk management procedures. The Asset Management Department is in charge of managing operational risk, whereas the Business Management Department is in charge of managing clerical risk and system risk. Furthermore, the Compliance Office oversees the overall risk management system. Departments in charge of managing risks monitor each of their respective risks at an appropriate frequency, and regularly or immediately reports to the Compliance Office and Compliance Committee, depending on the seriousness of each risk. In this manner, the Investment Corporation has developed a system for being able to comprehensively manage risk.

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