Risk Management

Mitsui Fudosan Group Compliance Policy
(established April 28, 2005; revised August 1, 2018)

Introduction

We have engaged in fair business activities based on the highest corporate ethics and worked diligently to garner trust and build a robust brand. However, these tireless efforts to build a robust brand strength can be lost in an instant by the erroneous actions of a single individual. As a result, proper decision-making and behavior will continue to increase in importance. To accomplish this, we regard the practice of compliance as one of our highest priorities for Group management and implement fair and highly transparent corporate activities in accordance with corporate ethics, in addition to observing laws and regulations as well as social norms.

Definition of Compliance

Ensuring legitimate and fair corporate activities by observing laws, regulations, and internal rules, and giving proper consideration to norms of ordinary society, and corporate ethics.

Aims for Compliance
Honest Conduct
  1. We shall aim not simply to comply with laws and regulations, but rather recognize our company's social responsibility and be a good corporate citizen.
  2. We shall ensure mutual respect of human rights, personalities, and values.
  3. Even if news is bad, it shall be promptly reported to top management, and we shall strive to respond properly.
  4. In carrying out work, the top priority shall be placed on the safety of customers and the workplace environment.
Fair Conduct
  1. We shall carry out corporate activities with fairness and a high degree of transparency, in accordance with corporate ethics.
  2. We shall properly disclose information to society and ensure the transparency and soundness of our management.
  3. We shall take an uncompromising stance toward antisocial organizations and reject any relationship whatsoever.
  4. We shall not engage in wrongful discrimination based on nationality, social status, race, creed, gender, age, disability, sexual orientation, or gender identity (i.e., LGBT).
Abiding by Rules
  1. We shall abide by all relevant laws, regulations, and internal rules, and give proper consideration to social norms and corporate ethics
  2. We shall carefully protect and manage personal information and other information requiring confidentiality.
  3. We shall not exchange gifts or provide entertainment to obtain illegitimate advantages.
  4. We shall not pursue personal gain by using undisclosed or internal information.
  5. We shall avoid conduct that may negatively affect our company's reputation or operations even outside of working hours.
When Unable to Decide, Ask Yourself the Following…
  1. Is my conduct honest?
  2. Is my conduct fair?
  3. Is it conduct you can explain to your family, friends, and the society at large without being ashamed?

Risk Management System

Under the Executive Management Committee, which supervises overall risk management for Mitsui Fudosan and the Mitsui Fudosan Group, the Strategy Planning Special Committee and the Risk Management Special Committee manage business risk*1 and administrative risk*2 respectively.

The Risk Management Special Committee meets in principle once a month to identify and delineate risk issues and evaluate and propose preventative and response measures. Where required, the committee shares information and/or communicates in other ways with the Mitsui Fudosan Group.

The Executive Managing Director acts as the person in charge of legal affairs and compliance, the Chief Risk Officer, the Chief Legal Affairs Officer, and the Chief Officer for Compliance, and he belongs to the Board of Directors and Risk Management Special Committee, and periodically reports on risk management to the Board of Directors.

*1 Business risk: Business risk is primarily risk associated with advancing business and earning profits, including development risk, leasing risk, and market risk.
*2 Administrative risk: Administrative risk is operational risk associated with regular administrative duties, including disaster risk, system risk, clerical risk, and compliance risk.

Risk Management System

Risk Management System

Major Risks

Major Risks Associated with Advancing Business
  • Risk of natural disasters, man-made disasters, etc.
  • Risk associated with changes in social structure (aging of society, population decline, etc.)
  • Risk associated with fluctuations in the economy and real estate markets
  • Risk associated with interest rate rises
  • Risk accompanying business expansion into new areas
  • Risk accompanying exchange rate fluctuations
  • Risk accompanying rises in the cost of labor, raw materials, etc.
  • Risk accompanying changes in economic activity due to the proliferation of ICT, etc.
Major Risks Associated with Corporate Activity
  • Information security risk
  • Risk of compliance violations
  • Risk associated with directors and employees related to illegal or improper conduct during the execution of duties, etc.
  • Risk of accidents, etc., which affect the safety of customers, business partners, or employees
  • Risk of defects in quality, etc., of products and services provided by the Group
  • Risk associated with factors affecting the health and safety of employees,such as long work hours
Supervision on Code of Conduct and ESG Risks

The Board of Directors also monitors the conduct of the Company's business activities as well as environmental, social, and governance (ESG) risk.

Risk Management Committee

To manage business risk, the Risk Management Special Committee formulates risk management policies and plans, identifies and assesses risks, formulates response measures, and issues instructions.

The Risk Management Special Committee implements a PDCA cycle to comprehensively manage administrative risk, and it also precisely engages in preventative risk management while standing at the ready to respond in a crisis. When a compliance violation occurs, the Risk Management Special Committee orders an investigation and response, and monitors the situation.

The Risk Management Special Committee fulfills the following functions for Mitsui Fudosan and its Group companies.

  • Formulating risk management policies and plans
  • Improving risk management-related organizations, and clarifying roles and responsibilities
  • Understanding and assessing risks that require management, formulating response measures, and issuing instruction
  • Understanding and assessing the status of risk management, formulating improvement measures, and issuing instruction
  • Deliberating response measures and issuing instruction in cases of business risk arising from emergency incidents, accidents, etc.

In fiscal 2018, the Risk Management Special Committee met, in principle, on a twice a month basis, to identify and grasp risk issues, and then evaluate and propose preventative and response measures. As necessary, the committee conveyed information to the Mitsui Fudosan Group.

Main Agenda Items of the Risk Management Special Committee
  • Report on condition of risk (incidents, accidents, etc.)
  • Report on legal issues and compliance
  • Plan and report on J-SOX compliance
  • Plan and report on protection of personal information
  • Inspect and report on information systems security

Response to Compliance Violations

When the Compliance Management Department determines that a particular matter involves a compliance problem, it conducts an investigation in collaboration with the relevant Company department. If necessary, appropriate action is taken with respect to the individuals who are out of compliance, as well as those individuals’ departments, after deliberation by the Risk Management Special Committee.

Related Fines, Surcharges, and Arbitrations

There were no major instances of legal non-compliance with our bribery prevention rules in 2018. As such, no fines, surcharges, or arbitration payments were made.

Our Commitment to Auditors

Mitsui Fudosan has established the Compensation Advisory Committee and the Nomination Advisory Committee to enhance transparency of the nomination process for corporate auditors. To ensure appropriate operation of the auditing function, we rotate our auditors in an appropriate way.

The Audit Department periodically conducts audits to review observance with the Code of Conduct and Code of Ethics, and identify any compliance violations.

Complying with the Antimonopoly Act

The Mitsui Fudosan Group closely monitors its purchases from vendors for conformance with its Group Compliance Policies, and makes efforts to strictly comply with the Antimonopoly Act.

Mitsui Fudosan will comply with all relevant laws, such as the Antimonopoly Act, and will avoid any conduct that could result in unfair transactions or unjust competition. We will engage with business connections sincerely as an equal partner and handle the procurement of goods and services based on fair standards.

Responding to Antisocial Forces

The Mitsui Fudosan Group Compliance Policy states, "We shall take an uncompromising stance toward antisocial organizations, and reject any relationship whatsoever," and we ensure that all employees are aware of this policy.

Mitsui Fudosan strictly forbids any kind of connection to organized crime and as a company, takes a firm stance in dealing with such groups. Each division of the Company also investigates and confirms that a transaction partner is not involved in organized crime before the transaction begins. Should the unlikely situation occur that forces the Company to face unwarranted demands or violent behavior from such organizations, it will contact the relevant police department and take any other action necessary, including legal measures.

Information Security Management System

Mitsui Fudosan appoints the chairperson of the Risk Management Special Committee as a general director of information security management. Under the general director’s supervision, a chief administrator, manager, group leader and other leadership are assigned at each organizational level to manage information security risk.

Personal Information Protection Initiatives

To appropriately utilize and manage personal information, in line with the Information Security Management System, the Mitsui Fudosan Group implements and manages its Personal Information Protection Policy in accordance with applicable laws and regulations.

Moreover, we strive to reinforce the system and cultivate awareness through the following efforts.

  • Formulation and application of Guidelines for Personal Information Protection
  • Training through e-learning
  • Formulation of personal information protection plan
  • Thorough management of subcontractors
  • Enhancing personal information protection by Group companies
  • Creating New Value and Markets through Urban Development
  • Corruption Prevention

Tax Transparency

Policy

Based on its Group Compliance Policies, the Mitsui Fudosan Group acts in strict compliance with all applicable international tax laws. Further, it conforms to the guidelines and standards, etc., laid forth by international organizations regarding taxation and conducts fair and highly transparent corporate activities.

Compliance with Tax Laws

The Mitsui Fudosan Group conducts its corporate activities in strict compliance with all applicable tax laws, as well as guidelines from international organizations such as the OECD, the EU, the UN, etc. Furthermore, it pays all prescribed taxes by their designated due dates in accordance with their country of origin.

Minimizing Tax Risks

In the interests of providing the best returns to its shareholders, the Mitsui Fudosan Group aims to obey any changes in international tax regulations and administration appropriately in order to minimize tax risks.

Transfer Pricing

With regard to dealings among its international partners, the Mitsui Fudosan Group will take into consideration the arm’s length price and appropriately distribute earnings based on the degree to which each party contributed, as well as on analysis of the functions, assets, and risks of the relevant subsidiary and country.

Eliminating Double Taxation

In order to avoid tax on the same economic gains being applied across numerous countries, the Mitsui Fudosan Group will adhere to the tax treaties of those countries in which it is conducting its business.

Securing Transparency

The Mitsui Fudosan Group will disclose its policies regarding taxes, and take care to provide easy-to-understand explanations and maintain a high level of transparency for each respective country’s taxation authorities.

Relationships with Taxation Authorities

The Mitsui Fudosan Group will obey each respective country’s tax administration and tax collection procedures. Further, it will maintain healthy and normal relations with relevant taxation authorities, and will not offer any inappropriate benefits or provisions.

Organizational Structure

The Mitsui Fudosan Group will not utilize tax havens for the purpose of tax avoidance, nor will it adopt an organizational structure that is not in line with its business goals or actual conditions in order to avoid taxes.

Tax Payments by Country

The Mitsui Fudosan Group’s tax payments in Japan, the US, the UK, and other regions for FY2018 are as follows.

Tax Payments by Country

Country Amount
(million yen)
Japan 41,113
US 2,426
UK 1,490
Other 2,361
Total 47,390