Corporate governance is a key issue that increases the value of JPR's business and ensures that responsibilities are fulfilled and the expectations of unitholders and all other stakeholders are met. In order to earn people's trust as an investment corporation, JPR is taking steps to further ensure the sound management of its business.
JPR's corporate governance
Under the guidance of the Board of Directors, which is comprised of executive officers and supervising officers, JPR seeks to thoroughly implement and reinforce its corporate governance in order to ensure successful operation of its business over the medium to long term.
JPR's decision-making organs
It is stipulated (Article 18 of the regulations) that JPR shall have up to two executive officers and up to four supervising officers (there must be at least one more supervising officer than executive officers).
At present, JPR's decision-making organs are the General Meeting of Unitholders (comprising unitholders), the Board of Directors (comprising all executive officers and supervising officers), and an accounting auditor. There are currently one executive officer and two supervising officers.
Breakdown of JPR's structure:
- General Meeting of Unitholders
- Executive officers, supervising officers, and Board of Directors
- Accounting auditor
- Supervision system based on internal control and supervising officers
- Coordination of auditing and supervision based on internal control and supervising officers
- System for management of affiliated corporations by JPR
For details of the implementation status of the above, refer to "4. Investment Corporation Structure" in our securities reports.
Criteria for appointing investment corporation officers
It is a requirement that none of the grounds for disqualification stipulated in the laws concerning investment trusts and investment corporations shall apply to officers appointed by JPR. Officers are appointed by means of a resolution of the General Meeting of Unitholders.
Remuneration of officers
The remuneration for executive officers and supervising officers is stipulated in the investment corporation regulations as the amount decided by the Board of Directors (up to a maximum of 500,000 yen per month for each executive officer and 400,000 yen per month for each supervising officer). With the aim of ensuring transparency, remuneration of officers is disclosed in asset management reports.
Transactions with interested parties
Transactions between JPR and interested parties and transactions that require the approval of JPR are reviewed and examined by TRIM's Compliance Committee at the invitation of an external attorney. In order for a transaction approved by the Compliance Committee to be carried out, the prior consent of JPR's Board of Directors (whose members are independent of TRIM's shareholders) is required. Transactions are thus subject to multiple effective reviews before being carried out.
Transactions with interested parties include the following:
- Acquisition of property/assets from an interested party
- Disposal of property/assets to an interested party
- Outsourcing of real estate management to an interested party
- An interested party acting as an intermediary or representative for a transaction
- Hiring an interested party to carry out construction work (if the work costs more than 10 million yen)
- Leasing of property to an interested party
*Leasing of property to an interested party refers to: 1) cases where a new rental contract is signed with an interested party, and 2) cases where the rent is frozen or set at a level below the average rent for the property when a lease is renewed.
TRIM's corporate governance
TRIM strives to increase management transparency and awareness of corporate ethics while making timely decisions and executing operations efficiently. TRIM aims to increase JPR's unitholder value by thoroughly implementing and reinforcing corporate governance.
TRIM's management structure
JPR entrusts management of its assets to TRIM.
TRIM's organizational framework is as shown below.
Investment management decision-making organs
TRIM has established an Investment Policy Committee to make investment management-related decisions, which oversees an Investment Subcommittee and Management Subcommittee.
Matters relating to investment targets and management policy are decided by the Board of Directors, while matters relating to management plans and their execution are decided by the Investment Policy Committee. Other matters are decided by the Investment Subcommittee or Management Subcommittee.
The decision-making organs for property acquisitions are as shown below. Decisions on whether to acquire new investment properties are made via a stringent process.
Transactions with interested parties
The appropriateness and validity of transactions between JPR and interested parties are reviewed and examined by the Compliance Committee, which meets once a month as a rule. Committee meetings currently call on an external attorney who serves as a special member and ensures their integrity.
Through the verification system described below, JPR and TRIM have developed an effective risk management framework for managing JPR's assets, from which they strive to produce the maximum possible effect. JPR and TRIM's policy is to avoid occurrence of asset management-related risks as much as possible and take measures to address risks if they do occur.
It is stipulated that JPR's executive officers shall hold Board of Directors meetings at least once every three months, and in reality, meetings are held roughly once a month as a rule. In addition to discussion of matters stipulated by law, Board of Directors meetings also involve approving certain transactions with interested parties and detailed reports on the execution status of JPR's and TRIM's operations. These procedures maintain a structure that enables supervising officers to accurately monitor the execution of executive officer operations from a standpoint that is independent of TRIM, parties with an interest in TRIM, and other interested parties as prescribed by law. Moreover, by means of these procedures, JPR strives to verify whether there is any possibility of a conflict of interest in transactions with parties with an interest in TRIM or other interested parties and to manage risks relating to conflicts of interest, etc.
JPR has the right to receive various reports from TRIM and to examine TRIM's account books and other documents. By exercising these rights, JPR maintains a structure that enables it to monitor TRIM's execution of operations.
In addition, JPR strives to prevent activities such as insider trading by officers through the establishment of insider trading regulations.
As a rule, TRIM monitors and manages operation- and management-related risks through multiple verification systems at different levels.
- TRIM has established portfolio operation standards and investment standards in its operation guidelines. It strives to manage risks relating to real estate and real estate trust beneficiary rights by adhering to such guidelines.
- TRIM has established Investment Policy Committee regulations with the aim of clarifying the decision-making process for key matters related to JPR asset management. It also strives to manage risk by establishing objective operating procedures, such as creating procedure manuals each covering the inspection, acquisition, operation, and management of real estate as well as other tasks.
- TRIM has established compliance regulations and a compliance manual, while the compliance officer and Compliance Subcommittee verify legal compliance and the Compliance Committee verifies the presence of conflicts of interest in transactions with interested parties. Through these measures, it strives to prevent the risk of legal violations and conflicts of interest.
- TRIM strives to prevent activities such as insider trading by its officers and employees through the establishment of insider trading regulations.
- TRIM has established a forward commitment manual, and when making forward commitments, it strives in particular to manage risk through a process involving careful reviews and thorough deliberation.
*Forward commitment refers to agreements for transactions that will be carried out at a later date. In the case of J-REITs, risk disclosure is required for transactions that will be carried out more than one month after the agreement date.
In order to continuously conduct its business in a secure manner, JPR strives to make appropriate use of information and prevent unauthorized access and information loss/leakage. In managing information, it implements safety measures to counter various threats (damage, accident, mishandling, unauthorized use, destruction, theft, leakage, etc.). It has also put recovery measures in place in the event that problems occur and established a contingency plan for dealing with any damage.
TRIM has also made security management preparations and established a department to oversee information management. This department ensures the validity of information management and protection through regular inspections and has developed safety measures and steps to be taken if problems occur.