Basic Compliance Policy and Structure

MTAM has set compliance with laws, regulations and other rules as one of its management priorities and MTAM's management is actively working to develop and strengthen the compliance structure and internal control structure. To establish an appropriate operational structure, MTAM has appointed a compliance officer as the person responsible for compliance-related matters at MTAM to ensure that internal checks and balances on other departments function effectively.
Furthermore, through the establishment and operation of the Compliance Committee, MTAM has established a multi-tiered structure for ensuring MTR's compliance with laws, regulations and other rules.

（a）Board of Directors

The Board of Directors seeks to ensure compliance as the organization with ultimate responsibility for the execution of business and, besides receiving reports on matters approved by the Compliance Committee, also makes resolutions on important compliance-related matters at MTAM, including formulation and amendment of the basic policy on compliance and compliance program, formulation of the risk management plan and internal audit plan, as well as appointment and dismissal of Compliance Committee members and the Compliance Officer.

（b）Compliance Committee

The Compliance Committee consists of the President and Representative Director, directors (including non-executive directors), the Compliance Officer, and one or more persons qualified as lawyers or certified public accountants or persons who are otherwise deemed to be familiar with compliance (limited to those who have no relations in the asset management company, or the matters handled by the asset management company). The Compliance Committee is chaired by the Compliance Officer.
The Compliance Committee is responsible for execution of the duties set forth in the Compliance Committee Rules in cooperation with the Board of Directors and Compliance Officer.

（c）Compliance Officer

As the person responsible for compliance at MTAM, the Compliance Officer works to establish an internal compliance structure and to raise awareness of norms for compliance with laws, regulations and other rules within the company. The Compliance Officer, therefore, constantly monitors whether MTAM executes asset management business in accordance with laws, regulations and other rules, and also monitors and supervises the status of compliance in the exécution of day-to-day operations.
In light of the importance of the Compliance Officer's responsibilities, MTAM elects as Compliance Officer an individual who is sufficiently capable of examining and supervising business execution to achieve compliance with laws, regulations and norms.
MTAM has put in place a structure such that any act pertaining to MTAM's business operations that violates or is likely to violate laws and regulations discovered by any officer or employee is reported immediately to the Compliance Officer.

Appropriate Management of Conflicts of Interest

To prevent MTAM from engaging in transactions with related parties sharing certain interests with MTAM which may be harmful to the interests of MTR, MTAM has identified types of related party transactions and set forth related party transactions standards and comprehensively judges whether to conduct a transaction through deliberation by more than one body. MTAM elects outside specialists as committee members to both the Compliance Committee and the Investment Committees that hold such deliberations.
If the acquisition of an asset or other transaction by an investment corporation which entrusts its asset management to MTAM constitutes a related party transaction, the approval of the outside committee members of the Compliance Committee and Investment Committees are required. Details of this decision-making process are as shown below.

Exclusion of Antisocial Forces

MTAM has formulated the Basic Policy to Prevent Damages Caused by Antisocial Forces in order to exclude antisocial forces and groups that threaten public order or stability and obstruct the economic activity of companies and individuals.
The Policy sets out that the organization as a whole will deal with unjust demands by antisocial forces, that MTAM will establish close and cooperative relationships with external specialist organizations such as the competent police, the National Center for Removal of Criminal Organizations, and legal practitioners, that it have no relations with antisocial forces including business relations, and that it will refuse any unjust demands by antisocial forces.

Prohibition of Insider Trading

MTR and MTAM established respectively its Corporate Information Management Rules to prohibit MTR's officers and MTAM's all its officers and employees (including temporary employees, contract employees, and employees on loan or dispatched from other companies and officers) from engaging in transactions such as trading securities including MTR's investment units, based on corporate information or other special information that they have obtained in the course of operations by taking advantage of their titles and positions.

Relations with politicians and governments

MTAM’s Basic Policy on Compliance stipulates that it shall maintain transparent and sound relations with politicians and governments.
It has never made any political donations in the past.

Prevention of Bribery and Corruption

MTAM has the Rules of Employment and the Basic Policy on Compliance in place to ensure that all managers and employees do not engage in any type of fraud or corruption, including the offering or accepting of gifts, entertainment and/or other benefits beyond socially accepted limits, money laundering, acts of bribery including the offering of economic benefits to public officers and acts of pursuing their own interest by taking advantage of their positions, with strict disciplinary action applying for any violation of such rules.
With respect to acts of fraud and corruption, there has been no material violation or any record of paying penalties, surcharges or settlement money to date.
No employee has been subject to reprimand or dismissal due to acts in relation to bribery or corruption.
In addition, we are fully committed to ensuring that all managers and staff members thoroughly understand the content of the Rules of Employment and the Basic Policy on Compliance. Measures for the prevention of acts of fraud and corruption are properly integrated into the company-wide risk management program and management.
Please see the following regarding outline of the company-wide risk management program.

Establishment of Whistleblowing System

MTAM has a whistleblowing system in place for all its officers and employees (including temporary employees, contract employees, and employees on loan or dispatched from other companies, employees not running in a year from whistleblowing and officers).
This system is used for whistleblowing to report acts involving organizational or individual violations of laws and regulations, including any type of fraud or corruption such as the offering or accepting of gifts, entertainment and/or other benefits beyond socially accepted limits, money laundering, acts of bribery including the offering of economic benefits to public officers and acts of pursuing personal interest by taking advantage of one's position.
　A whistleblower can make a report anonymously. In addition, in accordance with the Whistleblower Protection Act, it is prohibited to carry out dismissal, disciplinary measures, retaliation or any other treatment that is disadvantageous to a whistleblower on account of such whistleblowing.

Provision of Regular Compliance Training

MTAM provides all its officers and employees (including temporary employees, contract employees, and employees on loan or dispatched from other companies and officers) with training mainly aimed at raising compliance awareness on a regular basis.

Conduct of Audits of All Business

The Compliance Officer of the Asset Management Company is in charge of internal audits and, in principle, conducts regular internal audits of all operations of all departments (investment management structure, financial management structure, legal compliance structure, compliance with ethical standards, anti-corruption, etc.) at least once every six months. In addition, the Compliance Officer may conduct extra audits at his/her discretion and may conduct special audits at a determination of the President and Representative Director or an Internal Audit Manager.