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Proxy Voting

Sumitomo Mitsui Trust Asset Management Co., Ltd. (hereinafter, “SMTAM,” “we,” “us,” or “our”), as a responsible institutional investor, considers our exercise of voting rights in connection with entrusted assets (hereinafter, “exercise of voting rights”) to be one of the most important elements of our stewardship activities, and we will strive to ensure that our exercise of voting rights enhances the corporate value and encourages sustainable growth of investee companies, in order to maximize the medium to long term investment returns for our clients (beneficiaries).

Ⅰ.Basic Policy on the Exercise of Voting Rights

  1. Our exercise of voting rights must aim to contribute to the sustainable growth of investee companies thereby maximizing the medium to long term investment returns for our clients (beneficiaries). Based on investee companies’ conditions and details of engagements with those companies, we will exercise voting rights not only pursuant to the formal criteria for decision making, but after comprehensively considering the extent to which our exercise of voting rights would contribute to the sustainable growth of investee companies (and to the maximization of medium to long term investment returns for our clients (beneficiaries)). Furthermore, if a proposal has several interchangeable options, we will make our decision by prioritizing the option that would contribute most to sustainable growth.
  2. In exercising voting rights, we will encourage investee companies to efficiently utilize the shareholder’s equity regarding sustainable growth and to actively develop appropriate corporate governance systems, such as ensuring separation of management supervisory functions and independence of outside officers (directors or corporate auditors), among others. In addition, we will encourage the investee companies to conduct corporate activities appropriately by fully considering the environment and society under soundly developed corporate governance systems.

  3. 总裁的私有宝贝楼梯上做,总裁的私有宝贝If any act that disregards the interests of shareholders, controversies or anti-social behavior by an investee company or its management occurs, or its corporate value is damaged due to problems such as poor medium to long term performance, we will consider such act as a serious issue in the investee company’s corporate governance, and we will exercise voting rights in a way that would improve the investee company’s corporate governance. We require investee companies that have been involved in misconducts to provide a full explanation of recurrence prevention measures, progress of improvement measures, and efforts towards improvement of their corporate governance, and we will arrive at a decision on the exercise of voting rights based on the explanations.

Ⅱ.Management of Conflicts of Interest in the Exercise of Voting Rights

  1. With the view of prioritizing the interests of clients (beneficiaries), we strictly manage conflicts of interest that could arise in connection with our exercise of voting rights in accordance with the Conflict of Interest Management Rules, the Investment Operation Rules, and other relevant internal rules. Since conflict-of-interest management systems must be independent in particular when exercising voting rights, we have established the “Stewardship Activity Advisory Committee” (the “Advisory Committee”) mainly consisting of outside experts, and we will strive to exercise voting rights with high transparency by respecting the Advisory Committee’s recommendations to the maximum extent.
  2. In order to enhance the visibility of appropriateness of our exercise of voting rights, we will improve the disclosure of information regarding our exercise of voting rights by publishing our guideline for the exercise of voting rights that contains clearly defined criteria to guide decision making.
  3. All proposals concerning our parent company, Sumitomo Mitsui Trust Holdings, Inc., as well as board membership proposals which involve a person with close ties to our parent or our company (e.g. current board members or officers who have held an important position) shall be dealt with appropriately for reasons of conflict of interest. Therefore, we will exercise voting rights based on the proposal made by a proxy advisory company in line with our guideline and consultation with the Advisory Committee.

Ⅲ.Structure for the Exercise of Voting Rights

  1. 总裁的私有宝贝楼梯上做,总裁的私有宝贝At SMTAM, the Executive Officer in charge of the Stewardship Development Department (hereinafter, “the Officer”) exclusively holds all authority relating to our exercise of voting rights, independent from the authority to execute other business activities. In addition, in order for the Officer to appropriately exercise voting rights, we have established the Stewardship Meeting that deliberates on our exercise of voting rights, and we have established the Advisory Committee as an advisory body for the Officer.

  2. The Stewardship Meeting is a meeting to deliberate on our exercise of voting rights, engagements, ESG-related activities and various other activities under Japan’s Stewardship Code. In relation to our exercise of voting rights, the Stewardship Meeting will formulate original plans for the establishment, revision, or abolition of the guidelines for exercise of voting rights and original plans to individually exercise voting rights for a proposal not stipulated in the guidelines. The Stewardship Meeting consists of the chair (the Officer), asset management members (General Managers of the Stewardship Development Department, the Active Investment Department, the Index Investment Department, and the Research Investment Department), a compliance member (General Manager of the Compliance Department) and its secretariat is the Stewardship Development Department.

  3. The Advisory Committee is a body established to make recommendations for various activities under Japan’s Stewardship Code to the Officer. Regarding our exercise of voting rights, the committee will make recommendations for the establishment, revision, or abolition of the guidelines for the exercise of voting rights, decisions concerning whether to support a proposal not stipulated in these guidelines, appropriateness of interpretation of these guidelines for an individual proposal, and verification and improvement of the decision-making process on the exercise of voting rights on a proposal in connection with which a conflict of interest may occur. The committee consists of outside advisory members (outside experts) and officers appointed by the board of directors, General Manager of the Compliance Department, and its secretariat is the Stewardship Development Department.

  4. The Officer will make decisions on various matters taking full account of the recommendations of the Advisory Committee. If the officer receives recommendations from the Advisory Committee regarding improvement of its exercise of voting rights, the Officer will promptly take measures necessary for the correction or improvement, giving due respect to the recommendation.
  5. 总裁的私有宝贝楼梯上做,总裁的私有宝贝our exercise of voting rights will be performed as follows:

     

    (1)  the guidelines for exercise of voting rights shall be established, revised, or abolished with the approval of the Officer after deliberating at the Stewardship Meeting and consultation to the Advisory Committee;

    (2)  a decision to exercise the voting regarding a proposal that is stipulated in our guideline shall be made with the approval of the General Manager of the Stewardship Development Department;

    总裁的私有宝贝楼梯上做,总裁的私有宝贝(3)  a decision to exercise the voting rights regarding a proposal that is not stipulated in our guideline or that requires individual interpretation shall be made with the approval of the Officer after individual deliberation at the Stewardship Meeting and after consultation to the Advisory Committee;

    (4)  the result of exercising the voting rights shall be reported to the Stewardship Meeting and the Officer.

Ⅳ.Guidelines for the Exercise of Voting Rights

总裁的私有宝贝楼梯上做,总裁的私有宝贝We visualize our judgment in exercising voting rights through announcing key points of our numerical criteria and qualitative judgment. Please see details below.

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Concerning foreign equities, we will exercise judgment based on the circumstances for each country, specifically, its economic, political, social and historical foundation and how it has shaped the law, commercial practice and corporate governance. Please see details below.

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