Compliance

System for Promoting Compliance

The Asset Manager realizes compliance through the following system.

Organization/Title and post	Main role
Board of Directors	Establish and revise compliance manuals and compliance programs as the decision-making body on fundamental matters related to promoting compliance. Ask for reports on progress made on compliance from the Compliance Officer as necessary.
Compliance Committee	In principle, convened monthly and as necessary by the Compliance Officer for discussion of the agenda from the standpoint of compliance.
President and CEO	Supervise introduction of basic compliance policies and programs. Report to the Board of Directors on progress made on compliance at least every quarter and as necessary.
Compliance Officer	Conduct overall compliance planning, drafting and promotion as the head of compliance. Promptly report to the President and CEO and provide necessary suggestions or instructions to relevant departments whenever problems in the context of compliance arise or are likely to arise. Independently review from a compliance standpoint transactions and decisions pertaining to management of DHR’s assets, as an entity independent of the Asset Manager’s other internal organizations without being influenced by other internal organizations’ judgments.
Compliance Department	Engage in work related to compliance promotion, internal audits, verification of risk management, and more under the supervision of the Compliance Officer.

Establishment and Practical Implementation of Compliance Manual

The Asset Manager has established a Compliance Manual in the aim of increasing the soundness and reliability of its management and organization as the manager of DHR’s assets and, in turn, earning the trust of unitholders and society by prescribing not only fundamental compliance-related principles by which its officers and employees should abide but also specific practical matters.

Severance of Relationships with Anti-social Forces and Prevention of Money Laundering

The Asset Manager’s Compliance Manual requires officers and employees to categorically reject all requests, both public and private, from anti-social forces that threaten the order and safety of civil society, including those for money and goods, donations, contributions, and subscriptions to informational magazines.In addition, officers and employees are to thoroughly verify the identity of customers, etc., keep transaction records, and report suspicious transactions as stipulated by the Act on Prevention of Transfer of Criminal Proceeds in order to prevent money laundering (hiding the source of profits from illegal acts).

Compliance Training

The Asset Manager works to enhance internal education and training so that officers and employees are able to pursue the best interests of investors. Specifically, when it comes to internal education, we utilize a group textbook that provides easy-to-understand explanations by means of various case studies in order to ensure that Daiwa House Group employees (including fixed-term employees, temporary employees and parttime employees) are able to engage in proper decisions and actions according to “With our customers” and the other elements of the Principles of Corporate Ethics and Code of Conduct in their routine operations. As for internal training, we carry out compliance training on a continual basis to ensure that all officers and employees are acutely aware of pursuing the best interests of investors. We also include an assessment of whether employees are taking action on compliance with a continual awareness of other social demands in their performance evaluations. In so doing, we seek to raise awareness among our officers and employees.

Item	Fiscal year ended March 2019	Fiscal year ended March 2020	Fiscal year ended March 2021	Fiscal year ended March 2022	Fiscal year ended March 2023
Compliance training	8 times	9 times	12 times	12 times	12 times

Prevention of Corruption

The Daiwa House Group has established a system to strictly prohibit and prevent corruption, such as bribery, money laundering, embezzlement, and other violations of the law. This includes the establishment of Anti-Bribery Regulations and Identity Verification Regulations. In addition, acts that encourage bribery or unfair trade or that are ethically unsound are prohibited by various policies and rules, such as our Principles of Corporate Ethics and Code of Conduct, even if they do not violate the law. In this way, we set forth rules for maintaining transparency in business operations and fairness in transactions.
The Asset Manager has established a system for consultation and appropriate handling of reports related to acts that are (or could potentially be) problematic in terms of compliance, including organizational or individual legal violations and ethically questionable acts reported by whistleblowers based on the Whistleblower Protection Act and the Cabinet Office Guidelines for Private Businesses Concerning the Whistleblower Protection Act. Both internal and external points of contact are in place.
The Asset Manager further solidified this commitment by signing on to the United Nations Global Compact, which states, “businesses should work against corruption in all its forms, including extortion and bribery” as one of its principles.
Additionally, the Asset Manager’s Compliance Manual stipulates the following measures for all officers and employees to prevent bribery and corruption.

• Officers and employees must not directly or indirectly provide any entertainment, gifts, favors, or other benefits (including providing, offering, or promising cash or other benefits) to any public servants or quasi-public servants (whether in Japan or overseas, including private companies and the like prohibited by laws and regulations from engaging in bribery).
• Officers and employees must not provide or accept entertainment, gifts, favors, or other benefits beyond normal social etiquette under socially accepted ideas (i.e., engage in conduct that inhibits or could inhibit the Asset Manager’s promotion of compliance) to or from anyone, even if they are not a public servant or quasi-public servant.
• Officers and employees must follow the rules for entertainment expenses when providing entertainment, food and beverages, recreation, or gifts to business partners and others, when engaging in similar acts, and when the Asset Manager is on the receiving end of entertainment or food and beverages.

The Asset Manager raises awareness in each and every officer and employee about these measures through compliance and other training and works to prevent, quickly discover and rectify any issues through various efforts such as an internal whistleblowing system and accordingly to the rules on protections for whistleblowers.

“Internal Protections for Whistleblowers”

• The Asset Manager, officers, and employees shall never terminate or treat a whistleblower unfavorably (disciplinary actions, demotions, lower pay, etc.) because the whistleblower consulted about or reported a problem.
• The Asset Manager shall establish proper measures to ensure the workplace environment does not worsen for whistleblowers because the whistleblower consulted about or reported a problem.Additionally, any person who treats a whistleblower unfairly may be subject to disciplinary action in accordance with the disciplinary provisions in the employment regulations.
• Officers or other employees must not hinder anyone from making a report or taking other actions without good reason.

The Board of Directors of the Asset Manager shall receive risk reports about political contributions through a risk assessment sheet supervised by the Compliance Department and oversee the response to prevent bribery and corruption.
Furthermore, under its “Supply Chain Sustainability Guidelines,” the Daiwa House Group prohibits, as part of the Business Partner Code of Conduct, any actions that are or could be constructed as the bribery of members of Parliament, government and municipal officials, or local public organizations. When concluding agreements with new business partners, we explain the purposes and outline of the “Supply Chain Sustainability Guidelines” in implementing it and ask them to submit a letter of intent.

For details on the Supply Chain Sustainability Guidelines, follow this link.

	Fiscal year ended March 2019	Fiscal year ended March 2020	Fiscal year ended March 2021	Fiscal year ended March 2022	Fiscal year ended March 2023
Total political contributions (yen)	0	0	0	0	0
Number of incidents related to fraud or corruption	0	0	0	0	0
Number of dismissals or termination related to fraud or corruption	0	0	0	0	0
Costs of fines, penalties, and settlements related to fraud or corruption (yen)	0	0	0	0	0

Problems Related to Bribery and Corruption

There were no serious problems related to bribery or corruption at the Asset Manager that would influence stakeholders. (Fiscal year ended March 2023)