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 FY2021, the Compliance Committee met four times. It reported the minutes of these meetings to the Board of Directors.

Group Risk Management System

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; 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 2022, there have been no incidents of misconduct or lawsuits related to entertainment and gifts.

Whistleblower System that Ensures Confidentiality and Anonymity

SPARX and its group companies have established whistleblower systems they each operate independently.

We have informed all employees and officers through the Compliance Manual and the internal reporting rules that they must promptly use the Whistleblower System to report any suspected or potential deviation from the law, the Articles of Incorporation, or the Compliance Manual.

SPARX and its group companies take care to protect the privacy of any informant making a report, accept anonymous reports, and strictly enforce confidentiality. Moreover, SPARX and its group companies make it known that they will investigate any retaliation for consultations or reports through the Whistleblower System and correct the situation immediately.

As of December 2022, the Whistleblower System has not received any reports in the past three years.

Communicating the Anti-Corruption Policy to All Employees

SPARX Group is committed to preventing corrupt practices and building sound and healthy relationships with its clients and other stakeholders.

To prevent corrupt practices, we regularly conduct training and raise awareness among all officers and employees through the following initiatives:

  • Training upon employment (immediately after hiring)
  • Compliance training (annually; includes anti-corruption training, such as training on preventing insider trading)
  • Code of Ethics awareness campaigns (annually) to inform all employees and officers about our Anti-Corruption Policy.

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