FGI - FinTech Global Incorporated

Conflict of Interest Management Policy

1. Purpose

With the diversification of services provided by financial groups and the development of financial institutions into global financial conglomerates, the potential increases for competing or conflicting interests to occur within a financial institution or financial group, which raises the probability for conflicts of interest. Given this trend, FGI Group Companies are required to manage transactions that may cause conflicts of interest so as to prevent the interests of clients from being unfairly impaired, and thus established the Conflict of Interest Management Policy (the “Policy”), which is necessary for creating a conflict of interest management system under applicable laws and regulations.

2. Definitions

Terms used in the Policy are defined below.

  1. (1)“FGI Group Companies” covers FinTech Global Incorporated, FinTech Asset Management Incorporated and FGI Capital Partners, Inc.
  2. (2)“Client” means, in regard to the financial instruments–related business and real estate investment and advisory–related business conducted by FGI Group Companies, 1) any party that has already established a business relationship, or 2) any party that may establish a business relationship. Note that “client” includes any party, except FGI Group Companies, that maintains business with the subsidiaries and affiliates of FGI Group Companies for domestic services, and any party that may enter into a business relationship with subsidiaries and affiliates of FGI Group Companies.
  3. (3)“Real estate investment and advisory–related business” means business under Article 2 (Definition) of the Regulations for Registration of Real Estate Investment Advisory Businesses (Notice No. 1828, issued in 2000 by the old Ministry of Construction, now, Ministry of Land, Infrastructure, Transport and Tourism). Specifically, this refers to 1) real estate transactions, property rental and management; 2) real estate investment advice; 3) consultations primarily dealing with investment in real estate and real estate trust beneficiary rights; and 4) business incidental to these services.
  4. (4)“Financial instruments–related business” means 1) any financial instruments business, and 2) any business incidental to financial instruments business, as set forth in Article 35, Paragraph 1 of the Financial Instruments and Exchange Law.
  5. (5)“Transaction with the potential for conflict of interest” means any transaction conducted by FGI Group Companies that could lead to a conflict of interest.
  6. (6)“Transaction involving conflict of interest” means a target transaction that falls under the definition of a conflict of interest transaction.

3. Types of Conflict of Interest Transactions

A conflict of interest could occur between 1) FGI Group Companies and clients or 2) between the clients of FGI Group Companies.

Listed below are certain types of situations where a transaction or business activity could conceivably lead to a conflict of interest. They are for reference purposes only, to be used in conjunction with examples of typical transactions. These criteria serve only to identify the presence of possible conflict of interest transactions and such applicability will not necessarily define a transaction as one that unfairly impairs client interests. The types of conflict of interest transactions shown below are to be used as yardsticks for determining whether a transaction is at risk of causing a conflict of interest. The list is not exhaustive, and it may be expanded or revised in the future as required.

  1. (1)Any transaction in which there is a conflict of interest between a client and an FGI Group Company
  2. (2)Any transaction that gives rise to a conflict of interest between a client and another client of an FGI Group Company
  3. (3)Any transaction in which an FGI Group Company competes with an FGI Group Company client for an identical target
  4. (4)Any transaction in which clients of FGI Group Companies compete with each other for an identical target
  5. (5)Any transaction in which any FGI Group Company, any officers and employees of an FGI Group Company or another client of an FGI Group Company benefits from information that an FGI Group Company obtains through its relationship with the client

In determining if a transaction constitutes a conflict of interest, the FGI Group Company involved in the transaction will consider legal compliance and the impact of confirmed conflict of interest on its reputation. Furthermore, the Policy applies only to conflict of interest transactions, and any actions prohibited under the Financial Instruments and Exchange Law, the Real Estate Business Law or any other laws or regulations are addressed under separate provisions, and therefore excluded from the Policy.

4. Scope of Companies Subject to the Policy Rules

All FGI Group Companies are subject to the provisions of the Policy.

5. Methods of Managing Conflict of Interest Transactions

If a transaction involving conflict of interest occurs, or if a transaction with the potential for conflict of interest is identified, FGI Group Companies will properly establish safeguards for the client(s) concerned by selecting one, or a combination of, the following methods. (The methods described below are merely examples, and other measures may be adopted, in response to the specific content of the conflict of interest transaction.)

  1. (1)Create an information barrier by such means as separating the division executing a transaction involving conflict of interest or a transaction with the potential for conflict of interest (collectively, “Target Transaction”) from the division dealing with the client connected with such a transaction. (This includes approaches to establish information barriers between FGI Group Companies.)
  2. (2)Change the conditions or methods of either the Target Transaction or the transaction with the client concerned.
  3. (3)Discontinue the Target Transaction or the transaction with the client concerned.
  4. (4)Properly disclose to a client that the interests of the client could be unfairly impaired in connection with a Target Transaction (but only if disclosure to the client does not violate the obligation of confidentiality placed upon FGI Group Companies).
  5. (5)Manage by monitoring those who share information or those who are likely to share information.
  6. (6)Other methods

6. Conflict of Interest Management System

The Business Management Department will be the conflict of interest management control unit that coordinates the overall management system for identification and management of conflict of interest transactions. This unit is independent from sales divisions. The Compliance & Legal Affairs Officer oversees management of conflict of interest transactions.

Established September 22, 2011
Revised April 27, 2012

Typical Methods of Managing Conflict of Interest Transactions

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