Management Policy for Conflict of Interest(Outline)

Management Policy for Conflict of Interest(Outline)

Establishment: June 1, 2009
Revised on July 27, 2020
Shinsei Securities Co., Ltd.

1.Purpose

Shinsei Securities Co.,Ltd (hereinafter “the Company”)has established the Management System for Conflict of Interest for (1) managing conflict of interest that may unfairly impair the interest of customers based on the Financial Instruments and Exchange Act, and (2) managing conflict of interest that may impair the interest of customers in business operations that have set the highest priority in the “best interests” of the customers based on the Policy on Customer-Oriented Business Conduct publicly announced by the Company at the Company and the parent financial institutions (hereinafter, collectively, " the Group Companies") The Company has also established Management Policy for Conflict of Interest which stipulates basic items of the Management System for Conflict of Interest.
Outline of the Policy shall be publicly announced as follows under the relevant laws and regulations:

2.Scope of the Group Companies

The Group companies subject to the management for conflict of interest by the Company on the Financial Instruments and Exchange Act shall be shown in a separate table.

3.Categories of Transactions Which May Involve Conflict of Interest and Examples

  1. Categories of Transactions Which May Involve Conflict of Interest

    Categories of transactions . which may involve conflict of interest may include following: However, these categories merely show standards for making a judgment whether if there may be a conflict of interest or not. It does not necessarily mean that there is a conflict of interest if it is applicable to any one of the following. Also, additions or revisions, as required, may be made in future.

    1. When there is a conflict of interest between the Group Companies and a Customer
    2. When there is a conflict of interest between the Group Companies Customer and another customer
    3. When it is similar to a. or ⅱb. above or when the interests of Customers are unfairly impaired in other ways

    The Company shall take general circumstances, including any influence on Shinsei Group’s reputation, into consideration to judge if conflict of interest is involved or not.

  2. Examples

    Examples of transactions which may involve conflict of interest shall include following and other similar transactions:

    1. Examples of Categories under a. (1) Above
      1. When fundraising support services and/or advice, etc. on M&A are given with to a Customer who is in a conflicting or competitive relationship with principal investment of the Group Companies.
      2. When advice, etc. are given for M&A to a Customer, to whom credit is given by the Group Companies.
      3. When advice, etc. are given for fundraising support services and/or M&A to another Customer, who is in a conflicting or competitive relationship with a Customer.
      4. When advice, etc. are given to a Customer for fundraising support services and/or M&A and at the same time principal investment is made in the applicable Customer by the Group Companies, assets are purchased from the applicable Customer and other transaction is carried out with the applicable Customer.
      5. When a Customer is assisted by the Group Companies in the applicable Customer’s financing and at the same time the Group Companies intend to collect fund from the applicable Customer by means of fund raised through the Group Companies’ assistance.
      6. When the Group Companies make a principal investment in a Customer’s assets, for which the Group Companies have information.
      7. When a wide range of services are rendered to a Customer by the Group Companies and it is intended to limit participants of a transaction to the Group Companies.
      8. When securities issued or established by the Group Companies or an interested party are recommended or sold to the applicable Customer, or when the Group Companies incorporate the applicable securities into the applicable Customer’s assets, of which the Group Companies are entrusted with investment by the Customer. In addition, when the Group Companies back-finances the applicable Customer who invests in the applicable securities.
      9. When the Group Companies makes use of information of transactions with a Customer against the Customer’s intention to pursue its own interests.
    2. Examples of Categories under b. (1) Above
      1. When advice, etc. are given with regard to fundraising support services and/or M&A to a transaction in which more than one Customer are in conflicting or competitive.
      2. When the Group Companies make use of information of transactions with a Customer against the Customer’s intention to pursue interests of another Customer.

4.How to Manage a Transaction Which May Involve Conflict of Interest (hereinafter, “Subject Transaction”)

If it is determined that a transaction is applicable to Subject Transaction, the Company shall try to protect Customers appropriately through a selection or combination of methods below and other methods.

  1. Separation of a business organization responsible for the Subject Transaction and a business organization responsible for the applicable Customer’s deal.
  2. Change in conditions or ways of the Subject Transaction or the applicable Customer’s deal.
  3. Suspension of the Subject Transaction or the applicable Customer’s deal.
  4. Appropriate disclosure of information on possible risks that the applicable Customer’s interests may be unfairly impaired incidental to the Subject Transaction. (provided, however, that such disclosure does not infringe with confidential liability of the Group Companies.)

5.Management System for Conflict of Interest

  1. Establishment of a Division Responsible for the Management of conflict of interest
    1. The Legal & Compliance Division of the Company shall be the division responsible for the management of conflict of interest.
    2. The division responsible for the management of conflict of interest shall not be instructed by the manager of any other business organization for details of operations and shall maintain its independence in operations of the management of conflict of interest.
    3. The division responsible for the management of conflict of interest shall be responsible for the company-wide management system to specify transactions, which may involve conflict of interest, and to control conflict of interest.
  2. Responsibilities of the Division Responsible for the Management of Conflict of Interest

    The division responsible for the management of conflict of interest shall discharge following responsibilities in a position independent from divisions responsible for business and the Group Companies: When the the division responsible for the management of conflict of interest gives an instruction to the Group Companies or when the Group Companies make a report to the division responsible for the management of conflict of interest, such an instruction/a report shall be given/made through the division responsible for internal management at the applicable the Group Companies.

    1. To instruct divisions responsible for businesses at the Company and to implement appropriate management of conflict of interest with regard to the Subject Transaction as well as to specify the Subject Transaction.
    2. To make in every quarter reports to the Compliance Committee on transactions which may involve conflict of interest, as specified and managed. However, any item, which may have a considerable influence on the management or may considerably impair the interests of customers, shall be reported to the Board of Directors without delay.
    3. To receive reports on the management status, etc. of conflict of interest for Subject Transactions, including Subject Transactions of the Group companies, on a regular basis or from time to time, to verify implementation of appropriate management and to review procedures and systems for the management of conflict of interest, as required.
    4. If Customer’s interests may be unfairly impaired, to instruct implementation of appropriate management of conflict of interest to divisions responsible for businesses, as required, or to review the Subject Transaction, etc.
    5. To give training, on a regular basis, to statutory directors and staff of the Company with regard to the management of conflict of interest on the basis of this Policy and management regulations for conflict of interest and to make sure that everybody appropriately understands about the management of transactions which may involve conflict of interest.
  3. Preparation and Conservation of Management Records of Conflict of Interest

    The division responsible for the management of conflict of interest shall record and maintain actions taken to appropriately ensure specification of Subject Transactions and their management and Customer protection for five years from the date of preparation.

End

<Attached Table>Parent Financial Institutions, etc. Subject to Control over Conflict of Interest (as of July 27, 2020)

Shinsei Bank, Ltd.
Shinsei Trust and Banking Co., Ltd.
Shinsei International Limited
Shinsei Investment Management Co., Ltd.
Shinsei Investment & Finance Ltd.
Shinsei Corporate Investment Ltd.
Showa Leasing Co., Ltd.
Shinko Lease Co., Ltd.
Asuka Corporate Advisory Co., Ltd.
APLUS Co., Ltd.
APLUS Personal Loan Co., Ltd.
Zen-Nichi Shinpan Co., Ltd.
Shinsei Personal Loan Co., Ltd.
Shinsei Financial Co., Ltd.
Nissen Credit Service Co., Ltd.
Other Group companies that filed their Special Business Activities for Qualified Institutional Investors
Business operators operating the bank agent business on behalf of Shinsei Bank