Compliance and Risk Management
Basic Compliance Policy
We at SPARX aim to contribute to efficiently managing the world's wealth through our practice of the SPARX Way of Investment. We must never forget that our actual clients are not only mutual fund beneficiaries and individual shareholders but also the many smaller investors who support them, whether they are pension funds or institutional investors. Our vision is for our global clients to honestly think of us as the most trusted and respected investment company, and we will work tirelessly to achieve this goal.
If the foundation of investment is investment intelligence, the cornerstone of a company is compliance. A compliance-conscious person must act with discipline, always thinking about whether they are acting in the best interest of clients, beneficiaries, shareholders, fellow employees, and the world.
It is of utmost importance that we, as a company, remain steadfast in placing honesty and integrity as our top values.
Code of Conduct / Code of Ethics Compliance and Effectiveness
SPARX and its group companies also take the following actions to verify compliance with and effectiveness of the Code of Conduct / Code of Ethics:
- Investigate, review, and deliberate on matters related to compliance at SPARX and its group companies through our Compliance Committee;
- Inform our employees that they must promptly report any compliance issues in actions we have taken as a company through our established internal reporting system;
- Upon receipt of a report or notification, the Compliance Department will investigate the situation and take necessary measures. All reports also go to the SPARX Audit and Supervisory Committee and Board of Directors without revealing the reporting party's identity.
Compliance Committee
The Compliance Committee formulates basic policies (including the Code of Conduct and the Code of Ethics) regarding legal compliance and investigates, reviews, and deliberates on compliance-related matters at SPARX and its group companies.
The Committee reports directly to the Board of Directors to bolster the Group's compliance system. Committee members consist of representative directors and other key members.
The Committee regularly monitors how the Group promotes compliance and, through deliberation, verifies the effectiveness and other aspects of the compliance system.
In FY2024, the Compliance Committee met four times. It reported the minutes of these meetings to the Board of Directors.
Group Risk Management System
To ensure sound and appropriate management, SPARX Group considers accurately identifying and managing risks as one of its most critical executive tasks.
The Group Risk Management Committee reports its deliberations and provides appropriate feedback to the Board of Directors to promote and monitor overall Group risk management.
Under the unified management of the holding company SPARX Group, Group subsidiaries implement appropriate risk management per their unique business and risk characteristics.
Anti-Bribery Corporate Policy and Commitment
SPARX's Compliance Manual prohibits, in principle, accepting entertainment and gifts (e.g., money, goods, entertainment, dinners, travel expenses, and other property benefits) except when absolutely necessary from a socially accepted perspective. Moreover, it prohibits giving gifts or other favors to public officials or other persons under any circumstances.
Anti-Corruption Corporate Policy and Commitment
SPARX informs all officers and employees through the Compliance Program and Compliance Manual of our measures against corruption in all its forms, including entertainment, gifts, embezzlement, bribery, and money laundering. The Legal & Compliance Office also monitors entertainment and gifts on a monthly basis. If the Legal & Compliance Office discovers any issues through this monitoring, it must report them to the director in charge of internal control and the Compliance Committee.
As of December 2025, there have been no incidents of misconduct or lawsuits related to entertainment and gifts.
Communicating the Anti-Corruption Policy to All Employees
SPARX Group is committed to preventing corruption in all forms, including entertainment and gifts* - including gifts to public officials - embezzlement, bribery, insider trading, and money laundering. We endeavor to build fair and sound relationships with our clients and other stakeholders.
To prevent corrupt practices, we regularly conduct training and raise awareness among all officers and employees through the following initiatives:
- Examples of entertainment and gifts include cash, goods, entertainment, dinners, travel expenses, and other property benefits
Whistleblower System that Ensures Confidentiality and Anonymity
The Whistleblower System accepts reports and consultations from all directors, managers, and employees regarding any illegal or non-compliant actions by SPARX and SPARX Group company employees. The Compliance Division head and the auditors handle internal reports, while the Law Firm is the external contact.
In the event that any division discovers any other specific problems, they are to provide Incident Reports to the Compliance Division.
The Legal & Compliance Office conducts fact-finding investigations into matters reported or discovered. These investigations determine whether a compliance violation has occurred, the violation's cause, and other relevant matters. The Office will then formulate specific preventive measures to address the violation.
Information and preventive measures gained through these investigations are reported to the Compliance Committee and the Board of Directors. As necessary, the Compliance Committee and the Board of Directors implement measures to reduce compliance risks and review the compliance system to ensure client-oriented business operations.
Furthermore, employees who violate compliance may be subject to disciplinary action or other corrective measures after deliberation by the Disciplinary Committee per internal rules and regulations.
As of March 2025, the Whistleblower System has not received any reports in the past five years.