Basic Policies Concerning Compliance(1) Hankyu REIT, Inc. (hereafter “Hankyu REIT”) (2) Hankyu REIT Asset Management, Inc. (hereafter “Asset Management Company”) Additionally, as the organization responsible for compliance issues concerning asset management, it has established a Compliance Committee for the purpose of determining the propriety of transactions involving conflicts of interest in accordance with applicable rules and regulations. The Compliance Committee adopts invited experts, and at present, the members of the invited experts comprise one attorney and one certified public accountant who are not considered interested parties of Asset Management Company or the sponsor company. These two experts and the Compliance Officers attend the Compliance Committee meetings, and on the condition that no less than three-fourths of all the committee members including the committee chair are present, deliberation and decisions concerning conflict of interest issues are made with approval of all attendees. Furthermore, in addition to Auditors, with the endorsement of the committee chair and the approval of the committee, an observer may be present at the committee meetings and offer opinions (the observer is not permitted to participate in resolution). Issues that have been resolved at the Compliance Committee meetings – and the process by which the resolutions were achieved – must be reported to the Board of Directors meetings of the Asset Management Company and the Executive meetings of Hankyu REIT. The Investment Management Committee exists as the organization responsible for deliberation and decisions concerning asset management and operational evaluation, and the participation of a member of the Compliance Department appointed by a Compliance Officer or Compliance Committee in the Investment Management Committee is required (the member must be the assistant to the General Manager of the Compliance Department), and this person is responsible for confirming that there are no compliance issues concerning matters for resolution or the resolution process. Additionally, the contents of a request for a decision concerning execution of duties, which serves as a letter of intent, are closely inspected by the Compliance Department prior to a final determination. Establishment of a structure for the elimination of anti-social forcesThe Asset Management Company has formulated a compliance manual to serve as the basic policies to which all executives and employees are required to adhere, and ensuring practice in accordance with the compliance manual is one of the key responsibilities of the Asset Management Company. Within the Compliance Manual, the code of behavior is the Asset Management Company's stance concerning the elimination of anti-social forces: “Resolute confrontation of anti-social forces and associations”. Moreover, a manual for countermeasures against unreasonable demands by anti-social forces has been created. Additionally, the Asset Management Company has selected a person to be responsible for the prevention of unreasonable demands in accordance with the Act on Prevention of Unjust Acts by Organized Crime Group Members, and has registered with the public safety commission in order to acquire the necessary knowledge and skill to handle unreasonable demands by crime syndicates. Furthermore, selecting new tenants, we are endeavoring to eliminate anti-social forces by checking for relationships with anti-social forces in accordance with established standards. Procedures for the “Reporting system of suspicious transactions” are formulated as part of Operational Guidelines and, in accordance with the Act on Prevention of Transfer of Criminal Proceeds, we routinely undertake the following activities:
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