GovernanceIntroduction

Message from the Chairman of the Board
We will deepen discussions with the executive
team in both “offensive” and “defensive” areas forincreasing corporate value over the medium term.
Drawing on my experience as president in implementing the business integration, including the Post Merger Integration (“PMI”), as the non-executive Chairman of the Board, I will
strive for the smooth operation of the Board of Directors and the Governance Committee
as an advisory body as well as the Nomination Committee and the Compensation
Committee as consultative bodies. We will also ensure that the Board of Directors reliably
fulfills this role to attain the objectives of the Medium-Term Management Plan for
FY2023-FY2025 (“2025 MTMP”) and ultimately achieve Our Mission.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Dialogue with Independent Outside Directors
Toward further raising the effectiveness of the Board of Directors
and advancing governance
We held a roundtable discussion with five independent Outside Directors, who exchanged wide-ranging opinions on
various topics. These ranged from their assessment of the process for formulating the Medium-term Management Plan
for FY2023 - FY2025 (“2025 MTMP”) to the key points of governance, the future expectations of Mitsubishi HC Capital,
and the ideal business model that transcends the framework of the leasing business.

Takahiro Yanai
Director, Chairman(Chairman of the Board)

Mitsubishi HC Capital designated the first two years after the business integration in April 2021 as the period for the PMI. One of ourpriority issues during this stage was to deepen mutual understanding
between the two predecessor companies. At the same time, theBoard of Directors also ascertained the overall picture of the integrated company from a variety of perspectives by discussing numerous proposals based on conservative and broad-based standards foritems to be submitted to the Board of Directors. Through this process,each member of the Board of Directors has gained a deeper understanding of the Company. In FYE3/2023, the second year of theintegration, active discussions were held when formulating the
Medium-Term Management Plan. In this manner, along with ourdefensive-oriented discussions focused on risk management, wehave gradually deepened “offensive” discussions that contribute toour strategy formulation.
Regarding the governance system design of Mitsubishi HC
Capital, the Company has established the Governance Committee as
an advisory body as well as the Nomination Committee and theCompensation Committee as consultative bodies to the Board of
Directors. These are voluntary committees, with the majority of theNomination Committee and Compensation Committee composed ofIndependent Outside Directors, however, by stipulating that the Boardof Directors shall attach high importance to resolutions by eachcommittee, we have established a system under which the opinionsof Independent Outside Directors are firmly reflected in the
Companyʼs important decision-making.
In FYE3/2023, the Nomination Committee discussed theselection of a successor in the event of a change in the president,
while the Compensation Committee discussed re-evaluating theexecutive compensation system from the perspective of stakeholders.
The Board of Directors reached conclusions in line with the results ofeach resolution. The Governance Committee serves as an advisory
body to the Board of Directors and primarily evaluates the effectiveness of the Board of Directors and discusses improvement measures

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based on this evaluation. For example, we have received feedback
regarding the operational aspects of the Board of Directors, such asproviding better explanations prior to deliberating on important
proposals, and we are taking improvement actions to enhance theeffectiveness of the Board of Directors. Based on these evaluations ofeffectiveness, we plan to review the standards for items to be submitted to the Board of Directors in the second half of FYE3/2024,
delegate as many matters as possible to the executive team, andensure that the Board of Directors spends sufficient time on deliberating themes of higher importance in terms of governance and strategy.
Meanwhile, to steadily execute the role of the Board of
Directors, Outside Directors are actively implementing on-site inspections. We will deepen discussions at board meetings by observing
business sites in Japan and overseas and listening directly to group
executives and employees, including the management teams ofoverseas subsidiaries. In the future, we will continue to increase
opportunities for on-site inspections, including those for ourselves.
The 2025 MTMP features the major theme of “transformation”
toward exploring the frontiers of the future without being bound by
precedents while considering significant changes in the external
environment. To realize this “transformation,” we aim to create a
corporate culture that does not fear failure.
Taking on this challenge naturally involves risks. With this inmind, the Board of Directors needs to strengthen its defensivefunctions to appropriately monitor risks. Concurrently, each director
should leverage his or her own specialized knowledge to provide
appropriate advice to the executive team, and I believe that ouroffensive functions that support the implementation of this strategy
will assume an even greater degree of importance.
As the Chairman of the Board of Directors, I will make myutmost efforts to ensure the smooth operation of the Board of
Directors to enable the Board of Directors to engage in both offensive- and defensive-oriented discussions and implement governancethat meets the expectations of various stakeholders.

Hiroyasu Nakata

Yuri Sasaki

Director(Independent Outside
Director)

Director(Independent
Outside Director)

Koichiro Hiraiwa

Hiroko Kaneko

Masayuki Saito

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Post Merger Integration (“PMI”) is a cornerstone of growth

Q

During these past two years following the merger,
you have successfully completed the PMI as
originally planned. What are your thoughts about
the issues that lie ahead?

Saito Under the new system created through the mergerof the former Mitsubishi UFJ Lease & Finance and theformer Hitachi Capital, our pro-forma rule-making hasnearly been completed, and we are about to enter a maturation process. As we do so, first of all, everybody must
thoroughly acquaint themselves with each other in Japanand at the overseas companies we have acquired. We alsoneed to respect each companyʼs corporate culture while
management must clearly present and implement sharedvalues. This process should enable optimal integration andresult in the creation of “one team.” The management teamhas a solid understanding of our current position, and in
the future, it will likely advance steadily in the present
direction. I will continue to fully contribute to this process
by providing my advice and support.

Hiraiwa Generally speaking, it is said that it takes 30 years
to truly unify a company through integration after a merger.
To put this into better perspective, this is the same amountof time for a new employee to eventually become an executive. While this might very well be true, I also feel that wecannot spend such a long time on our integration process.
2025 MTMP has been formulated based on the solid foundation of Our Mission. I am sure all employees agree withthis thinking. This is precisely why I believe 2025 MTMP has
great significance and originality. To realize Mitsubishi HC
Capitalʼs Our Mission, it is important to embed the respective corporate cultures and traditions cultivated by eachcompany into the new management structure.
Saito Mitsubishi HC Capital now has great potential
because it laid the cornerstone for significant growth during
the past two years of PMI. Mitsubishi HC Capital will firmly“sowing seeds” and “gaining a solid foothold” as set forthin 2025 MTMP over the next three years, which is designated as the planʼs “Hop” phase, so that it can transitionsmoothly to the successive “Step” and “Jump” phases.

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Frank discussions in formulating 2025 MTMP thatstrongly promotes Our Mission
Q

How do you assess the details and formulation
process for 2025 MTMP?

Saito In discussing 2025 MTMP, we first drew an imageof our 10-Year Vision and then backcasted from there to
identify what we need to do now. I learned about thisconcept of backcasting from then-President & CEO
Yanai. I think this plan serves as a suitable management
strategy that is aligned with the times. Within the plan, I
am focusing particularly on synergies generated throughthe integration of the two predecessor companies. I think
the most important point will be to leverage thestrengths of both companies and deploy synergies,
especially in overseas operations.
Kaneko The plan was repeatedly discussed at meetings of the Board of Directors and careful considerations
were made internally in advance. We held various discussions from the dual perspectives of fostering a senseof solidarity and solidifying our foothold through the
integration of the two companies.
Hiraiwa Medium-term management plans generally
tend to be associated with setting and attaining numerical targets. Certainly, Mitsubishi HC Capital has also set
several numerical targets, such as net income. However,when I look at 2025 MTMP, I am focusing on a more
abstract aspect in that Our Mission is being firmly positioned at the forefront of the plan. The 10-Year Vision,“Together we innovate, challenge and explore the frontiers of the future,” emphasizes fortifying the corporate
structure. This will enable Mitsubishi HC Capital to withstand shifts in the environment and continuously move
forward regardless of how dramatically the times change.
I was also deeply impressed when I listened to
executives tell me they seek to create a corporate culture
where there is no fear of failure. Of course, this is easier
said than done. Nonetheless, setting a goal of not fearing
failure is a tremendous objective considering that theCompany is still feeling its way around in the short timesince the integration. This reaffirmed our strong sense

What points are you focusing on whenmonitoring the progress of 2025 MTMP?

Sasaki A fundamental point is checking to ensure we
do not create something only within the company that is
not visible from the outside. Here, a third-party perspective is particularly important for governance. I always

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Value Creation Story Business Strategies

auditing firms and various partners. The most important
aspect of monitoring is to consider the situation atbusiness sites or matters close to actual circumstances.
Kaneko Speaking from my own experience in accounting auditing and observing the internal control andgovernance of companies for nearly 30 years, I can say

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Sectionthat internal control and governance in overseas divisions is particularly difficult. I get the impression that allcompanies face difficulties with internal controls overseas owing to differences in business cultures.
Additionally, changing our employee engagement is also
important for realizing 2025 MTMP.

Creating a well-balanced Board of Directors andadvisory committees where it is easy to express opinions
Q

that we too must help create such a corporate culture.
Sasaki In formulating 2025 MTMP, all Outside Directors
openly made comments such as, “I donʼt understand the
explanation using this terminology” and “I need clearer
explanations.” I, of course, expressed my opinions too
and through various exchanges, our understanding
deepened significantly.
The plan formulation proceeded under an excellent
format as the executive team created content that could
withstand exhaustive discussion while the Outside Directors
also voiced their opinions from an objective standpoint.
Nakata The fact that the formulation process proceededin stages is tremendously beneficial. Immediately after
the merger in April 2021, we established our BasicManagement Policy, and the following year we crafted
the 10-Year Vision. This year, we announced 2025 MTMP.
Over this time, the Board of Directors has convened eighttimes and held ongoing discussions. After consolidating
the main points of these internal discussions, the committee submitted the results to the Board of Directors,
which engaged in exchanging differing opinions that
included the participation of Outside Directors. In
response to this, we have continuously repeated thecycle of re-examining issues within the Company.
Through this process, each of our Internal Directors andOutside Directors began thinking more deeply about
what kind of company we wish to become and the ways
we can contribute to realizing such a company.

Continuous monitoring from a third-party perspective
Q

Message from the
President & CEO

make my utmost efforts to point out anything I noticethat could be problematic for the Company.
Hiraiwa Visiting business sites and then thinking basedon my observations of these sites is important. Somethings cannot be explained by numbers alone. For thisreason, I hope to visit all actual business sites, including
those overseas, and listen carefully to the opinions ofWhat are your thoughts on the composition andoperation of the Board of Directors and advisorycommittees?

Nakata Board members are rich in diversity and possessa variety of specialties and skills. This Board composition
was the result of meticulous selection that emphasizes
each individualʼs characteristics and talents rather than
imposing formal criteria such as being male, female, or aforeign national. Although we currently have no foreign
nationals serving on the Board of Directors or advisorycommittees, clarifying the skills required of any suchforeign nationals with an eye to the future is important.
Additionally, Mitsubishi HC Capital is a company
with an Audit & Supervisory Committee. As such, some
Directors are members of the Audit and Supervisory
Committee while other Directors are not. This structure
can be visualized by imagining two concentric circles
centered around the Company. Audit and Supervisory
Committee members belong to the inner circle closest to
the Company, and these members proactively visit
actual business sites from time to time to perform audits.
Directors like me who are not Audit and Supervisory
Committee members belong to the outer circle and ourrole is to point out any issues we become aware of froma third-party perspective. I think it is greatly beneficial
that Mitsubishi HC Capital has these two types of directors who concurrently look at the same matters while
maintaining a healthy distance from each other.
Sasaki We asked Mitsubishi HC Capital for slightlyQ

more advanced explanations so that we can be better
prepared to undertake more in-depth discussions. The
Company responded and now always provides us withprior explanations regarding key matters. This allows us
to ask questions and hold discussions before attending
the Board of Directorsʼ meetings. Initially, there weremany directors and I worried about whether we could all
express our opinions within the allotted time. Fortunately,
improvements have been made and the meetings areoperated smoothly under current conditions.
Hiraiwa Mitsubishi HC Capitalʼs Board of Directors isbalanced and there is an atmosphere in which we can
express anything on our minds. Individual directors havea wide variety of opinions and ways of thinking. This is
an ideal composition for the Board of Directors and is
especially effective because each director has a different
background. The Board is well-balanced, and it is easy
for us to express our opinions because members maketremendous efforts to listen to and learn from each other.

What do you notice during your on-site
inspections?

Kaneko Recently, the COVID-19 pandemic has subsided, and so there are increased opportunities foron-site inspections, which have opened my understanding of the Companyʼs business. I hope to continue
utilizing my observations at these on-site inspections fordiscussions with the committee.
Saito The Audit and Supervisory Committee had me
make inspection visits to domestic business sites, and in

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Introduction

early 2023, I engaged in direct discussions with the top
management of a recently acquired U.S. marine container leasing company. These inspections were meaningful because I gained an understanding of the thinking
and qualifications of local managers as well as their formof governance and degree of loyalty to their company.
The results of a company naturally reflect whether
local management only has a matter-of-fact attitude ofgive and take or whether they undertake management asa member of the group with a deep sense of affiliation

with their company. I feel that all the managers I met
understood our company and had a mindset of desiring
to work together. Furthermore, I also realized that they
undertook management with a sense of unity with thelocally dispatched Japanese staff.
It is highly commendable that the executive teamprovides the Audit and Supervisory Committee with suchopportunities. This opportunity renewed my strong
desire to contribute to the Company.

Recently we hear the term “offensive and defensive governance” as a function expected of
Outside Directors. What types of matters do you
pay close attention to from this perspective?

Hiraiwa In my role as an Audit and Supervisory
Committee member, I believe my primary responsibility
is defensive governance. Information regarding guidanceand support from the head office is also important for
on-site inspections. I look at whether the Companyʼsgoals are being permeated and promoted in the workplace and whether necessary communications andreports are properly sent to the head office. I believe thatchecking on these matters is also a key role of the Audit
and Supervisory Committee members.
Japanese companies still probably have some weaknesses in offensive-oriented governance. This is why I was
so surprised when our executive team talked about “creating a corporate culture that does not fear failure.” Thatsaid, I fully support this idea and will make my utmost
efforts to encourage this. Everybody will combine theirstrengths to protect Our Mission. I believe this will help
foster offensive-oriented governance at the Company.
Nakata I spend considerable time reading the materials
provided by the Company before each board meeting. In
examining these materials, I sometimes run into ambiguous areas that I do not understand. This makes me think

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What are your thoughts about the role of Outside
Directors as representatives of stakeholders andshareholders?

Nakata To reiterate, on behalf of shareholders, I pointout matters that appear odd from a third partyʼs perspective and areas that would be considered normal inother organizations.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Hiraiwa In particular, although Outside Directors ofcourse make their best efforts for the interests ofminority shareholders, we must never lose sight ofmatters that benefit all stakeholders, including employees and partner companies.
Saito Considering ways to maximize a companyʼssustainability will ultimately lead to rational discussions
for both minority shareholders and employees.

Toward being a leasing business that creates new value without fear of failure

Implementing offensive and defensive governance
Q

Q

Message from the
President & CEO

something might be occurring that the Company isunaware of and it is my job to point this out. I am notsure whether my method is an offensive or defensive
approach.
Sasaki There are times when matters arise internallythat are difficult to speak out about within the Company
or to tell the President & CEO. Offensive-oriented governance involves being aware of such matters as much as
possible and pointing these out when necessary.
Kaneko I think there are two aspects of offensive-oriented governance. The first is to properly confirm aprocess when managers take an offensive approach. A
primary role is to ascertain whether any matter has been
overlooked and, ultimately, provide sound support foroffensive-oriented management. The second aspect is toclosely examine how risk management is undertaken. If
the risk management system is properly functioning after
assuming a risk, a system is in place for going on to thenext offensive. Mitsubishi HC Capital has strong
bank-related elements and undertakes extremely sophisticated risk management, so we have created an environment in which we can easily provide support.
Saito Our inherent duty is to strengthen our defense
against any situations that could damage corporate
value. Alternatively, I believe we have a duty to contribute as much as possible to the “offensive” mission ofincreasing corporate value.

Q

Lastly, please tell us your expectations about the
future of the Company.

Saito Mitsubishi HC Capital has formulated 2025
MTMP and has drawn an overall picture toward realizing
its 10-Year Vision. However, there are some areas where
the head has moved out in front and the body is unable
to catch up. This makes it essential to quickly create amanagement system that firmly manages these aspects.
Sasaki There are features of the leasing business thatare generally difficult to understand. Nonetheless, theleasing business holds the potential to do various thingsand can create diverse value while incorporating societyʼs needs. Generating synergies between the twocompanies will, of course, not be simple. Even so, I
expect that Mitsubishi HC Capital will successively
create new value without fear of failure.
Nakata I highly acclaim Our Mission, “Contribute to aprosperous and sustainable future by creating social value
through maximizing the potential of assets,” which wasannounced at the time of the merger in April 2021. This isbecause Our Mission embodies a variety of possibilities.
The word “asset” can conjure images of tangible
things as well as intangible concepts such as businessand know-how. The term “leasing business” mentioned
by Director Sasaki can be applied not only in its classicalmeaning but also to broader concepts. For example, one
future possibility for Mitsubishi HC Capital is to expand
its leasing business while concurrently moving beyond
the leasing business into different domains.

Although the two former companies before themerger differed in terms of culture and tradition, the determination to change while working together toward thefuture is embedded in Our Mission. This is very appealing.
Hiraiwa Looking at the current situation, full integration
has been completed, and 2025 MTMP has just gotten
underway. Despite many disagreements during theprocess, we have forged a consensus and are now off
and running in the same direction as the new company.
In other words, we all share a common awareness andthis will serve as a strength for the future. I hope
Mitsubishi HC Capital can realize a new business modelthat will change Japan, where there is a strong sense ofstagnation. Furthermore, I would also like to see
Mitsubishi HC Capital provide venues where young
people can work freely. Mitsubishi HC Capital has thecourage and foundation to continuously tackle newchallenges even if it occasionally experiences failures. I
hope Mitsubishi HC Capital will not overthink small
matters in its day-to-day operations and will continue tomove towards a big future.
Kaneko An extremely large benefit of the integration isthat it created a stable base of tangible and intangible
assets and diversified our portfolio. I have great expectations for the ways these assets will be deployed tocreate new value. Mitsubishi HC Capital as a whole isvibrant and young. Mitsubishi HC Capital also has aculture of encouraging young people to take on challenges and providing them with a variety of experiences.
I would like to see Mitsubishi HC Capital develop humanresources who can globally play active roles.

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