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Article 1 Purpose

These Conflict of Interest Control Regulations (these “Regulations”) stipulate the organization system and other basic matters for conflict of interest control in order to prevent Nikko Asset Management Co., Ltd. (the “Company”) from unduly prejudicing the interests of customers in the conduct of its financial instruments business in accordance with the Nikko Asset Management Group Conflict of Interest Control Regulations.

Article 2 Definitions

“Transactions and other such conduct with possible conflicts of interests” in these Regulations shall be defined as transactions or conduct engaged in by the Company in which the interests of customers of the Company in the conduct of its financial instruments business could be unduly prejudiced, such as transactions involving business contracts between the Company and any of the companies stipulated in Appendix 1 (hereinafter “Group Companies”) or securities issued by Group Companies, and shall include the following cases.

  1. Cases where the interests of customers are in conflict with those of Group Companies or other customers
  2. Cases where customers are in competition with Group Companies or other customers
  3. Cases where Group Companies use information they have obtained through their relationships with customers to further the interests of Group Companies or other customers

2. “Customers” in these Regulations shall be defined as listed below.

  1. The beneficiaries of investment trusts managed by the Company
  2. The clients of discretionary investment management agreements
  3. The clients of investment advisory agreements

Article 3 Scope of Application

These Regulations shall apply to the Company’s type II financial instruments business, investment management business and investment advisory and agency business.

Article 4 Types of Transactions and Other Such Conduct with Possible Conflicts of Interests

For a transaction or other such conduct to be deemed to have possible conflicts of interests, it must be identified as a transaction or type of conduct (a “Controlled Transaction”) that risks unduly prejudicing the interests of customers in light of the below transaction types, and necessary measures must be taken, including restricting or monitoring the transaction, to ensure that customers’ interests are not unduly prejudiced.

  1. Typical conflicts of interests
    Transactions or conduct that have possible conflicts of interests and are deemed by laws and regulations as applicable to separate rules of conduct, prohibited activities or damage prevention measures.
  2. Offering of products created within group
    Sale or recommendation by Group Companies of products or services provided by other Group Companies or products or services developed using assets of other Group Companies
  3. Exercising of influence
    Investment management, engagement or exercising of voting rights by investment management departments in Group Companies that handle the assets of customers in regard to the stocks of companies that have business relationships with the institutional sales departments of said Group Companies or other Group Companies.
  4. Other
    Other transactions similar to those set forth in any of the preceding paragraphs that need to be subject to control.

The Company shall, regarding Group Companies, follow the instructions of, and make the relevant changes upon receiving communication from, the Compliance Department of Sumitomo Mitsui Trust Holdings, Inc. (the “Compliance Department of the Holding Company”), and notify the persons concerned of the changes thereof.

Article 5 Transaction Forms

The following transactions and other such conduct are thought to be at risk of causing conflicts of interests.

  1. Inclusion of securities (equities, bonds, fund securities) or short-term financial products (CDs, CP) issued or launched by Group Companies among assets in funds, discretionary investment agreements or investment advisory agreements
  2. Transactions involving call loans, deposits or borrowing in which Group Companies are counterparties regarding assets in funds or discretionary investment agreements
  3. Transactions between managed assets whose transaction conditions risk harming the interests of beneficiaries
  4. Block ordering or distribution of IPO results between assets in multiple funds or investment advisory agreements
  5. Management of equities, bonds or foreign exchange brokered by Group Companies in assets in funds or investment advisory agreements
  6. Management of equities, bonds or foreign exchange brokered by distributors in funds
  7. Transactions that are not based on best practice in assets in funds or investment advisory agreements
  8. Launches of funds that do not constitute reasonable compensation frameworks
  9. Early trading of own assets using information on trading of assets under management in order to further own interests
  10. Excess provision or receipt of gift or entertainment to extent likely to create conflicts of interest
  11. Involvement of Group Company as related party for fund (as trustee, custody bank, investment advisor or distributor)
  12. Engagement or exercising of voting rights in response to requests from Group Companies or companies with which have business relationship in order to further interests of said companies in funds or investment advisory agreements

Article 6 Method of Conflict of Interest Control

Controlled Transactions are controlled in accordance with the characteristics of the relevant transaction or the level of conflict of interest by selecting or combining any of the following methods.

  1. Segregation of divisions (information blocking)
  2. Change of transaction conditions or methods
  3. Transaction termination
  4. Information disclosure to customer (also acquisition of consent from customer in some cases)
  5. Ensuring of fair transaction conditions
  6. Control by monitoring people who share certain information
  7. Other measures

2.When segregating divisions (information blocking), the organizations to be segregated from each other shall be expressly defined in the relevant rules and other necessary measures shall be taken, such as restriction of access to, and physical seclusion of, a computer system. The segregated division and other divisions shall not exchange information with each other in a manner that is improper in light of the purpose of segregation.

3.When changing transaction conditions or methods or taking steps to terminate transactions, the authority and responsibility for making such decisions, including the involvement of officers of the parent financial institution or subsidiary in the decision to make the change or termination, must be made clear.

4.In disclosing information to a customer, the details of anticipated conflicts of interest and reasons for selecting such methods (including reasons for not selecting other methods) must be fully explained to customers in accordance with their attributes before the relevant contract is signed. However, an obligation of confidentiality owed to other customers shall be observed.

5.When controlling people who share certain information through monitoring methods, the Business & Regulatory Compliance Department must appropriately monitor the transactions of those persons.

6.The Business & Regulatory Compliance Department may provide instructions for the handling of the relevant Controlled Transaction and the items provided for above, and the related divisions shall follow such instructions.

Article 7 Conflict of Interest Control Process

The process of conflict of interest control shall be as follows.

  1. Identify Controlled Transactions based on the types described in Article 4 and the forms described in Article 5 with respect to transactions with possible conflicts of interests that occur in the operations or transactions involved with Group Companies.
  2. The process for identifying Controlled Transactions shall be as set forth in the regulations, etc. regarding specific operations.
  3. When Controlled Transactions are identified, the method of conflict of interest control as well as the processes for selecting the method for determining the framework of conflict of interest control shall be as set forth in the regulations, etc. regarding specific operations.
  4. When Controlled Transactions are entered into, efforts shall be made to prevent harmful effects from conflicts of interests with the use of a conflict of interest control method decided in advance.
  5. If it is envisaged that a new transaction or other such conduct with possible conflicts of interest is to be engaged in, the transaction or other such conduct shall be identified in advance as a Controlled Transaction, a conflict of interest control method shall be stipulated before the transaction, and efforts shall be made to prevent harmful effects from conflicts of interests.

2. Relevant departments are allowed of their own accord to ask for instructions from the Business & Regulatory Compliance Department or enquire of the department concerning an instruction, according to circumstances, in addition to complying with instructions from the Business & Regulatory Compliance Department.

3. In order to facilitate conflict of interest control, the conflict of interest control methods to be selected in advance for envisaged Controlled Transactions are summarized in Appendix 2. Appendix 2 shall be reviewed when appropriate and efforts shall be made to ensure that its contents are suitable. It must also be noted that transactions that are not mentioned in Appendix 2 may also need to be controlled as transactions with possible conflicts of interests.

Article 8 Role of the Business & Regulatory Compliance Department

The Business & Regulatory Compliance Department shall devise and promote the conflict of interest control system of the Company, ensure that related regulations and other rules are maintained, and conduct training and other education activities.

2. The Head of the Business & Regulatory Compliance Department shall be the supervisor in charge of conflict of interest control of the Company. In addition, the Head of the Business & Regulatory Compliance Department shall report to the Compliance Department of the Holding Company on a regular basis.

3. The Business & Regulatory Compliance Department shall ensure, pursuant to the request of relevant departments, that internal regulations, business operational manuals and other rules, and other necessary matters are maintained in order to manage legal compliance and customer protection.

4. The Business & Regulatory Compliance Department may provide advice on individual Controlled Transactions from the viewpoint of legal compliance and customer protection, through devising internal regulations or implementing transaction restrictions in the trade management computer system or other relevant systems as set forth above. If such advice is given, the persons or authorized decision-makers engaged in the relevant transaction shall make decisions and take actions in compliance with such advice.

5. When a report on the status of conflict of interest control is received from the relevant departments, the Business & Regulatory Compliance Department shall investigate or verify conflict of interest issues without delay.

6. The Business & Regulatory Compliance Department shall report on the status of conflicts of interest to the Compliance Oversight Committee (GEC Committee) and the Compliance Department of the Holding Company on a regular basis.

7. The Business & Regulatory Compliance Department shall, when required, assess whether there is any need to alter the processes to identify conflicts of interest and the methods for conflict of interest control, etc. based on the results of verifications and any other information collected.

8. In the event that a recommendation is issued by the Compliance Department of the Holding Company concerning a specific Controlled Transaction, etc., the Business & Regulatory Compliance Department shall investigate or verify the matter as required. In executing its investigation and verification duties, the Business & Regulatory Compliance Department shall be required to make a judgment and take action paying due regard to the recommendation from the Compliance Department of the Holding Company.

Article 9 Role of Relevant Departments Effecting Transactions and Contracts

Relevant departments shall seek to avoid any occurrence of an inappropriate event that unfairly compromises customer interests. When a process for conflict of interest control is stipulated in the internal rules or business operation manuals, etc. (hereinafter referred to as the “Guidelines for Administrative Handling,” etc.), relevant departments shall control conflicts of interest pursuant to the process concerned.

2. When it is unclear whether conflict of interest control is required or when a method for conflict of interest control is unclear, reference shall be made to the Business & Regulatory Compliance Department.

3. The heads of relevant departments shall be the individuals responsible for conflict of interest control. The individuals responsible for conflict of interest control play the role of establishing an appropriate structure, collecting information, and raising employee/director awareness within specific departments by cooperating with the Business & Regulatory Compliance Department.

Article 10 Maintenance of Records

The relevant departments shall appropriately prepare records concerning conflict of interest control, and shall retain them for a period of five years from the date of preparation. However, if there are stipulations on retaining records for more than five years, those stipulations shall be complied with.

Article 11 Formulating and Announcing Conflict of Interest Management Policy

A separate policy on the management of conflicts of interest shall be established, and the policy shall stipulate types of transactions and other such conduct with possible conflicts of interest, primary forms of transactions and identification processes, conflict of interest control methods, systems for managing conflicts of interest (responsibilities and independence of supervisor in charge of conflict of interest control as well as system for identifying transactions and other such conduct with possible conflicts of interest and verifying methods of control), as well as the scope of companies subject to conflict of interest control.

2. The Company shall publicly release a summary of its policy on managing conflicts of interest on its website.

Article 12 Reporting to the Compliance Oversight Committee, etc.

The Business & Regulatory Compliance Department shall periodically report to the Compliance Oversight Committee (GEC Committee) on the information collected and other matters related to conflict of interest control.

Article 13 Department In Charge of These Regulations

The Business & Regulatory Compliance Department shall be in charge of these Regulations.

Article 14 Authority for Establishment, Amendment and Abolishment

The establishment, amendment or abolishment of these regulations shall be based on the approval of the Compliance Oversight Committee (GEC Committee). However, amendments to Appendix 1, minor wording amendments and changes in department name / title in line with organizational changes shall be based on the approval of the Head of the Business & Regulatory Compliance Department.

SUPPLEMENTARY PROVISIONS

(Established)
April 26, 2017
(Revised and Enforced)
July 26, 2018
October 25, 2018 (Enforced on November 1, 2018）
November 16, 2018

Appendix : Targeted Group Companies

• Sumitomo Mitsui Trust Holdings, Inc.
• Sumitomo Mitsui Trust Bank, Limited.
• Sumitomo Mitsui Trust Research Institute Co., Ltd.
• Sumitomo Mitsui Trust Asset Management Co., Ltd.
• Japan Trustee Services Bank, Ltd.
• SBI Sumishin Net Bank, Ltd.
• Sumitomo Mitsui Trust Card Co., Ltd.
• Sumitomo Mitsui Trust Loan & Finance Co., Ltd.
• Sumitomo Mitsui Trust Panasonic Finance Co., Ltd.
• Sumitomo Mitsui Trust Leasing (SINGAPORE) Pte, Ltd.
• Sumitomo Mitsui Trust Investment Co., Ltd.
• Sumitomo Mitsui Trust (Hong Kong) Limited
• Zijin Trust Co. Ltd.
• Tokyo Securities Transfer Agent Co., Ltd.
• Japan Securities Agents, Ltd.
• Sumitomo Mitsui Trust Realty Co., Ltd.
• Sumitomo Mitsui Trust Real Estate Investment Management Co., Ltd.
• Mitsui & Co., Logistics Partners Ltd.
• Nikko Asset Management Co., Ltd.
• Nikko Asset Management Americas, Inc.
• Nikko Asset Management Asia Limited
• Nikko Asset Management Australia Limited
• Nikko Asset Management Europe Ltd.
• Nikko AM Limited
• Nikko Asset Management International Limited
• Asian Islamic Investment Management Sdn. Bhd.
• Nikko Asset Management New Zealand Limited
• Nikko Asset Management Hong Kong Limited
• Nikko AM Equities Australia Pty Limited
• Affin Hwang Asset Management Berhad
• Rongtong Fund Management Co., Ltd.
• Shen Zhen Rongtong Capital Management Co., Ltd.
• Sumitomo Mitsui Trust International Limited
• Sumitomo Mitsui Trust Bank (Luxembourg) S.A.
• Sumitomo Mitsui Trust Bank (U.S.A) Limited
• Sumitomo Mitsui Trust (UK) Limited
• OIF (PANAMA) S.A.
• STB Finance Cayman Ltd.
• Fresco Asset Funding Corporation
• Crecer Asset Funding Corporation
• Vector Asset Funding Corporation
• Nexus Asset Funding Corporation
• Rongtong Global Investment Limited
• Affin Capital Services Berhad
• Sky Ocean Asset Management Co., Ltd.
• Sea Bridge Finance Limited
• Trust Capital Mezzanine 2015 Investment Partnership
• Trust Capital Mezzanine 2016 Investment Partnership
• Trust Capital Private Equity Partners Investment Partnership VIII
• Sumitomo Mitsui Trust Bank (Thai) Public Company Limited
• SBI Card Co., Ltd.
• JP Asset Management Co., Ltd.
• FA Leasing Co., Ltd.
• Sumitomo Mitsui Trust Club Co., Ltd
• Enex Asset Management Co., Ltd.
• Cardif Assurances Risques Divers Japan
• Cardif Assurance Vie Japan
• Nippon Institutional Securities Co., Ltd.
• Trust & Custody Services Bank, Ltd.

(As of October 1, 2018)