1. Home
  2. ESG Initiatives
  3. Governance

Governance

Corporate Governance

In addition to the general unitholders meeting, the Investment Corporation’s governance structure is composed of 1 executive officer, 2 supervisory officers, a Board of Directors (comprised of the executive officers and supervisory officers), and an auditor. Pursuant to the provisions of the Investment Trust Act, supervisory officers (who are appointed during the general unitholders meeting) are officers who have no conflicts of interest with the Sponsor and the Sponsor’s related parties.

Appointment of Corporate Officers and Supervisory Officers

Executive officers and supervisory officers were appointed during the third general unitholders meeting of the Investment Corporation held on November 22, 2019, effective as of December 1, 2019. The term of office is 2 years for both executive officers and supervisory officers according to the rules of the Investment Corporation.

Title Name Reason for Appointment Attendance at Board of Directors Meetings (2020)
Executive Officer Toshimitsu Fujiwara In addition to practical experience and insight into the overall core business of the real estate investment management business, such as real estate asset management, operations, and finance, he also has experience as a corporate officer of the company. Accordingly, the company has determined that he possesses sufficient knowledge and experience to fulfill his duties and has elected him as an executive officer. 100%
(13 times/13 times)
Supervisory Officer Kentaro Shibata As an attorney, he is familiar with corporate legal affairs and various other related laws and regulations. As a supervisory officer of the Investment Corporation, he was determined to have sufficient knowledge and experience to supervise the execution of duties by executive officers and to perform duties as a member of the Board of Directors of the Investment Corporation, and therefore he was appointed as a supervisory officer. 100%
(13 times/13 times)
Supervisory Officer Koji Nishiuchi In addition to being familiar with accounting and tax affairs as a certified public accountant, he has experience with real estate transactions. As a supervisory officer of the Investment Corporation, he was determined to have sufficient knowledge and experience in supervising the execution of duties by executive officers and performing duties as a member of the Board of Directors of the Investment Corporation, and thus was appointed as a supervisory officer. 100%
(13 times/13 times)

Remuneration for Directors and Corporate Auditors

Under the rules of the Investment Corporation, the maximum monthly amount of executive officer compensation is 800,000 yen per person, and the maximum monthly amount of supervisory officer compensation is also 800,000 yen per person. The amount of such compensation is determined by the Board of Directors.

Title Name Total amount of remuneration for each position in the 10th fiscal period (Thousands of yen)
Executive Officers Toshimitsu Fujiwara --*1
Supervisory Officers Kentaro Shibata 1,800
Supervisory Officers Koji Nishiuchi 1,800
*1: Toshimitsu Fujiwara, an Executive Officer, also serves as the President and CEO of LRA and has not received any compensation from the Investment Corporation.

Periodic Replacement of Auditors

This Investment Company has selected PricewaterhouseCoopers Aarata LLC (“PwC”) as its auditor.
To maintain the independence of audits, PwC has established and monitors the following policy regarding the rotation of executive employees.

・The main executive partner may not be involved in the audit services of the Investment Corporation for more than 5 consecutive fiscal periods. Before the re-engagement of the main executive partners, there shall be an interval of 5 accounting periods or at least 2 years.

・Besides the main executive partner, other executive partners may not be involved in the audit services of the Investment Corporation for more than 7 consecutive fiscal periods. Before the re-engagement of those executive partners, there shall be an interval of 2 accounting periods or at least 2 years.

Management entrusted to the asset management company

The Investment Corporation has entrusted the management of assets to LaSalle REIT Advisors K.K., (“LRA” or the “Asset Management Company), in accordance with the provisions of the Investment Trust Act. The asset manager manages the assets of the Investment Corporation in accordance with the Asset Management Agreement executed with the Investment Corporation.

Please refer to this for the organizational structure of the Asset Manager.

Structure of asset management fees

The management fees paid by the Investment Corporation to the Asset Management Company are determined in accordance with the following calculation methods set forth in the terms of the Investment Corporation. By adopting a compensation system that is linked to the Investment Corporation's earnings per unit and the NAV per unit, we believe that the level of alignment with unitholder earnings will contribute to further enhancement of unitholder value.

Asset Management FeeⅠ (Operating revenues – property leasing fees – other related operating expenses + depreciation and amortization + loss on disposal of fixed assets) x 10% (Maximum Rate)
Asset Management FeeⅡ Income before income taxes × Adjusted EPU × 0.002% (maximum rate)
Asset Management FeeⅢ Adjusted NAV × NAV per unit for the immediately preceding period × 0.6% (maximum rate)
Asset Management FeeⅣ Real estate purchase/sale price or loan origination amount × 1.0% (maximum rate)
Asset Management FeeⅤ Value of the real estate-related loans and value of assets held by a counterparty in the case of a consolidation-type merger or an absorption-type merger × 1.0% (maximum rate)

Investment Unit Ownership Program

In October 2018, LRA introduced a directors’ and employees’ Investment Unit Ownership Association Program, where all directors and employees of LRA and LRA’s sponsor, LaSalle Investment Management K.K., were allowed to invest in LLR units. The goal of this investment program had an aim toward contributing to the enhancement of unitholder value over the medium-to-long term by promoting an alignment of economic interests between the unitholders of the Investment Corporation, the officers and employees of LRA, and the sponsor.

Compliance

Taking full account of its social responsibilities and public mission, the Asset Management Company's basic compliance policy is to establish the trust of society through its sound business operations.

Compliance System

The Board of Directors of the Asset Management Company will strive to ensure thorough compliance with laws and regulations, internal regulations, and the Code of Business Ethics. The Board of Directors receives reports on matters approved by the Compliance Committee and makes resolutions on important compliance-related matters.

The Compliance Committee has been established to deliberate and make decisions on the following compliance-related matters.
・Establishment, revision, and abolishment of compliance rules
・Formulation of compliance policies, compliance manuals, and compliance programs
・In terms of compliance, improving measures for acts that are inappropriate and for which there is doubt that they are inappropriate
・Certain stakeholder transactions
The Compliance Committee is composed of the Compliance Officer, an external member (a lawyer who has no conflict of interest with the Asset Manager), and the President and CEO.

Mechanism of Internal Control in Related Party Transactions

Decisions on related party transactions are subject to the approval of the Asset Manager's Compliance Committee and external board members of the Investment Committee. Furthermore, in certain cases, the Investment Corporation’s Board of Directors approves the matters in accordance with the provisions of the Investment Trust Act.

利害関係者取引における本資産運用会社の意思決定フロー

Prohibition of Corrupt Practices Including Bribery

The Asset Manager prohibits all corrupt practices in all its business activities, including bribery, misappropriation, unauthorized bidding, and kickbacks. As a framework to effectively prevent such corruption, we not only observe domestic laws and international practices, but also provide clear guidelines in our Code of Business Ethics and Compliance Manual. We strive to ensure that all officers and employees are thoroughly informed through compliance trainings. In 2020, penalties related to corruption were 0 yen, and no staff were disciplined or dismissed for violation of anti-corruption policies.

・We do not illegally pay money, donate money, or offer other economic benefits to Japanese and foreign public officials and officials of the like.

・We do not give gifts or entertainment to public officials in Japan or abroad or officials of the like in violation of laws and regulations.

・We do not give gifts, entertainment, or other economic benefits beyond the bounds of socially accepted ideas to the directors and employees of business partners, etc. In principle, no cash or gift certificates, etc. will be delivered or received.

・We do not demand private interests such as gifts and bribes from business partners, etc., and we refrain from sending or receiving gifts or bribes by utilizing the position and authority of the company.
All gifts, entertainment, and gifts and entertainment in excess of a certain amount to public officials and persons equivalent thereto must be approved in advance. The history of gifts and entertainment is managed in records by the Compliance Officer and is also subject to internal audits.

For more information about the Anti-Corruption Compliance Program, see here.

Political contributions

The Asset Manager may grant political contributions only when there are justifiable business reasons after approval and legal review in accordance with the Company Rules. In 2020, spending on political contributions was 0 yen.

Internal Whistleblower System

The Asset Manager requires officers and employees to promptly report any violations and potential violations of the Code of Business Ethics. This includes all conduct that is contrary to corporate ethics, including discrimination/violations of human rights, such as unjust working conditions, lack of safety/health in the workplace, corruption, and bribery.

As a whistleblower, the channels in the bullet points below are open to all officers and employees of business partners, etc. Reports can also be made anonymously. In addition, there is a promise to keep the confidentiality of the reporter’s content to the extent possible. The Asset Manager strictly prohibits retaliation and unfavorable treatment of officers and employees who report in good faith any violation or possible violation.

・Direct contact with the Compliance Officer
・Ethics help line operated by an external organization
・Online reports from the intranet to external organizations

In addition, the Complaint Handling and Dispute Resolution Department was established within the Asset Management Company. In accordance with the Complaint Handling Regulations, complaints/disputes from external stakeholders such as investors will be appropriately handled. Please refer to the Asset Manager's website for the contact information.

Compliance training

The Asset Manager regularly conducts compliance training for all officers and employees to raise awareness of compliance.

Compliance Training in the Fiscal Year 2020

Revision of the Civil Code and Real Estate Transactions Feb. 2020
Confirmation of Compliance with the Code of Business Ethics Jul. 2020
Information Security Jul. 2020
Corporate Ethics (including anti-corruption such as bribery) Dec. 2020
Money Laundering Prevention Dec. 2020

Risk Management

As an asset management expert, the Asset Management Company is responsible for accurately identifying and managing various risks (investment risks in particular) and for the best approach to those risks. The asset manager is also aware that inappropriate risk management will result in the impairment of assets under management and damage to the interests of its shareholders. Considering the nature of the asset manager’s operations, the asset manager will appropriately manage and control risks as one of its most important management topics of focus.

Based on the Asset Manager’s “Risk Management Rules”, main risks to be managed are classified as follows.
・Investment risks
・Financial risks
・Operational risks
・System and information security risks
・Legal and compliance risks
・Other risks (reputational risks, etc.)
ESG risk is managed within the framework of the risk categories described above, including acts of corruption, climate change, and bribery, etc.

Risk Management Framework

At the Asset Management Company, the Board of Directors are responsible for the development and supervision of the risk management system (including ESG risk) as one of the most important management topics of focus. In addition, the Board of Directors shall act as a compliance officer and shall be entrusted with the role as the Risk Management Supervisor, who is responsible for overseeing the overall management of risks. The Risk Management Supervisor must conduct effective risk management in accordance with the risk management process stipulated in the “Risk Management Manual”. The Board of Directors decides on the annual risk management plan to be submitted by the Risk Management Supervisor and receives quarterly reports on the status of such initiatives.

Process of risk management

In the event any violation of laws and regulations and/or the Articles of Incorporation (hereinafter referred to as "Incident") is discovered at the Asset Management Company, the person in charge of the department where the Incident occurred shall promptly report to the CEO and the Compliance Officer in accordance with the compliance rules set forth in the “Risk Management Manual”, and the Compliance Officer shall investigate such Incident. The person in charge of the department where the incident occurred shall respond to and be responsible to resolve the Incident, formulate preventive measures, and report it to the CEO and the Compliance Officer. Significant matters are also reported to the Board of Directors. There were no major incidents in 2020.