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SuMi TRUST
CORPORATE BROCHURE

PROXY VOTING

Sumitomo Mitsui Trust Asset Management Co., Ltd. (“SMTAM”), 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 medium-to-long-term investment returns for our clients (beneficiaries)

Ⅰ.Basic Policy on the Exercise of Voting Rights

  • 1Our exercise of voting rights must aim to contribute to the sustainable growth of investee companies thereby maximizing 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 maximization of medium-to-long-term investment returns for our clients (beneficiaries))Meeting Furthermore, if a proposal has several interchangeable options, we will make our decision to exercise the voting rights by prioritizing the option that would contribute most to sustainable growth.
  • 2In exercising voting rights, we will encourage investee companies to actively develop appropriate corporate governance systems that respect the interests of shareholders by efficiently utilizing the shareholders’ equity towards sustainable growth and ensuring separation of management supervisory functions and independence of outside officers, 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.
  • 3If any act that disregards the interests of shareholders, misconduct 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 engaged in misconduct to provide a full explanation of recurrence prevention measures, progress of improvement measures, and efforts towards improvement of its 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

  • 1With 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 (hereinafter, 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.
  • 2In 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 guidelines that contain clearly defined criteria to guide decision making or the like.

Ⅲ.Structure for the Exercise of Voting Rights

  • 1At 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 in charge of the Stewardship Development Department 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 in charge of the Stewardship Development Department.
  • 2The Stewardship Meeting deliberates 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 will consist of the chair (the Officer in charge of the Stewardship Development Department), members (General Manager of Stewardship Development Department, General Manager of Active Investment Department, General Manager of Index Investment Department, General Manager of Research Department), General Manager of the Compliance Department), and the secretariat (the Stewardship Development Department)
  • 3The Advisory Committee is a body established to make recommendations for various activities under Japan’s Stewardship Code to the Officer in charge of the Stewardship Development Department. 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 will consist of outside advisory members (outside experts) and Officers appointed by the board of directors as a member, the monitoring unit (General Manager of the Compliance Department), and the secretariat (the Stewardship Development Department)
  • 4The Officer in charge of the Stewardship Development Department will make decisions on various matters that, to the maximum extent, respect the Advisory Committee’s recommendations. If the officer receives a recommendation 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 maximum extent, to the recommendations.
  • 55. The operations relating to 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 in charge of the Stewardship Development Department after deliberating at the Stewardship Meeting and after obtaining recommendations from the Advisory Committee;

    (2) a decision to exercise the voting rights for an individual proposal within the scope stipulated in the guidelines for the exercise of voting rights shall be made with the approval of the General Manager of the Stewardship Development Department;

    (3) a decision to exercise the voting rights regarding a proposal that is not stipulated in the guidelines for the exercise of voting rights and that requires individual deliberation shall be made with the approval of the Officer in charge of the Stewardship Development Department after individual deliberation at the Stewardship Meeting and after obtaining the recommendations from the Advisory Committee; and

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

Ⅳ.Guidelines for the Exercise of Voting Rights

We visualize our judgment in exercising voting rights through announcing key points of our numerical criteria and qualitative judgment. Please see details below.

PDF: Our Principles for Exercising Voting Rights (for Domestic stocks) as a Responsible Institutional Investor

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.

PDF: Our Principles for Exercising Voting Rights (for Foreign stocks) as a Responsible Institutional Investor

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