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Policy for Conflicts of Interest Management

Mitsubishi UFJ Financial Group ("MUFG") and its subsidiaries and affiliates (collectively, "MUFG Group") shall establish the following policy for conflicts of interest management and take necessary mitigation measures to assure that clients’ interest would not be unfairly damaged in the situation where interests of clients and MUFG Group are conflicting, or where interests of multiple clients are conflicting and/or opposing in transactions in which MUFG Group involves. Further, MUFG materializes customer-oriented business conduct based on MUFG Basic Policy for Fiduciary Duties.

Chapter 1 Conflicts of Interest

1. Conflicts of Interest

A conflict of interest means the situation where an MUFG Group's client's interest conflicts with MUFG Group's or one MUFG Group's client's interest conflicts with other MUFG Group's clients'.
 
While such conflicts of interest occur on a day-to-day basis as a result of conglomerations of financial institutions and diversification of financial trading, MUFG Group shall establish appropriate business management and compliance system to prevent adverse effects from conflicts of interest within the Group.

Chapter 2 Conflicts of Interest Management based on Banking Act, Financial Instruments and Exchange Act, and Others

1. Identifying and categorizing Transactions with Potential Risk of Adverse Effects from Conflicts of Interest

MUFG Group shall identify and categorize businesses in advance, which require special management ("Managed Businesses"), from businesses in the following situations, and manage individual transactions of categorized businesses with potential risk of adverse effects from conflicts of interest, taking into consideration reputation risk.
  • Situations where a client reasonably expects MUFG Group to prioritize the client's best interest (e.g. advisory service)
  • Situations where MUFG Group could inappropriately benefit in the market using information obtained from transactions with clients
  • Situations where high reputation risk resulting from transactions between MUFG Group and clients could arise
Examples for Managed Businesses include:
  • M&A advisory
  • Securitization of Assets/Receivables
  • Loan Syndication
  • Principal Investment
  • Equity and Debt Underwriting
  • Bond Management
The examples of transactions involving M&A advisory, Equity and Debt Underwriting activities of Managed Businesses that may cause conflicts of interest are as follows:
[M&A advisory]
  • when MUFG Group offers advisory services to both potential buyers and the seller’s side in an M&A transaction
  • when MUFG Group offers advisory services to competing multiple potential buyers in an M&A transaction
  • when MUFG Group offers advisory services either to buyer or to seller while MUFG involves as the counterpart in an M&A transaction
  • when MUFG Group offers advisory services to the seller’s side in an M&A transaction as well as provides loans to a single or multiple potential buyers.
[Equity and Debt Underwriting]
  • when MUFG Group is appointed as Lead Managing Underwriter in client's financing in capital markets through Bond/ equity issuance, while MUFG Group provides loans to the issuer.
  • when MUFG Group is appointed as Lead Managing Underwriter in client's financing in capital markets through Bond/ equity issuance for the purpose of acquisition, while MUFG Group offers advisory services to the seller’s side in the M&A transaction

2. Companies with Requirement for Conflicts of Interest Management

MUFG Group companies conducting Managed Businesses shall be required to develop appropriate management system for conflicts of interest.

 

Examples of companies with requirement for conflicts of interest management include:

  • MUFG Bank, Ltd.
  • Mitsubishi UFJ Trust and Banking Corporation
  • Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
  • au Kabucom Securities Co., Ltd.

3. Management System for Conflicts of Interest

MUFG Group shall centralize the management of conflicts of interest by establishing divisions responsible for management and control of conflicts of interest at each company under a legal duty to establish management system for conflicts of interest.

 

MUFG Group shall comply with applicable laws and regulations related to conflicts of interest and maintain appropriate management for conflicts of interest.

4. Measures for Management of Conflicts of Interest

With the following measures MUFG Group shall prevent adverse effects from conflicts of interest issues and avoid falsely damaging clients' interest.
  • Separating a division/company conducting a transaction with potential risk of adverse effects by conflicts of interest from other divisions/companies
  • Changing the conditions/methods of either/both transactions with potential risk of adverse effects by conflicts of interest or terminating either one of transactions with potential risk of adverse effects by conflicts of interest
  • Obtaining client’s consent on potential risk of adverse effects by conflicts of interest or notifying such risk to the client

Chapter 3 Conflicts of Interest Management based on MUFG Basic Policy for Fiduciary Duties

MUFG Group shall manage conflicts of interest properly with the following items under 4. Provision of line of products to meet customers' diverse needs and 5. Sophistication of investment for the improvement of customers' investment results from MUFG Basic Policy for Fiduciary Duties.
  • Selection of products that contribute to customers' asset building and provision of sales procedures
  • Ensuring independence and transparency of investment management
Examples of companies with requirement for practice under MUFG Basic Policy for Fiduciary Duties include:
MUFG Bank, Ltd., Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., au Kabucom Securities Co., Ltd., Mitsubishi UFJ Asset Management Co., Ltd., The Master Trust Bank of Japan, Ltd., and Mitsubishi UFJ Real Estate Asset Management Co., Ltd.
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