Sound Corporate Governance
MEL is composed of one Executive Director, two Supervisory Directors, and the Board of Directors, on which all MEL’s directors serve as members, plus an accounting auditor as well as the General Meeting of Unitholders. For details, please refer to the Securities Report (Japanese only) (“1. Fund Information, 1. Fund Status, 1. Outline of MEL, (4) Structure of MEL”).
MEL is prohibited from having any employees under the Japanese Act on Investment Trusts and Investment Corporations, and therefore commissions business operations to its asset management company, Mitsubishi Jisho Investment Advisors, Inc.
Management Structure with Emphasis on Maximizing Unitholder Value
MEL will seek to ensure to align interest between MEL's unitholders and Mitsubishi Estate Group, and maximize unitholder value as well as to establish and enhance a highly transparent management system.
In the event of transaction which falls under the category of transactions with interested parties, MJIA executes such transactions through a transparent decision-making process. In addition, transactions which exceeds a certain standard with interested parties must be deliberated and approved by the Compliance and Risk Management Committee. However, for transaction below a certain level, the approval of the General Manager of the Compliance Department is required. Through such deliberations, we will be able to carefully examine from many points of view and comprehensively judge whether or not to make a transaction. The Compliance and Risk Management Committee, which is composed of outside attorney, enhances the checks and balances against conflicts of interest transactions from the standpoint of experts. In deliberations on the acquisition and sale of properties by MEL, the Management Committee is composed of real estate appraisers who do not have a special interest in the Mitsubishi Estate Group, and is expected to participate in the deliberations and resolutions of MJIA from a wide range of perspectives based on expertise and experience as experts in real estate appraisal, and to exert a check-and-balance function against the decisions of MJIA.
Decision-Making Flow in the Case of Asset Acquisition or Sale Falling Under Related-Party Transactions
Acquisition or sale of assets at MEL undergoes a transparent decision-making process.
|(Note)||An example of the decision-making flow in cases that fall under the category of transactions with interested persons, etc. requiring approval of the board of directors of the investment corporation pursuant to Article 201-2 of the Act on Investment Trusts and Investment Corporations.|
Asset Management Structure
Asset management fee structure aligned with the unitholders' interests
To strengthen the alignment between Asset Management Company and unitholder interest, MEL introduced an asset management fee reflecting the relative performance between MEL's investment unit price and the TSE REIT Index.
|Asset management fee Ⅰ
|Total assets as of the end of previous period x 0.2% (upper limit)|
|Asset management fee Ⅱ
(Real estate profit-linked)
|Adjusted NOI × 5.0% (upper limit)|
|Asset management fee Ⅲ
|Adjusted net income before tax × net income before tax per unit × 0.001% (upper limit)|
|Performance against TSE REIT Index ((a) – (b)) × market capitalization (for fiscal period of each term) × 0.1% (upper limit)
（a）：Fluctuations in MEL's investment unit price (incl. dividends)
（b）：Fluctuations in the TSE REIT Index (incl. dividends)
|Acquisition fee||Acquisition price × 1.0% (upper limit)|
|Disposition fee||Disposition price × 1.0% (upper limit)|
|Merger fee||Appraisal value of assets to be succeeded × 1.0% (upper limit)|
First J-REIT to Introduce Asset Management Fee Fully Linked to Investment Unit Performance
Same-boat Investment by Mitsubishi Estate
Mitsubishi Estate, our sponsor holds our investment units with the aim of aligning the interests between unitholders and the sponsor. Numbers of units (ratio) held by the sponsor as of Apr. 6, 2021 : 15,950 units (4.1%)
Risk Management Structure
MJIA has established "Risk Management Regulations" in order to ensure the soundness of management by establishing basic matters concerning risk management and appropriately managing and operating risks. The Board of Directors oversees the development of risk management systems. The general manager of the Compliance Department supervises the risk management of the entire asset management company, and the general manager of each department takes charge of risk management in each department. MEL conducts an internal audit of the asset management company once a year to verify and evaluate the appropriateness and effectiveness of the risk management system, and reports the results to MEL's Board of Directors.
Employee Hotlines (Whistleblower Protection)
We have established a consultation desk for legal violations, violations of internal rules, harassment, and other matters that are widely contrary to ethical and social standards, and all persons engaged in our business, including retirees and temporary employees, can report and consult with us. We strictly observe privacy in whistleblowing and consulting, confirm and investigate the facts, and take appropriate action. The Mitsubishi Estate Group Help Line and the Mitsubishi Estate Group Whistleblower System may also be used as necessary. This system complies with the Whistleblower Protection Act.
Bribery and Anti-Corruption Policy
The Mitsubishi Estate Group has declared its corporate activities to be fair, transparent and trustworthy. The Group's Action Guidelines prohibit not only suspected political and administrative cohesion and illegal activities but also entertainment and gifts that deviate from social norms.
When support is provided for the activities of political organizations, appropriate measures are taken in light of the Political Funds Regulation Law, the Public Offices Election Law, and other relevant laws and regulations, as well as internal rules such as the Mitsubishi Estate Group Action Guidelines.
We have also established a system to systematically prevent bribery. In 2013, we established the Mitsubishi Estate Group Basic Rules on Anti-Bribery, and in 2018, we established and announced the Mitsubishi Estate Group Anti-Bribery Guidelines. The Anti-Bribery Guidelines clearly state the requests we make to our business partners, and with the cooperation of our business partners, we will strive to ensure thorough compliance throughout the supply chain.
To prevent bribery, we provide training for group managers and employees, and acquire pledges from group managers and employees to the Anti-Bribery Guidelines. In addition, bribery prevention lectures are held annually, particularly for departments and Group companies related to overseas operations. The Risk Compliance Committee monitors the operation of the anti-bribery system annually, and the status of monitoring by the Risk Compliance Committee is also reported to the Board of Directors.
In 2017, external organizations conducted an assessment of the Mitsubishi Estate Group's overall anti-bribery system. By responding to the issues identified by this, we are working to further strengthen our anti-bribery system.
Promotion System for Compliance
MJIA have achieved compliance through the following system.
|Board of DIrectors||・As an organ that determines our basic policy regarding business execution and important business execution, we formulate and modify compliance programs and compliance manuals.|
|Compliance and Risk Management Committee||・Promote Compliance and Risk Management, and discuss and approve these monitoring issues. As a general rule, this committee should be held once a month, but It should be held as necessary.|
|President & CEO||President & CEO is responsible for establishing and implementing a compliance system as the ultimate responsibility for compliance. President ＆CEO is responsible for working sincerely and taking the lead in promoting compliance awareness among officers and employees.|
|General Manager of Compliance Department(Compliance Officer)||
General Manager of Compliance Department is responsible for planning, drafting, coordinating and promoting our compliance efforts.
・If it is determined that a problem has occurred or may occur from the viewpoint of compliance, the President & CEO or the Compliance and Risk Management Committee shall promptly obtain approval of the policy for responding to the compliance violation and the preventive measures.
・As an independent organ of separate from other internal organs of the Asset Management Company, General Manager of Compliance Department independently verifies the details of transactions or decisions related to the Asset Management Business of Investment Corporation.
・Under the supervision of the General Manager of Compliance Department, the Compliance Department coordinates the planning, planning, coordination, and promotion of compliance activities, and verifies the compliance status of each department.
・The Compliance Department checks the progress of the compliance program to the Compliance Manager of each department on a quarterly basis, and reports the results to the Board of Managers after deliberation through the approval by the Compliance and Risk Management Committee.