Policy for Achieving Customer Centric Business Operation
Established as of June 22
Amended as of March 13
ITOPIA Asset Management Co.,Ltd. (hereinafter, the "Company") has adopted the "Principles on Customer Centric Business Operation," announced by the Financial Services Agency of Japan in March 2017, in their entirety as they correspond to the Company's corporate philosophy (please refer to 2. [Policy 5] (1)) and has established its policy on business operation to provide better services and financial instruments to its customers, as described below.
Features of the services and financial instruments offered by the Company and targeted customers
(1) Features of the services and financial instruments
The Company was established in March 2011 as a corporation wholly owned by ITOCHU Corporation (hereinafter, "ITOCHU") and has been engaging in the management of assets entrusted by customers, the provision of investment advice, intermediary services for customers'securities transactions, the handling of private placements of securities and other services as its principal operations.
To date, the main assets subject to such management services or investment advice, etc. offered by the Company have been securities with real estate as underlying assets. The Company offers management services or investment advice to customers comprised a limited liability company (godo-kaisha) which acts as the proprietor of a business based on the silent partnership (tokumei-kumiai) and/or investors who are partners or prospective partners of tokumei-kumiai, , mainly in the form of a so-called real estate fund using tokumei-kumiai scheme, (i) at the time when the limited liability company (godo kaisha) plans to hold a beneficial interest in a real estate trust. The Company provides intermediary services for securities transactions or provides services regarding the handling of private placements of securities, to customers comprised of a limited liability company (godo-kaisha) for a silent partnership (tokumei-kumiai) and and/or investors who are partners or prospective partners of tokumei-kumiai (ii) at the time when the limited liability company (godo-kaisha) acquires or transfers a beneficial interest in a real estate trust or (iii) (iv) at the time when investors acquire or transfer equity interests issued by the limited liability company (godo-kaisha) pertaining to an equity contribution to the silent partnership (tokumei-kumiai) (please refer to the following chart).
When the Company performs management services or provides investment advice in this form, a direct counterparty under a contract with the Company is the limited liability company (godo-kaisha). However, in this case, the Company responds to investors who make equity contributions as partners of a silent partnership (tokumei-kumiai) to become the ultimate beneficiaries or risk bearers, as the effective customers.
In addition, the Company currently handles funds in which development projects including the construction of buildings are not yet complete at the time customers commence investment (hereinafter, "Development Funds"), and this is one of the features of the services offered by the Company.
The Company adopts the basic policy of offering customized services in which it forms a real estate fund using single real estate as the underlying asset in each case, in principle, after providing explanations to the customer on the outline of the project, possible risks, etc., and discussing with the customer contract terms including our compensation based on the customer's request and obtaining the customer's consent thereto.
(2) Targeted customers
At present, the Company primarily manages and provides investment advice on beneficial interests in real estate trusts. The real estate underlying such trusts is developed at a cost ranging between several billion yen and several tens of billion yen, including the construction cost for the buildings, and is used as large-scale logistics facilities. A single real estate fund is produced with said beneficial interests as investment target for a limited number of customers.
As a real estate fund of this size is formed and managed with equity contributions from a small number of customers; (i) an individual customer's investment value in these securities (meaning equity interests in a silent partnership (tokumei-kumiai) if the silent partnership (tokumei-kumiai) method is used) becomes high; (ii) customized services are offered based on prior discussions on contract terms as described above; and (iii) the management services and investment advice are premised on the development risks, risks concerning the handling of the Overseas Related Securities and other risks unique to real estate funds described in 2.[Policy 1]. Consequently, the Company has been providing services, since the commencement of its business operation and up to the present date, to institutions which own assets over a specific amount and have abundant knowledge of real estate and financial instruments and experience in the relevant transactions.
The Company considers having knowhow in real estate development as an advantage in the execution of its business and believes that, going forward, it is appropriate to provide similar services and financial instruments as before mainly to such investors having assets over a specific amount and abundant knowledge and experience in transactions in light of the Company's business scale, including personnel structure.
Policy on business operation
The Company has established a policy for achieving customer centric business operation as described below. The policy and the status of the Company's compliance with the policy that takes into account the features of the services and financial instruments offered to customers and customer attributes, etc. shall be posted on the Company's website.
The Company shall review the policy on a periodic basis to achieve better business operation and periodically confirm the status of its compliance. The results of this review and confirmation and details of any revision made shall be disclosed on the Company's website.
For the latest announcement (announced on April 1, 2019), please see this.
With constant recognition of the risks unique to the financial instruments it handles, the Company shall provide important information that may influence customers' investment decisions, including said risks, by laying out details in a clear and understandable manner.
- With respect to Development Funds, so-called development risk is inherent in such funds, unlike other funds which invest in real estate the completion of its development and the commencement of leasing to tenants. Accordingly, The Company shows examples of such risks, manages such risks and provides information to customers.
Management services and investment advice regarding securities with real estate located overseas as underlying assets (hereinafter, "overseas related securities"), intermediary services for customers' transactions of overseas related securities and the handling of private placements of securities of such securities are included in the Company's business operation. In operations handling such overseas related securities, there are risks different from those related to securities with real estate located in Japan as underlying assets. If such risks arise, the customer may suffer from resulting decreases in dividend yield and the value of securities held, an increase in handling fees and other consequences.
To avoid these consequences as much as possible, the Company shows examples of such risks in operations regarding overseas related securities, manages such risks and provides information to customers.
- In addition to the above, the Company shows examples of risks unique to real estate funds, manages such risks and provides information to customers.
The Company shall endeavor to prevent adverse effects in relation to conflicts of interests by accurately grasping any possibility of party-in-interest transactions and implementing appropriate decision making and management in transactions with customers.
With respect to transactions regarding assets subject to the management services or investment advice provided by the Company, the corporate group comprising ITOCHU which is the parent company of the Company, subsidiaries or affiliated companies of ITOCHU and so forth (hereinafter, the "ITOCHU Group") may act as the counterparty or be involved in such transactions. If the interests of the ITOCHU Group or third parties, including suppliers of the ITOCHU Group, take precedence over others in transactions with conflicts of interests involving the ITOCHU Group, customers may suffer from a decrease in dividend yield, additional contribution, a decrease in the value of securities held and other consequences.
To prevent such adverse consequences, the Company shows examples of such risks that may arise in transactions with the ITOCHU Group, manages such risks, including the prevention of adverse effects from conflict-of-interest transactions, and provides information to customers.
The Company shall offer services and financial instruments that are appropriate for a customer by grasping the customer's assets, knowledge and experience in transactions, purpose of transactions and investment needs.
The Company shall clearly indicate in advance the names and amounts of cost items and other necessary information, including compensation, fees and other expenses payable to the Company in consideration of services and financial instruments provided to the customer and obtain the customer's understanding.
The Company shall aim to achieve the best interests of customers by maintaining advanced expertise and professional ethics and conducting business with customers in a fair and sincere manner. To achieve this, the Company shall seek to suitably motivate its employees and to build an appropriate system of corporate governance.