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1. PURPOSE
In connection with the diversification of services
provided by financial institutions and the development
of global financial conglomeratization, multiple interests
compete or conflict with each other within a financial
institution or financial group increasing the possibility
of conflicts of interests.
Under such circumtances, Metropolitan Bank and Trust Company,
Tokyo Branch and Osaka Sub-Branch (the "Branch") are required
manage the transactions that may cause conflicts of interests
so as to prevent the interests of our customers from being
unjustly impaired.
The Branch, foreign bank under the Banking Act has established
the Conflict of Interest Management Policy (the "Policy"),
which is required in the creation of the conflict of interest
management system under applicable laws and regulations.
2. TYPES OF TRANSACTIONS THAT MAY CAUSE CONFLICTS
OF INTERESTS; PROCESS OF IDENTIFICATION, Etc.
2.1 Covered Transactions
"Transactions that may cause conflicts of interests," which
are covered by this Policy, means such transactions conducted
by the Branch, Bank Agency whose principal bank is the Branch
or any of its Parent Financial Institutions, Etc. (as defined
in 3 below) or Subsidiary Financial Institutions, Etc. (as
defined in 3 below) that may unjustly impair the interests of
our Customers (the "Covered Transactions").
Conflicts of interests may occur
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between the Branch, Bank Agency whose principal bank
is the Branch and/or any of its Parent Financial
Institutions, Etc. or Subsidiary Financial Institutions,
Etc., and their Customers, or
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between the Customers of the Branch, Bank Agency
whose principal bank is the Branch and/or any of its
Parent Financial Institutions, Etc. or Subsidiary
Financial Institutions, Etc., and other Customers.
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"Customer" means, in relation to the "Banking Related
Business" conducted by the Branch, Bank Agency whose
principal bank is the Branch or any of its Subsidiary
Financial Institutions, Etc.,
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any customer who has already established business
relations, or
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any customer who may establish business relations.
However, we exclude a transaction which has no relation
with our domestic business.
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"Banking Related Business" means "businesses can be conducted
by a bank" and includes core business of a bank (Banking
Act Article 10 Clause 1), ancillary business (Article 10
Clause 2), Financial Instruments and Exchange Business
(Article 11) and other business under provisions of other
laws (Article 12).
2.2 Types of Transactions That May Cause Conflicts of
Interests; Criteria
The following transactions may be considered as types of
"transactions that may cause conflicts of interests."
However, as these types are only criteria to determine
whether there is any "transaction that may cause any
conflict of interests," please note that the satisfaction
of any such criteria does not necessarily mean the occurrence
of a "transaction that may cause a conflict of interests."
Also, please note that some additions or modifications may
be made in the future if necessary.
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If any Customer reasonably expects that
his/her own interests will be prioritized through our
counselling or advice (Duty-of-Loyalty Type);
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If the Branch or any of its Affiliates
may obtain any economic profit or avoid any economic loss
knowing it may impair interest of Customer (Duty-of-Loyalty
Type);
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If the Branch or any of its Affiliates
obtains or will obtain any incentive in the form of money,
goods or services other than the usual commission fees or
expenses in connection with the transactions with any person
other than their Customers (Duty-of-Loyalty Type);
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If the Branch or any of its Affiliates
conducts any transaction with any Customer who should be
protected by the Branch or such Affiliate (Self-Agency Type);
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If the Branch or any of its Affiliates
conducts any transaction under which the Branch or such
Affiliate takes the side of the counterparty of any
Customer who should be protected by the Branch or such
Affiliate (Two-Side Agency Type);
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If the Branch or any of its Affiliates
conducts any transaction with the counterparty of any
Customer who should be protected by the Branch or such
Affiliate, which counterparty competes with such Customer
(Competitive Transaction Type);
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If the Branch or any of its Affiliates
conducts any transaction through the use of non-public
information on any Customer who should be protected by
the Branch or such Affiliate, which transaction results
in any benefit to the Branch or any such Affiliates
(Information Use Type); or
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If the conditions for similar transactions
may not be expected due to the involvement of Branch or
any of its Affiliates in the same transaction on multiple
sides (Transaction-Internalization Type).
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With regards to the acts prohibited under the Banking Act,
or any other laws or regulations that constitute
"transactions that may cause conflicts of interests",
the Branch will "identify" such transactions in accordance
with this Policy, but the "management" of such transactions
will be conducted in accordance with the existing compliance
system.
In addition, upon determining whether any conflict of
interests has occurred, the Branch will consider whether
any impact upon the reputation of the Branch or the Group
has been caused.
2.3 Specific Examples
The following transactions and any other similar
transactions may be considered as specific examples of
"transactions that may cause conflicts of interests (actual
or perceived)":
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A buy side engagement from a customer regarding
a third party to which the Group is a lender and the proceeds
from the acquisition will repay the debt.
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Any financing to be arranged by the Group in
the form of a syndicated loan where the proceeds of the
financing are to be used in whole or part to repay credit
extended or guaranteed by the Group.
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The Group has a controlling equity investment
in a company, or a seat on the board of the company, that
has other shareholders and provides banking services to
that company.
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A transaction for a customer regarding a
third party in which the Group:
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has an investment interest, e.g. the buy-side customer, to
which the Group is financial advisor, wishes to acquire a
company of which the Group is an existing shareholder, or
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is on the other side, e.g. the customer, to which the Group
is financial advisor, is selling an asset and another part
of the Group is the buyer.
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Engagement from two or more customers where
there is a conflict between the interests of those customers
in relation to the subject matter of the engagements,
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e.g. Customer A engages the Group regarding the sale of
assets to B and B engages the Group regarding the purchase
of those assets from A or
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Customer A and Customer B separately engage the Group
regarding the acquisition of C.
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An advisory engagement from a customer where
the Group has information that is material to the
transaction and the information was obtained as a result
of banking relationship with another party,
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e.g. Customer A has a banking relationship with the Group
and Customer B engages the Group to act as its buy side
adviser regarding the acquisition of A.
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Where the Group is providing services to an
entity that is acting as agent for a third party and the
Group has the ability to provide the services directly to
the third party,
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e.g. where the Group is asked by another bank
(an "Applicant Bank") to issue a guarantee in
circumstances where the Group may be in a position to
offer the service direct to the Applicant Bank's customer.
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Two separate transactions by different business
units in respect of the same entity, where one business
unit has, or is perceived to have, confidential information
regarding the entity,
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e.g. the Group is a shareholder of company A managed
by Private Equity and credit protection on company A
is purchased by another business unit.
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3. SCOPE OF THE COMPANIES COVERED BY CONFLICT OF
INTEREST MANAGEMENT
As stated in 2.1 above, the Covered Transactions are any
transactions conducted by the Branch, Bank Agency whose
principal bank is the Branch or any of its Parent Financial
Institutions, Etc. or Subsidiary Financial Institutions, Etc.
(the Parent Financial Institutions, Etc. and Subsidiary
Financial Institutions, Etc. of the Branch are referred to as
"Affiliates").
"Parent Financial Institution, Etc." means
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such parent corporation of the Branch,
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such subsidiary corporation of any Parent Corporation,
Etc. of the Branch, such Affiliated Corporation, Etc.
of any parent corporation, etc. of the Branch, or
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such Subsidiary Corporation, Etc. or affiliated
corporation, etc. of any Specific Individual Shareholder of
the Branch, as is
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(a) |
a Financial Instruments Business Operator,
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(b) |
a bank,
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(c) |
an insurance company (including any foreign insurance
company, etc.),
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money lending business or its intermediary, or
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a person who engages in Financial Instruments Business,
banking business or insurance business in any foreign
country in accordance with any foreign law or regulation.
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"Subsidiary Financial Institution, Etc." means
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such Subsidiary Corporation, Etc. of the Company, or
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such Affiliated Corporation, Etc. of the Branch, as is
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(a) |
a Financial Instruments Business Operator,
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(b) |
a bank,
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an insurance company (including any foreign insurance
company, etc.),
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money lending business, or
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a person who engages in Financial Instruments Business,
banking business or insurance business in any foreign
country in accordance with any foreign law or regulation.
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As of June 1st 2009, the companies listed in the Exhibit hereto
are the "Parent Financial Institutions, Etc." or "Subsidiary
Institutions, Etc." of the Branch.
4. METHOD OF MANAGING TRANSACTIONS THAT MAY CAUSE CONFLICT
OF INTERESTS
If the Branch identifies any transaction that may cause a conflict
of interests, the Branch will properly secure the protection of our
Customers by selecting from any of, or combining, the following
methods and any other methods (the following methods are only
examples, and the following measure need not be adopted):
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The method of separating the division conducting the
Covered Transaction, and the division conducting the
transaction with such Customer;
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The method of amending the conditions or method of the
Covered Transaction or the transaction with such Customer;
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The method of discontinuing the Covered Transaction or
the transaction with the Customer; and/or
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The method of properly disclosing to the Customer the
possibility that the interests of such Customer may be
unjustly impaired in connection with the Covered
Transaction (only if such disclosure does not violate
the duty of confidentiality assumed by the Branch, or
any of its Parent Financial Institutions, Etc. or
Subsidiary Financial Institutions, Etc.).
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5. CONFLICT OF INTEREST MANAGEMENT SYSTEM
5.1 Establishment of the Conflict of Interest Management
Control Division
Compliance and Legal Affairs Division of the Branch will
be the Conflict of Interest Management Control Division.
The Conflict of Interest Management Control Division will
be independent from the Sales Division, and will never
receive any direction or order regarding the treatment of
specific cases from the Sales Division.
The Conflict of Interest Management Control Division will
control the Branch-wide management system regarding the
identification of transactions that may cause conflicts of
interests and the management of conflicts of interests.
5.2 Duties of the Conflict of Interest Management
Control Division
The Conflict of Interest Management Control Division will
assume the following duties in a position independent from
the Sales division.
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The Conflict of Interest Management Control Division
will identify any Covered Transactions, and also
instruct the Sales divisions to properly manage any
conflicts of interests regarding the Covered Transactions.
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The Conflict of Interest Management Control Division
shall immediately report to the Internal Control
Supervisor any matter that has a material effect on
the management of the Branch, or significantly impairs
the interests of Customers.
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The Conflict of Interest Management Control Division
will verify whether the conflicts of interests have
been properly managed, and, when necessary, review
the procedures for conflict of interest management,
or the conflict of interest system.
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If the interests of our Customers may be unjustly
impaired, the Conflict of Interest Management Control
Division will instruct the Sales divisions to properly
manage conflicts of interests, or review the Covered
Transactions, when necessary.
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The Conflict of Interest Management Control Division
will provide training for the management of conflicts
of interests based on the Policy to any officers and
employees of the Branch, and keep them informed about
the management of transactions that may cause conflicts
of interests.
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5.3 Record and Preservation
If any officer or employee of the Sales Division identifies
any transaction that may cause any conflict of interests and
selects the management method thereof, he/she will report to
the Conflict of Interest Management Control Division, which
records such measures, and preserve such record for five (5) years
from the creation of such record.
If the Conflict of Interest Management Control Division
identifies any transaction that may cause any conflict of
interests and selects the management method thereof, the
responsible person of the Conflict of Interest Management
Control Division will record such measures, and preserve
such record for five (5) years from the creation of such record.
FULLY CONSOLIDATED SUBSIDIARIES & CONSOLIDATION AS PER EQUITY
METHOD LIST
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