Examples of Good Practice in Corporate GovernanceTokyo Stock Exchange, Inc.
December 2, 2019

*This English translation is for reference purpose only.

1Introduction
Japan‘s corporate governance reform has made certain progress through various measures, as evidenced by higher
levels of board independence and increasing usage of optional nomination/remuneration committees, among other things.
From the perspective of Japanese companies achieving real sustainable growth and increasing corporate value over themid- to long-term from now on, it is expected that if companies can deepen their understanding of the Corporate
Governance Code’s principles and use that understanding to act substantially towards achieving those aims, as well as
carrying out good quality disclosure which includes the thinking behind their actions, this will lead to more constructive,
effective engagement between companies and investors.
However, it is pointed out that while some companies are working on governance based on their business environmentand disclosing sufficient useful information that is easily understood, there are also those whose initiatives and contents ofdisclosure are mere formalities.
As such, Tokyo Stock Exchange, Inc. (TSE) has selected good examples of companies we consider to have carried out
substantial initiatives based on the Principles of the Corporate Governance Code, such as including cost of capital in their
management strategies and strengthening the function of the board, which are seen as important parts of increasing
corporate value over the mid- to long-term in Japan, and communicated these to shareholders in an easy-to-understandway. TSE is now publishing these as disclosure exemplars in the document “Examples of Good Practice in Corporate
Governance". Examples come mainly from Corporate Governance Reports submitted by listed companies. We hope thatthese will serve as a reference for companies looking into initiatives toward mid- to long-term corporate value increase andlooking to improve disclosure about those initiatives, and for investors to use as concrete examples of good practice whenengaging with companies.
（Remarks)
 These examples are principally based on information disclosed in Corporate Governance Reports, also include otherdisclosed information such as related statutory documents (proxy statement, etc.) and voluntary disclosure documents(integrated reports, etc.) that can be used as a reference.
 Some descriptions include excerpts with changes to the layout and format (bold and underlined text, etc.) as necessary.
 For each example, the good points evaluated by TSE are stated in a green box.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

2

Contents
1. Management in recognition of cost of capitalEisai Co., Ltd. ･･･････････････････････6
Santen Pharmaceutical Co, Ltd.･････････8
Sanwa Holdings Corporation･･･････････10

2. Roles of the board of directors
i.
Analysis and evaluation of the effectivenessof the Board




ii.

Mitsui & Co., Ltd.･･････････････14
Asahi Group Holdings, Ltd.･･･････18
EBARA CORPORATION ･･････････21

Director and kansayaku training



iii.

ii.







T&D Holdings, Inc.･･････････････30
Daiichi Sankyo Co., Ltd. ･･････････31

i.

Views on skill balance, diversity and size of
board



Mitsubishi Chemical Holdings Corporation･･･35
Hitachi, Ltd. ･･･････････････････････････36

Policies and views on reduction of rossshareholdings / Assessment of appropriatenessof cross-shareholdings
ii.

Mitsubishi UFJ Financial Group, Inc. ･･････45

Exercise of voting rights on crossshareholdings


SHIBUYA CORPORATION････････････････48
NIHON PLAST CO.,LTD.･･････････････････49

5. Roles of Asset Ownersi.

Initiatives of companies that adopt fund type
corporate pension plans

3. Preconditions for Board Effectivenessi.

Kao Corporation･･････････････････････38
The Gunma Bank, Ltd.･･････････････････40

4. Reduction of Cross-Shareholdings

Mizuho Financial Group, Inc.･･････25
Konica Minolta, Inc.･････････････27

Activities of optional nomination committee
and optional remuneration committee

Initiatives for ensuring board Effectivenessii.

Panasonic Corporation･･････････････････53
Seven & I Holdings Co.,Ltd.･･･････････････55
CORONA CORPORATION ･･･････････････57

Initiatives of companies that adopt defined
contribution corporate pension plans

NIPPON EXPRESS CO., LTD.･･･････････････59
Haruyama Holdings Inc. ･････････････････60Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

3

1. Management with awareness of cost of capital- Corporate Governance Code Principle 5.2 -4Corporate Governance Code

1. Management in recognition of
cost of capital

Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans
Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans
When establishing and disclosing business strategies and business plans, companies should articulate their earnings
plans and capital policies and present targets for profitability and capital efficiency after accurately identifying thecompany’s cost of capital. Also, companies should provide explanations that are clear and logical to shareholders withrespect to the allocation of management resources, such as reviewing their business portfolio and investments in
fixed assets, R&D and human resources, and specific measures that will be taken in order to achieve their plans andtargets.
(Background and context of this Principle)

 Purposes for Establishing this Principle
 Corporate governance reform is aimed at sustainable growth of companies and enhanced corporate value overthe mid-to long-term.
 It is necessary to make decisive management decisions, such as reviewing their business portfolio andinvestments in fixed assets, R&D and human resources, and specific measures after accurately identifying thecompany’s cost of capital.

 Identifying Cost of Capital Targets for profitability and capital efficiency shall be presented after the company's cost of capital is accurately
identified.

 Decisive Decision-making by Management Companies should provide explanations with respect to the allocation of management resources, such as
reviewing their business portfolio and investments in fixed assets, R&D and human resources, and specificmeasures that will be taken in order to achieve their plans and targets.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

5

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Eisai Co., Ltd. (4523, First Section, Pharmaceutical) - 1
Corporate Governance Report (June 20, 2019)[Disclosure Based on the Principles of the Corporate Governance Code]* Excerpt[Principle 5-2 Determination / Announcement of Management Strategy and Management Plans]
The Company has adopted equity spread (ROE in excess of shareholders’ cost of capital) as a KPI of corporate
value, and aims to create a positive equity spread (10-year average) over the medium- to long-term. Whilepharmaceutical company shares are classified as defensive, the Company conservatively assumes a cost ofequity of 8%. Furthermore, the Company has set investment selection criteria for strategic investment (VCIC:
Value-Creative Investment Criteria), and ensures value creation by using NPV with approximately 200 types ofrisk-adjusted hurdle rates, and Internal Rate of Return (IRR) spread as KPIs.
Pursuing value creation in excess of positive-equity spread over the medium- to long-term, under the mediumterm business plan ‘EWAY 2025’, the Company aims to attain ROE at the 10% level and an equity spread at the
2% level for fiscal 2020, as the midpoint of the plan. For fiscal 2025, the final year of the plan, the Company is
mindful of attaining ROE at the 15% level and an equity spread at the 7% level.

 Specifying equity spread as a KPI for its corporate value, the company aims at having a positive tenyear average over the mid- to long-term.
 Cost of shareholder’s equity is conservatively set at 8%.

 Investment selection criteria for strategic investment are specified, and NPV and IRR spread withhurdle rates are set as KPIs.
 Targets for ROE and equity spread are gradually set to pursue creating greater corporate value.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

6

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Eisai Co., Ltd. (4523, First Section, Pharmaceutical) - 2
Integrated Report 2019

* Excerpt

https://www.eisai.com/ir/library/annual/index.html

 ROE is divided into three elements:“margin”, “turnover”, and “financial
leverage”, and measures to improveand enhance them are specified.

 In terms of improving “turnover”,
the company refers to reduction ofcross-shareholdings and states thatit sold seven stocks in FY2018.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

7

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Santen Pharmaceutical Co, Ltd. (4536, First Section, Pharmaceutical) - 1
Corporate Governance Report (June 28, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Principle 5-2]
[Establishing and Disclosing Business Strategies and Mid-to-Long Term Business Plans]Aiming for realization of Santen’s long term strategic vision 2020 (“Vision 2020”) to become “a Specialized Pharmaceutical Company with a Global Presenceby 2020,” Santen has actively implemented growth investments such as those relating to research and development activities or business development,
and concurrently therewith, actively promoted business expansion in Asia and EMEA where high market growth is expected. In June 2018, aiming for therealization of Vision 2020 and construction of a path toward sustainable growth beyond 2020, Santen publicized “MTP 2020,” which is the mid-termbusiness plan for 2018 to 2020.
In MTP 2020, while increases in the three functions of “customer satisfaction,” “profitability” and “organizational strength” are positioned as the core of
our activities, Santen endeavors to outperform the market through making progress in global business strategy, enhancing our product pipeline anddeveloping new treatment options, while raising the strength/efficiency of our business framework and boosting our human resource and organizational
capabilities. In addition, given that Santen will actively take initiatives to realize profits and invest in growth, Santen has set three financial indicators(i.e., sales growth rate, core operating profit margin and full ROE) as goals and objectives. Santen has also embarked on the construction of a long term
vision and strategy beyond 2020.
Santen moves forward with the construction of its business strategy with a view to new needs arising from lifestyle changes, pursuing new technologies
and capturing global market growth.
Santen aims to enhance profitability and maximize cash generation and eventually shareholder value, through formulation of competitive advantage in thefield of ophthalmology. In addition, Santen has formulated its capital policy, fundamental to which is implementing in an appropriate balance both theretention of earnings for future growth and the distribution of profits to shareholders, while pursuing a capital structure, including capital efficiency andfinancial soundness, which is optimal for Santen. Through optimization of profitability, capital efficiency and financial soundness, retained earnings, andshareholder returns, Santen makes efforts to improve its ROE.
Also, Santen’s basic policy concerning profitability is to achieve more profit than capital cost, and thus it has set evaluation standards therefor, basedon which investment decisions have been made. Furthermore, regarding recovery of invested capital, in addition to the improvement of a management
control system to monitor a business situation that is globally expanding and developing, Santen has made efforts to maximize cash through a cash
management system that includes management of tax issues.
Santen has disclosed its long-term visions and mid-term managerial plans on its website. Concurrently, Santen has explained, through shareholders
meetings and results briefings, specific measures and policies toward the achievement of its goals.
https://www.santen.co.jp/ja/ir/document/plan.jsp

 Three financial indicators (sales growth rate, core operating profit margin, and full ROE) are set as objectives.
 To realize profit that exceeds cost of capital,
standardsInc.
arein making investment decisions.
Ⓒ2019 evaluation
Tokyo Stock Exchange,
Allspecified
rights reserved.

8

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Santen Pharmaceutical Co, Ltd. (4536, First Section, Pharmaceutical) - 2
Medium-Term Plan “MTP2020” *Excerpt
https://www.santen.com/en/ir/document/pdf/mtg2018to2020.pdf

 Three financial targets compared withpast results are clearly described.
 Under the fundamental policy to
become “a Specialized Pharmaceutical
Company with a Global Presence”,
business strategies are detailed withenhancement of three functions:profitability, customer satisfaction, andorganizational strength.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

9

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Sanwa Holdings Corporation (5929, First Section, Metal Products) - 1
Corporate Governance Report (June 28, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans]
The company periodically reviews cost of capital (currently WACC is set at 6%) and positions based on
cost of capital *SVA (the company's own EVA) as one of the important pillars of management.
In making profit plans and capital policies, the basic policy is to keep SVA positive (increase incorporate value), and also set targets such as ROE and capital ratio.
The company also strives to contribute to increasing corporate value by reviewing the businessportfolio and comprehensively considering circumstances for each investment (M & A investment,
capital investment, R & D investment, human resource investment, etc.), etc., and reviewing by
quantitative indicators such as operating profit, SVA, and ROE.
At the same time, as part of the allocation of funds (shareholder returns), the basic policy is to target a
dividend payout ratio of 35% of net income attributable to shareholders of the parent.
* SVA=Operating profit after tax – Invested capital x WACC (6%)

 Cost of capital is periodically reviewed and, based on the assessment, SVA shall be kept positive in
profit planning and capital policy planning.
 The company strives to improve corporate value by reviewing its business portfolio and weighing
capital investment, R & D investment, etc. against operating profit, SVA, ROE, etc.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

10

Example of good practice for “Creating and publicizing corporate strategies and plans”

1. Management in recognition of
cost of capital

Sanwa Holdings Corporation (5929, First Section, Metal Products) - 2
Third Mid-Term Management Plan (2019-2020) *Excerpt
https://contents.xj-storage.jp/xcontents/AS02460/7a757c27/aca2/4eae/add7/1d72e02ea29e/140120190522433198.pdf

 Higher SVA and ROE are set
as objectives to increase
corporate value.
 How SVA is calculated iswell described with adiagram.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

11

2. Roles of the board of directors
i.

Analysis and evaluation of the effectiveness of the Board- Corporate Governance Code Supplementary Principle 4.11.3 -12Corporate Governance Code

2. Roles of the board of directors

Supplementary Principle 4.11.3
Analysis and evaluation of the effectiveness of the Board
Supplementary Principle 4.11.3
Each year the board should analyze and evaluate its effectiveness as a whole, taking into consideration therelevant matters including the self evaluations of each director. A summary of the results should be disclosed.
(Background and context of this Principle)
 Purposes for Establishing this Principle
 The board of directors must engage in a continuous process of implementing measures to effectively fulfill its roles andresponsibilities. These measures encompass a variety of actions ranging from ensuring that not only the duties of eachboard member but of the entire board itself are being carried out appropriately, as well as periodically reviewing thestructure and steering of the board while identifying issues and how such issues can be solved or strengths leveraged

 Analysis and Evaluation of the Effectiveness of the Board Analysis and evaluations should start with each director evaluating him/herself as a minimum standard, and whencoupled with other evaluations, including those of the board of directors as a whole, it can become a springboard for
discussions.
 In order to strengthen independence and objectivity, companies may seek analysis and evaluation by outside parties.
(Companies in the U.K. are requested to seek outside evaluation once every three years.)
 Evaluation items need to be periodically reviewed in response to changes in key points and priorities to enhance
effectiveness.

 Disclosure of Summary of Analysis and Evaluation Results
 Summaries of analysis and evaluation results need to be appropriately disclosed, including issues identified in such
evaluations.
 Companies may also disclose (1) evaluation methods, (2) questionnaire items, (3) status of responses to issues
identified in the results from effectiveness evaluations in the previous fiscal year, (4) evaluation results for the current
fiscal year, and (5) steps to take to further improve board effectiveness.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

13

Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Mitsui & Co., Ltd. (8031, First Section, Wholesale Trade) - 1
Corporate Governance Report (June 20, 2019)[２．Matters on Functions of Business Execution, Auditing, Oversight, Nomination
and Remuneration Decisions (Overview of Current Corporate Governance System)]* Excerpt(iii) Evaluation of effectiveness of the Board of Directors
Each year, the Board of Directors analyzes and evaluates its effectiveness, taking into
consideration relevant matters, including self-evaluations of each Director, anddiscloses a summary of the results.
The methods and results of the evaluation of effectiveness of the Board of Directors
for the year ended March 31, 2019 are summarized as follows:＜Evaluation method＞(1) In January 2019, questionnaires pertaining to matters such as the composition of
the Board of Directors, its operational status, and topics for deliberations, were
distributed to fourteen Directors and five Audit & Supervisory Board Members(hereinafter referred to as the "2019 questionnaire").
(2) Moreover, opinions were exchanged regarding the effectiveness of the Board of
Directors in meetings attended by all External Directors and External Audit &Supervisory Board Members (hereinafter referred to as the “External member
meetings”) held on February 1, 2019.
(3) In its meeting held on February 12, 2019, the Governance Committee engaged in
discussions on the basis of the results of the 2019 questionnaire and External member
meetings.
(4) The Board of Directors, after discussing such matters while taking the GovernanceCommittee’s report into account, decided on the matter of evaluating its effectivenessfor the year ended March 31, 2019 in its meeting held on March 20, 2019.
With respect to the carrying out of the above evaluation method, at a GovernanceCommittee meeting held in November 2018, the decision was made, as the current
format’s effectiveness was recognized previously, to persist with the current selfevaluation format involving the evaluation of the effectiveness of the Board of
Directors for the year ended March 31, 2019, upon having verified the adequacy ofprocesses that encompass methods of evaluating the effectiveness of the Board of
Directors carried out by a third party.

＜Questionnaire items＞
Major categories of questionnaire items of the 2019 questionnaire are listed below.
The 2019 questionnaire contains fields for free comments related to such categories,
and has been evaluated using methodology that involves assigning one of five grades
to each question. Furthermore, evaluation also encompasses the extent to which
effectiveness of the Board of Directors has improved in comparison with the previous
year by assigning one of three grades, in order to gain an understanding of progressachieved in that regard.
I. Composition of the Board of Directors
II. Operational status of the Board of Directors
III. Deliberations of the Board of Directors
IV. Roles and duties of the Board of Directors
V. Advisory Committees
VI. Execution of duties of the Directors and Audit & Supervisory Board Members
themselves
VII. Support, etc. for Directors and Audit & Supervisory Board Members
VIII.Overall comments＜Initiatives in the year ended March 31, 2019 geared to achieving greater
effectiveness＞
During the year ended March 31, 2019, the Board of Directors and the Board of
Directors Secretariat have engaged in the following initiatives taking into accountresults of the evaluation of effectiveness of the Board of Directors for the previous
year. The Governance Committee also held meetings in September and December
2018, where committee members confirmed, reported and otherwise took action
with respect to challenges of improving effectiveness and the status of initiatives
geared to resolving issues.

 Evaluation method is summarized with reasons for adopting aself evaluation format, questionnaire items, and the like.
 Initiatives in the current fiscal year are described based on the
results from evaluating the effectiveness in the previous fiscal
year.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

14

Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Mitsui & Co., Ltd. (8031, First Section, Wholesale Trade) - 2(Continued)- Composition of the Board of Directors
In November 2018, a free discussion session at the Company’s training institute(hereinafter referred to as the "free discussion") was held, during which discussions
were held on the design of the Company’s governance and organizational structure,and more detailed discussions were held on what would be the most optimalcomposition of the Board of Directors in accordance with the design of theorganizational structure to be chosen for the Company. In addition, Mr. Uchiyamada(Chairman of Toyota Motor Corporation), who has significant business experience,
was appointed as External Director at the Annual General Meeting of Shareholders
held on June 20, 2019.
A significant majority of the External Directors and External Audit & Supervisory Board
Member (hereinafter referred to as the "External members") responding to the 2019questionnaire provided favorable assessment concerning the composition of theBoard of Directors. However, opinions were also raised that, in order to make future
improvements, the total number of Directors should be reduced, or that the ratio ofExternal Directors should be increased, favorable opinions were raised that the
number of people with business experience has increased, and opinions were also
raised that there will be an expectation to discuss the knowledge, experience, andattributes required of External Directors in the Nomination Committee.
- Topics for the Board of Directors to deliberate
In addition to formulating agenda items which would be suitable topics for discussion
with External members, the Board of Directors also held meetings to discusscompany-wide themes such as internal controls, risk management, sustainability, andcybersecurity, as well as issues based on trends and current social circumstances.* In
addition, a discussion on the responses and concerns in the capital markets took placein an External member meeting. Furthermore, discussions also took place regarding
the Company’s policies with respect to the coal business through deliberations on
individual business projects, as well as the Company’s policies with respect tobusinesses in the non-resources sectors.*
A significant majority of the External members responding to the 2019 questionnaire
provided favorable assessment concerning the items deliberated at meetings of theBoard of Directors, and a majority of the respondents overall feel the situation has
improved in comparison with the previous year.

（Excerpt）- Methods of deliberation by the Board of Directors
As opinions were raised in the previous year’s evaluation of the effectiveness of theBoard of Directors that the Board of Directors should have an opportunity for free
discussion with respect to the methods of deliberation in meetings of the Board of
Directors, the free discussion was held in which all Directors and Audit & Supervisory
Board Members discussed the following topics:・ The Company’s governance and organizational structure
・ Themes, current situation, and issues for realizing sustainable growth・ The Company’s human resources to support sustainable growth
A significant majority of External members responding to the 2019 questionnaire
provided favorable assessment concerning the methods of deliberation in meetings ofthe Board of Directors, and a majority of the respondents overall feel the situation has
improved in comparison with the previous year. On the other hand, as a matter for
further improvements, opinions were raised that it was necessary to accurately
communicate discussions and nuances at management meetings in order to ensurethat External Directors are well aware of the importance of individual matters.
- Matters concerning the Advisory Committee
For the fiscal year ended March 31, 2019, there was an expansion of the reporting of
the topics of deliberation and results of such deliberations for each Advisory
Committee to the Board of Directors, and initiatives were implemented to establish
the frequency of meetings and enhance discussions of each Advisory Committee.
A significant majority of External members responding to the 2019 questionnaire
provided favorable assessment, and a majority of the respondents overall feel thesituation has improved in comparison with the previous year. On the other hand,
opinions were raised that while the number of deliberations being reported by each
Advisory Committee to the Board of Directors have increased as well as there being an
increase in transparency, expectations are being placed on discussions being
conducted at future meetings of the Board of Directors, and as a result, the mattersrequiring further improvement were able to identified.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

15

Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Mitsui & Co., Ltd. (8031, First Section, Wholesale Trade) - 3(Continued)＜Summary of evaluation results＞
Taking the aforementioned initiatives into account, the Company has reviewed theresults of the 2019 questionnaire, and outcomes of exchanges of opinion at theExternal member meetings and deliberations of the Governance Committee and theBoard of Directors. Accordingly, with respect to effectiveness of the Board of
Directors during the year ended March 31, 2019, the findings made by the Board of
Directors are as follows:- Many commented that improvements have been achieved in addressing thechallenges stated last year of (i) composition of Directors, (ii) matters for deliberationby the Board of Directors, (iii) methods of deliberation by the Board of Directors, and(iv) Advisory Committees.
- The Board of Directors has a wealth of diversity, and has prepared a system structure
to secure in place to ensure effective management oversight.
- Meetings of the Board of Directors have been operating smoothly, underpinned byadequate support of the Board of Directors Secretariat in areas such as preparing
materials for meetings of the Board of Directors, provision of information, andscheduling.
- The Board of Directors has been securing ensures sufficient time for deliberations
and engaging in constructive discussions and exchanges of opinions.
- The direction and business strategies of the Company are actively being discussed by
the Board of Directors. In addition, by taking advantage of the opportunities for free
discussions between Directors and Audit & Supervisory Board Members including
External members, a wide range of discussions concerning the realization of theCompany’s sustainable growth were able to take place.
- At meetings of the Board of Directors, reports are given on results of risk analysis
from Company-wide and multiple angles, based on which the Board of Directors
discusses and reviews such risks drawing on knowledge furnished by respective
Directors and Audit & Supervisory Board Members.
- The Board of Directors appropriately supervises the development and operation ofinternal control systems and risk management systems.
- The respective Directors and Audit & Supervisory Board Members, uponunderstanding the Board of Directors’ duty to carry out oversight and auditing of the
management, have all been devoting sufficient time andeffort in fulfilling their responsibilities as Directors or Audit & Supervisory Board
Members from an objective standpoint separate from business execution.
- The Company adequately ensures the availability of opportunities and funds forenabling Directors and Audit & Supervisory Board Members to acquire knowledge
necessary to fulfill their roles and duties, and also on the whole the Company has
ensured availability of frameworks for collaboration involving External members, themanagement, the Independent Auditor, and the Internal Auditing Division.
Based on the details summarized above, the Company’s Board of Directors concludes
that it has adequately maintained its effectiveness during the year ended March 31,
2019. On the other hand, the following issues were recognized as issues that are
required to be addressed in order to achieve greater effectiveness of the Board of
Directors.
＜Further Initiatives geared to achieving greater effectiveness＞- More detailed deliberations on individual business projectWith respect to the relationship between individual business projects and companywide strategies to be discussed at meetings of the Board of Directors, as well ascompany-wide strategies and business plans, the Company has implemented thefollowing measures based on the opinions and recognition of issues from pastevaluations of effectiveness.
Year Ended March 31, 2017
A review was undertaken on the explanatory materials for individual business projects
and by putting forward the Company’s strategies and positioning in the asset
portfolio, efforts were made to discuss the major direction of the Company throughdiscussions on individual sales projects.
Year Ended March 31, 2018
In order to create more opportunities to discuss the major direction of the Company,
such as the Company’s corporate strategy and medium-term management plan,
discussions with respect to the business plan and the new medium-term management
plan were held at a meeting of the Board of Directors following the same discussionsat an External member meeting. In addition, the issues of ‘Key issues in the capital
markets and the Company’s IR activities’ and the ‘Company’s Digital Transformation’
were discussed at External member meetings.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

16

Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Mitsui & Co., Ltd. (8031, First Section, Wholesale Trade) - 4(Continued)
However, several opinions were raised such as that in the current fiscal year, there
was difficulty in gaining an overall picture by analyzing individual business projects.
Based on these opinions, efforts will be made to have more detailed deliberations on
individual business projects by creating materials that provide easy-to-understandexplanations of the positioning of individual business projects as part of the segment
strategies.
- About the free discussion
With respect to the free discussion, opinions were raised that "we were able todiscuss the direction of the Company and business strategies", "more active
discussions were able to take place" and "the format of the training camp was good",
and all Directors and Audit & Supervisory Board Members responded that the same
concept should continue to be held in the next fiscal year. On the other hand, as
matters for improvement, the participants expressed their expectations for further
improvement by devising ways to implement themes and methods of the free
discussions.
Based on these opinions, it is intended that the free discussion will continued to beheld by continuing to devise and improve methodologies for the free discussion andselecting themes- Further improvement of the operation of the Board of Directors
With respect to the operation of the Board of Directors, there were opinions callingfor (i) further acceleration of the distribution of materials which are intended to bepre-distributed; (ii) enhancing deliberations on important individual businesses
projects; (iii) further use of written resolutions; and (iv) more accurate, objective, andclear sharing of discussions at the Management Committee.

 Issues that require further initiatives are disclosedwith background and evaluation result summaries.

Based on these opinions, the Board of Directors is committed to further improving theoperations of the Board of Directors by (i) sharing materials at the draft stage; (ii) withrespect to important business projects, enhancing the provision of information toExternal members in multiple angles and in an objective manner, including by
providing more detailed written reports, allocating more time, and the provision of
explanations by the Business Division in charge of the business project, as well as theGeneral Manager of the Investment Administrative Division; (iii) further utilizing
written resolutions; and (iv) further improvement of the accuracy, objectivity, andclarity of discussions at the Management Committee.

- About the Advisory Committee
With respect to the Advisory Committee of the Board of Directors, opinions wereraised that “the deliberation and discussion by the Advisory Committee has beenenriched, but the extent to which there is a understanding by Directors other thanthose who are committee members, is unknown” and opinions were raised that there
were expectations to further enhance the reporting of discussions at the Advisory
Committee meetings to the Board of Directors.
The Advisory Committee is committed to enhancing deliberations by the Board of
Directors concerning the direction and action policies of each Advisory Committee, as
well as continuing to regularly report the activities of the Advisory Committee to theBoard of Directors.
- Method of evaluation of effectivenessRegarding the method of evaluating the effectiveness of the Board of Directors,
opinions were raised that it would be preferable to conduct a third-party evaluation
periodically, and that advice and evaluation should be sought from third parties
regarding the ways in which self-evaluation are being conducted, as well as thecontents of the questionnaire.
Based on these opinions, the Board of Directors will consider using a third-party
evaluation to evaluate the effectiveness of the Board of Directors for the next fiscal
year.
The Company’s Board of Directors will continue to work to maintain and improve theeffectiveness of the Board of Directors, including the matters described above, toensure thorough supervision of management by the Board of Directors, and to aim forsustainable improvement of corporate value.

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Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Asahi Group Holdings, Ltd. (2502, First Section, Foods) - 1
Corporate Governance Report (March 26, 2019)[Disclosure Based on the Principles of the Corporate Governance Code]*Excerpt(Supplementary Principle 4-11-3)
The Company’s Board of Directors ha s analyzed and evaluated effectiveness of
the Board of Directors in fiscal 2018 for realizing the “growth oriented
governance in order to further develop “Management for Corporate Value
Enhancement,” and has opted to disclose summarized results of those efforts,
as provided below.
I. Overview of results of analysis and evaluationi) Conclusion• The Company’s Board of Directors concluded that the Board of Directors was“functioning effectively” in fiscal 2018.
ii) Analysis and evaluation• The responses “performed adequately” or “performed adequately overall”
accounted for a high proportion of the answers to many of the questions on
the effectiveness evaluation questionnaires submitted by each Director and
Audit & Supervisory Board Member.
• In addition, nearly all answers involved proposals, advice and indications as tochallenges, in particular with regard to such subjects as the allocation ofduties between the Board of Directors and the Nomination Committee,
Group governance including overseas operations, risk management, and theformation of corporate culture, showing high awareness of issues.
• In addition to the above mentioned questionnaire, in order to obtainobjective opinions, interviews were conducted between third parties and all
Outside Directors, the Chairman of the Board of Directors, and the President
and Representative Director, CEO, and an explanation of their opinions on theevaluation was received from these third parties.

iii)Results of the effectiveness evaluation questionnaire regarding the
response to issues recognized in the previous fiscal year
• For issues recognized, discussions were held in relation to the matters
including corporate governance improvement, ESG initiatives, theestablishing of a new Group Philosophy. As a result, the related items forall such issues on the questionnaire held a large number of “ performed
adequately” and “ performed adequately over all” responses, confirmingthat improvements are under way.
• Within these, it has been recognized that further discussions should beheld for areas that need sustained enhancements, as follows. For“continuous improvement of the effectiveness of the Board of Directors,”
deliberation of succession plans by the Board of Directors and global risk
management; for “promoting discussion on corporate social value and ESG
initiatives,” what sort of role should be played by the Board of Directors,
and how it should be monitored; for “cultivation of a corporate culture
shared throughout the Group,” the allocation of roles between the Boardof Directors and the executive side of the Company.
II. Initiatives going forward
After having held discussions based on the many suggestions submitted byeach Director and Audit & Supervisory Board Member, the Company’s Boardof Directors will work to improve the effectiveness of the Board of
Directors, premised on awareness of the three points listed below.

 Evaluation of responses to issues recognized in the previous fiscal year and items that require continuous improvement based on theevaluation are described concretely.
 Remaining issues and initiatives to solve them are specified.
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Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Asahi Group Holdings, Ltd. (2502, First Section, Foods) - 2(Continued)i)Strengthening the effective corporate governance system- Enhancing the effectiveness of the Board of Directors and theNomination/Compensation Committees • Establishing a shared understanding with regard to matters that should be
handled by the Board of Directors, matters that should be handled by the
executive side, and matters to which a cooperative approach should betaken• Setting out matters for the jurisdiction of the Board of Directors, and theNomination/Compensation Committees, respectivelyii)Putting in place a risk management system in preparation for thestrengthening of Group governance• Arranging supervision by the Board of Directors of the succession of the top
management for Asahi Group HD and other important Group companies• Setting out and finalizing the risks to be recognized and monitored by the
Board of Directors, and drawing up methods for their monitoringiii)Reinforcing ESG initiatives• Clarifying the role taken by the Board of Directors with regard to ESG
initiatives• Building a mechanism to monitor the state of ESG initiatives
III. Methods of analysis and evaluation
With the aim of making corporate governance more substantial, theeffectiveness of the Board of Directors during fiscal 2018 was analyzed andevaluated. This was accomplished by having each of the Company’s Directors
and Audit & Supervisory Board Members conduct an evaluation between
December 2018 and January 2019 using an effectiveness evaluationquestionnaire prepared by the secretariat of the Board of Directors, with
input from third parties, and approved by the Board of Directors.

In addition, in order to obtain objective opinions, interviews were conductedin December 2018 between third parties and all Outside Directors, theChairman of the Board of Directors, and the President andRepresentative Director, CEO. The third parties were provided with copies of
the responses to the above questionnaire and a compilation of the results, inorder that their opinions might be obtained. The third
parties also gave assistance in relation to analyzing the results of thequestionnaire, and in relation to the provision of a benchmark indicator.
The Company’s Board of Directors complied results of the evaluation using theabove effectiveness evaluation questionnaire for each Director and Audit &Supervisory Board Member, and held discussions and determined theevaluation at the Board of Directors meetings held in February and March
2019 by reference to opinions on the evaluation based on the interviews by
third parties and the above questionnaire
results.
IV. Evaluation items
The main items listed in the effectiveness evaluation questionnaire are as
follows.
1. Roles and responsibilities of the Board of Directors
2. Discussions and initiatives of the Board of Directors
3. Delegation of authority to management
4. Support for appropriate risk taking
5. Global risk management and internal control
6. Structure of the Board of Directors
7. Election of senior management and Directors and succession
8. Remuneration for management
9. Dialogues with shareholders investors and stakeholders

 Analysis and evaluation methods together with concrete evaluation item, are described.
 Utilize of third party knowledge.
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Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

Asahi Group Holdings, Ltd. (2502, First Section, Foods) - 3

 Initiatives toward evaluation of the effectiveness of the board of directors are clearly explained with diagrams inreference material of analysis and evaluation result summary posted on the company’s own website.
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Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

EBARA CORPORATION (6361, First Section, Machinery) - 1
Corporate Governance Report (April 9, 2019)[Disclosure Based on the Principles of the Corporate Governance Code]* Excerpt

9. Effectiveness of the Board of Directors(1) Evaluation of the Effectiveness Supplementary Principle 4.11.3 （See Article 19 ofAppendix 2）
The Company pursues the best possible corporate governance structure and strives
for its further enhancement at all times. Each year the Board of Directors itself
analyzes and assesses the overall effectiveness of the Board of Directors to review
how the Board of Directors contributes to corporate governance functioning
effectively, identify issues and make improvements. An overview of the results is thendisclosed.
◆Efforts to Resolve Issues Recognized in the Fiscal Year 2017 Evaluation of the Boardof Directors
In fiscal year 2017, the Directors’ evaluation of the Company’s corporate governancesystem and the state of operation of the Board of Directors and each committee weregenerally high and the Company’s Board of Directors found that the effectiveness of
the Board was sufficiently ensured. However, the following were identified as areas
for improvement: identification and enhancement of discussion of long-term issues
such as growth strategy and monitoring of the progress of the Medium-termManagement Plan. Furthermore, it was confirmed that important elements related
to the effectiveness of the oversight function of the Board of Directors need to beperiodically reviewed to ensure the size and composition of the Board of Directors isright for the Company in response to changes in the Company’s business and the
management environment.
(a) Enhancement of discussion of long-term issues such as growth strategy andmonitoring of the Medium-term Management Plan.
In fiscal year 2018, the number of Independent Directors with experience of top
corporate management increased to four (4) out of the seven (7) Independent
Directors. As a result of such increase, the Board discussed thoroughly the growthstrategies of every business segment as well as the main business and the progress
and issues of the Medium-term Management Plan.

(b) Review of the size and composition of the Board of Directors
In June 2015 when the Company adopted the organizational form of a “Company withThree Committees,” the composition of the Board of Directors comprised fourteen(14) Directors, seven (7) of whom were Independent Directors. In fiscal year 2017, thenumber of Non-executive Inside Directors was reduced from four (4) to three (3).
In fiscal year 2018, the Board of Directors discussed at length the optimal size andcomposition of the Board of Directors and each committee, with particular emphaseson how to achieve more substantive deliberations. The Nomination Committee
considered director candidates for fiscal year 2019 based on these discussions.
(c) Enhancement of discussion of succession plan for the Representative Executive
Officer
The Nomination Committee held thirteen (13) meetings in fiscal year 2018, andpursuant to the succession plan specified by the Nomination Committee, it discussed
thoroughly and appointed the next President and Representative Executive Officer.
The selection process and discussions of the Nomination Committee were properly
shared with the Board, and each process was carefully conducted with transparency.

◆Fiscal Year2018 Evaluation of the Board of Directors
Analysis and evaluation process
With the cooperation of a third-party organization, the Company prepared aquestionnaire for each Director, conducted analysis of the responses, and thenimplemented individual interviews with all of the Directors to confirm the thoughtsof each Director based on their responses to the questionnaire, and analyzed theresults of the questionnaire and individual interviews. The Board of Directors
discussed the effectiveness of the Board of Directors in the Board Meetings held in
February 2019 based on the report from the third-party organization on the above
analysis, and confirmed the evaluation and future action to be taken.

 Initiatives to issues of effectiveness evaluation in the previous
fiscal year are detailed.
 Details of analysis and evaluation with use of a third party aredescribed.

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Example of good practice for “Analysis and evaluation of the effectiveness of the Board”

2. Roles of the board of
directors

EBARA CORPORATION (6361, First Section, Machinery) - 2(Continued)
Summary of the results of analysis and evaluation
As a result of the above analysis, it was found that Directors’ evaluations of thecomposition and status of operation of the Company’s Board of Directors andCommittees were generally high and the effectiveness of the Board was sufficiently
ensured. However, it was found that it is necessary to continuously engage in someissues.

[Overview of the Results of the FY2018 Evaluation About the Effectiveness of theCompany’s Board of Directors (February 22, 2019)]

Action to be taken
The Company’s Board of Directors re-affirmed that it will further increase theeffectiveness of the Board of Directors by continuously engaging in the following
actions.
О Enhancement of discussion of long-term issues contributing to the improvementof corporate value, along with progress of and issues with the Medium-termManagement PlanО Strengthening of support aimed at ongoing monitoring and enhancement of thestate of efforts and improvements after deliberation of important issues in the
Board of Directors
О Periodic reviews of the size and composition of the Board of Directors
О Enhancement of discussion on succession plans for Independent Directors→

For full disclosure on “Overview of the results of the fiscal year 2018
Evaluation about the Effectiveness of the Company’s Board of Directors,”
please see:https://www.ebara.co.jp/en/about/ir/Governance/governance/__icsFiles/afieldfile/20
19/03/01/en_board_evaluation_FY2018_1.pdf

 Future actions are specified.
 A summary of the results from the evaluation of the effectiveness ofboard of directors is announced before the AGM.

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2. Roles of the board of directors
ii. Director and kansayaku training- Corporate Governance Code Principle 4.14 -23

Corporate Governance Code

2. Roles of the board of
directors

Principle 4.14 Director and Kansayaku Training
Principle 4.14 Director and Kansayaku Training
New and incumbent directors and kansayaku should deepen their understanding of their roles and responsibilities as a critical
governance body at a company, and should endeavor to acquire and update necessary knowledge and skills. Accordingly, companies
should provide and arrange training opportunities suitable to each director and kansayaku along with financial support for associatedexpenses. The board should verify whether such opportunities and support are appropriately provided.
Supplementary Principles
4.14.1 Directors and kansayaku, including outside directors and outside kansayaku, should be given the opportunity when assuming theirposition to acquire necessary knowledge on the company’s business, finances, organization and other matters, and fully understand theroles and responsibilities, including legal liabilities, expected of them. Incumbent directors should also be given a continuing opportunity
to renew and update such knowledge as necessary.
4.14.2 Companies should disclose their training policy for directors and kansayaku.

(Background and context of this Principle)
 Purposes for Establishing this Principle

It is not always easy for directors and kansayaku to acquire the necessary knowledge and skills through their own efforts to exert theirrespective roles and fulfill their respective responsibilities. As such, listed companies need to provide continuous support such asoffering training opportunities and financial support for associated expenses.
The board should verify whether such opportunities and support are appropriately provided

 Providing Training Suitable to Each Director and Kansayaku
Training opportunities need to be suitable to each director and kansayaku: internal directors would need to learn and refresh theirknowledge of their respective roles, authority, and legal responsibilities; experienced outside directors would need to acquire andimprove knowledge on the specific business of the companies they serve. Such training opportunities should be provided at the time ofand after their appointment on a continuous basis.

 Disclosing Training PolicyTraining policies need to be appropriately disclosed. (In cases where there are different policies provided between internal and outside
directors, sufficient explanation on each policy should be provided.)Companies may also disclose actual records of training in addition to their training policies.

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24

Example of good practice for “Director and kansayaku training”

2. Roles of the board of
directors

Mizuho Financial Group, Inc. (8411, First Section, Banks) - 1
Corporate Governance Report (July 5, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Supplementary Principle 4.14.2] (Director Training)
In order to fulfill their roles in the monitoring and advising functions of the Board of
Directors, our directors proactively gather information and take efforts to be informedof the management environment and the state of business surrounding our Group.
We provide our directors on a continuing basis with “opportunities to acquire andimprove knowledge” that is necessary to fulfill their expected roles and duties.
We shall provide newly appointed directors with opportunities when taking officeto acquire the knowledge necessary to fulfill the roles and responsibilities requiredof directors, such as information on the Companies Act, other related laws andregulations as well as corporate governance, and shall provide each director on a
tailor-made basis with such opportunities after taking office as necessary.
In addition, for outside directors, each outside director is offered opportunities toacquire the necessary knowledge about our Group’s business, finance andorganizational structure at the time of appointment and continuously thereafter.
The training policy for directors is described in Article 6 Paragraph 6 of the “Corporate
Governance Guidelines.”(https://www.mizuhofg.com/company/structure/governance/g_report.html#guideline)<Key examples>
1. “Opportunities to acquire and improve knowledge” for all directors• Conduct training programs by external instructors (lawyers) centered on the duties
and responsibilities of directors for our newly appointed directors of MHFG and theThree Core Companies, etc.
• Help directors to comprehensively understand Mizuho’s management as a wholethrough various discussions and reports at the Board of Directors meetings• Annual scheduled training sessions (for directors and executive officers, etc. of ourgroup) regarding “Compliance and Customer Protection” and “Human Rights” byexternal instructors• If necessary in executing duties, opportunities are to be offered to receive separate
explanations from executive officers in charge, etc., as well as advice from andtraining by external specialists and authorities (at the company’s expense)
2. “Opportunities to acquire and improve knowledge” for outside directors
At the time of appointment• “Intensive explanations at the time of appointment” will be conducted individuallyfor each newly appointed outside director• Explanations from executive officers in charge and the General Manager of the
Corporate Secretariat on corporate identity, business, strategy, business plans,
finance and governance system, etc.
Post-appointment (Shown below are examples conducted for the fiscal year
ended March 31, 2019)• Outside Director Session*• For the fiscal year ended March 31, 2019, an Outside Director Session was held
twice, and outside directors exchanged information to share understanding andexchanged opinions on management of the Board of Directors, evaluation of theeffectiveness of the Board of Directors, and consideration necessary to establish
the new business plan.*For more information on the role, composition andoperation of the Outside Director Session, see the subsection, “Outside Director
Session” under “2. Matters regarding the function of execution of duties, audit
and supervision, appointment, decisions on compensation, etc. (Overview ofcurrent corporate governance structure)” in “II. Status of corporate governancesystem in managerial decision making, management control system regarding
enforcement and supervision and others.”• Off-site meetings on management issues (21 times from June 2018 to March 2019)• Enable a deeper mutual understanding with outside directors through free
discussions with President & Group CEO, as well as heads of in-housecompanies, groups and regional business divisions.
• Lunches following the Board of Directors meetings (at each meeting)• Help outside directors to obtain necessary knowledge through exchanging
information with internal officers.

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25

Example of good practice for “Director and kansayaku training”

2. Roles of the board of
directors

Mizuho Financial Group, Inc. (8411, First Section, Banks) - 2(Continued)• Executive reception (dinner)• Help outside directors to deepen the understanding towards the management
team.
• Attendance at meetings of the General Managers of the Three Core Companies• Help outside directors to deepen the understanding toward execution plans andtheir status based on the Group strategic policies.
• Thorough explanations of proposals prior to the Board of Directors meetings andimplementation of follow-up (after each meeting)• Help outside directors to deepen the understanding towards the proposals andto substantiate the discussions at the Board of Directors meetings by explaining
not only the structure of proposals, but also details such as the relevant financial
terminologies and business matters.
3. “Opportunities to acquire and improve knowledge” for internal officers

Similarly to directors, we provide our internal executive officers on a continuingbasis with “opportunities to acquire and improve knowledge” that is necessary
to fulfill their expected roles and duties.
• Conducting “case studies for newly appointed officers”• Root cause analysis of past crises to deepen the understanding of the awarenessand actions required of officers and leaders during crisis management.
• Conducting training sessions into “fundamental knowledge of crisis management
reporting”• Conducting annual “business continuity management training sessions”• Conducted annually on a scheduled basis to deepen the understanding of thegroup’s business continuity management framework, emergency procedures
and crisis management procedures for those who have not received lessons orexperienced such crises in the past.
• Compliance training sessions for newly appointed officers, etc.

 The company indicates that training
opportunities to acquire and improve knowledge
for all the directors, outside directors andinternal officers are provided respectively.
 In particular, a summary of training (including
actual records such as the number of training
sessions and duration) for outside directors upon
and after appointment is separately described.

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26

Example of good practice for “Director and kansayaku training”

2. Roles of the board of
directors

Konica Minolta, Inc. (4902, First Section, Electric Appliances)
Corporate Governance Report （June 28, 2019）[Disclosure Based on the Principles of the Japan’s Corporate Governance Code]* Excerpt[Supplementary rule 4-14-2 Training of Directors and Auditors]
In accordance with the Director Election Standards, the Nominating Committee selects candidates for election as Director who have thequalities needed to be a Director. The Company confirms whether new Directors require training judging from each individual’s knowledge,
experience and other characteristics. If training is needed, the Company provides suitable opportunities to receive this training.
(1) For new Independent Outside Directors, the Company provides information about the group’s structure, business activities andfinances as well as information about the medium-term business plan and its progress and other subjects. These new Directors also
receive basic information about the Company’s businesses and corporate-level functions.
(2) For Independent Outside Directors, the Company arranges visits to the development, manufacturing, sales,
service and other operations of every business unit. The Executive Officer of each business unit provides the Directors with the latest
information about that business.
Board of Directors activities in fiscal 2018:(a) Inspection tours in Japan (factories and sales offices, including at subsidiaries)
Three tours with the cumulative participation of ten Outside Directors(b) Inspection tours outside Japan (factories and sales offices, including at subsidiaries)
Four tours with the cumulative participation of five Outside Directors(c) Research activity announcement event
Research activity announcement events in two business areas with participation of three Outside Directors.
(d) External exhibitions
External exhibition with the participation of two Outside Directors.
(3) New Inside Directors provided opportunities to attend governance training held by external institutions.

 Training for directors is concisely summarized with specific items and actual records such as attendees and thenumber of training sessions are also described.
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2. Roles of the board of directors
iii. Activities of optional nomination committee and optional
remuneration committee- Corporate Governance Code Supplementary Principle 4.10.1 -28

Corporate Governance Code

2. Roles of the board of
directors

Supplementary Principle 4.10.1 Establishment of optional nomination committee andoptional remuneration committee
Supplementary Principle 4.10.1
If the organizational structure of a company is either Company with Kansayaku Board or Company with Supervisory Committee andindependent directors do not compose a majority of the board, in order to strengthen the independence, objectivity and accountabilityof board functions on the matters of nomination and remuneration of the senior management and directors, the company should seek
appropriate involvement and advice from independent directors in the examination of such important matters as nominations andremuneration by establishing independent advisory committees under the board, such as an Optional nomination committee and an
optional remuneration committee to which independent directors make significant contributions(Background and context of this Principle)
 Purposes for Establishing this Principle
 Appointment/dismissal of senior management (in particular CEO) and establishment/operation of remuneration system which
offers appropriate incentives to senior management are critical and strategical decision-making for companies. Accordingly, it isimportant to strengthen independency and objectivity of such process by using an optional nomination and remunerationcommittee.

(Recent Trends related to this Principle) Practical Guidelines for Corporate Governance Systems Revised by Ministry of Economy, Trade and Industry (Sept. 2018)
 Companies should compose these committees with outside directors as members, in principle; and, based on this, they should
consider that [i] at least the majority of the members of such committees should consist of outside directors, or [ii] the chairs ofsuch committees should be outside directors even when the number of inside and outside directors is the same.
 Report by the "Working Group on Corporate Disclosure" of the Financial System Council (June 2018)
 Companies are required to improve the completeness and method of delivery of governance information in order to promote
more constructive and effective engagement between investors and companies.
 The activities of boards of directors and committees (excluding boards of auditors and auditing committees) vary among
companies; therefore, first of all, the descriptions in Corporate Governance Reports should be improved.
 Preparation Guidelines for Corporate Governance Repots Revised (Feb. 2019) (in Japanese only) It is preferable to include descriptions of activities (frequency of committee meetings, major discussion items, attendanceof each member, etc.) of boards of directors and committees (excluding boards of auditors and auditing committees).
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2. Roles of the board of directors

Example of good practice for “Activities of optional nomination committee and optional remuneration committee”

T&D Holdings, Inc. (8795, First Section, Insurance)
Corporate Governance Report (August 1, 2019)[Supplementary explanation on optional committees equivalent to nomination or
remuneration committee] *Excerpt[Activities of optional nomination committee and optional remuneration committee]
In FY 2018, a total of seven meetings were held, and the attendance rate of each committee
was 100%. The main discussions and reports are as follows.

Nomination and Compensation Committee Overview[Purpose]-The company has established Nomination and Remuneration Committees as advisory
bodies to the Board of Directors to deliberate on the fairness and appropriateness of theappointment and dismissal of directors as well as director remuneration, etc., and toensure management transparency and improve accountability.

1st: Introduction of stock compensation system for directors
Amendment to Articles of Incorporation for shortening the term of office of directors
2nd: Appointment of candidates for directors, auditors, and substitute auditors
Appointment of executives of direct subsidiaries
3rd: FY2017 Executive evaluation
Established internal regulations for executive compensation
4th: Succession plan
Response to revised corporate governance code
5th: Executive appointment of direct subsidiaries
6th: Appointment of executive officers
Appointment of executives of direct subsidiaries
7th: Revision of internal regulations regarding executive treatment
Disclosure of executive remuneration system, etc. related to revision of Cabinet Office
Ordinance concerning disclosure of company contents, etc.

[Responsibility]-The committees deliberate on matters related to the appointment and dismissal of
directors of the Company and its direct subsidiaries, compensation for directors andmatters concerning the successor plan of the President and Representative Director of theCompany, report the results of the deliberations to the Board of Directors, and provide
opinions as necessary.
(Involvement in the appointment and dismissal of the President and Representative
Director and senior management)-The committees deliberate the evaluation results for the President and each senior
manager based on the company performance evaluation and the evaluation of thedepartment in charge. They deliberate on appointment and dismissal (reappointment /non-reappointment) of the president and senior management after checking eligibility inaddition to the evaluation of each director, report the results of the deliberation to theboard of directors, and provide opinions as necessary.
(Involvement in the president’s successor plan)-With regard to matters related to the successor plan, the committees discuss theappropriateness of the plan and periodic review of candidates, etc., report the results ofthe deliberations to the Board of Directors, and provide opinions as necessary.
[Composition]-The committees consist of the president and outside directors. The majority of thecommittee members are appointed from among outside directors to ensure
independence and neutrality. In addition, the chairperson shall be selected from among
outside directors by mutual selection of committee members.

[Attendance of committee members]
TitelsName
Job title
Attendance
Chairman
Haruka MATSUYAMA Outside director
100%
MemberNaoki OHGO
Outside directors
100%
MemberSeiji HIGAKI
Outside directors
100%
MemberHirohisa UEHARA Representative Director and President 100%

 There are detailed descriptions of deliberations/reports for each time
a committee meeting was held.
 The attendance of each member with positions and its composition
are indicated.

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2. Roles of the board of directors

Example of good practice for “Activities of optional nomination committee and optional remuneration committee”

Daiichi Sankyo Co., Ltd. (4568, First Section, Pharmaceutical)
Corporate Governance Report (June 18, 2019)[Supplementary explanation on optional committees equivalent to nomination and remuneration committees] *Excerpt
The Company has established a Nomination Committee and a Compensation Committee as advisory organs to the President regarding the determinationof such matters as the nomination of candidates for Members of the Board, Members of the Audit and Supervisory Board and Corporate Officers , thedismissal of Members of the Board, the appointment and the dismissal of CEO and their compensation to strengthen oversight of management and the
conduct of operations and ensure management transparency. These Committees both consist of at least three Members of the Board, of whom
Members of the Board (Outside) form a majority. Currently, these Committees consist only of Members of the Board (Outside).
The Compositions of each committee as of June 17, 2019 are as follows[Nomination Committee]
Chairperson: Noritaka Uji, Member of the Board (Outside)
Members: Tsuguya Fukui, Kazuaki Kama and Sawako Nohara, Members of the Board (Outside)
Observer: Tateshi Higuchi, Member of the Audit and Supervisory Board (Outside)[Compensation Committee]
Chairperson: Kazuaki Kama, Member of the Board (Outside)
Members: Noritaka Uji, Tsuguya Fukui and Sawako Nohara, Members of the Board (Outside)
Observer: Sayoko Izumoto, Member of the Audit and Supervisory Board (Outside)
The Activities of each committee for the fiscal year 2018 are as follows.
[Nomination Committee]
In the fiscal year 2018, meetings were held eight times, in April, August, September, November, December, January, February, and March, to discussmatters required for nominating candidate Members of the Board and Corporate Officers, and plan to train successors of the Pres ident and CEO and
Senior Corporate Adviser and Corporate Adviser System, as well as other matters.
[Compensation Committee]
In the fiscal year 2018, meetings were held six times, in April, May, October, January, February, and March, to discuss amounts and calculation
standards for bonuses of Members of the Board and Corporate Officers, allotment of restricted stocks, examination of remuneration level for
Members of the Board and Members of the Audit and Supervisory Board, and other matters.
 The committees are described with names and positions of the members.
 The number of committee meetings held and what was discussed are described.

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31

3. Preconditions for Board Effectiveness- Corporate Governance Code Principle 4.11 -32

Corporate Governance Code

3. Preconditions for Board
EffectivenessPrinciple 4.11 Preconditions for Board and Kansayaku Board EffectivenessPrinciple 4.11 Preconditions for Board and Kansayaku Board EffectivenessThe board should be well balanced in knowledge, experience and skills in order to fulfill its roles and responsibilities, and it should
be constituted in a manner to achieve both diversity, including gender and international experience, and appropriate size. In addition,
persons with appropriate experience and skills as well as necessary knowledge on finance, accounting and the law should be appointed askansayaku In particular, at least one person who has sufficient expertise on finance and accounting should be appointed as kansayaku.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of the board as a whole.
Supplementary Principles 4.11.1
The board should have a view on the appropriate balance between knowledge, experience and skills of the board as a whole, andalso on diversity and appropriate board size. Consistent with its view, the board should establish policies and procedures for nominating
directors and disclose them along with its view.
(Background and context of this Principle)
 Purposes for Establishing this Principle (*Analysis and evaluation of effectiveness as stated before) The board of directors has critical roles and responsibilities to support management, including the CEO.
 To fulfill the board’s function, it is vital for the entire board to be well balanced in knowledge, experience, and skills according to thecompany’s business, stage of the business lifecycle, and business environment and issues, and it should be constituted in a manner
to achieve both diversity and appropriate size.
 The revised code clarifies the necessity of ensuring diversity, including gender and international experience.
 Ensuring appropriate balance between knowledge, experience and skills, and diversity of the board
 Based on the roles and responsibilities of the board, each company needs to consider what factors and skills are required for its own
board to appoint suitable directors.
 Disclosing Views on balance between knowledge, experience and skills, diversity and size of board
 Investors should be informed about the knowledge, experience, skills, etc. that the board of directors should have as a whole, andthe reasons the board think it is necessary based on the company’s business environment and issues.
* In order to provide high added value information to investors, concrete targets and initiatives for ensuring diversity are also supposed
to be disclosed.
* Some investors recommend using a skills matrix from the perspective that a skills matrix may clearly explain to investors whatknowledge, experiences and skills are required at the board as a whole and how the board will have such functions in actual.
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33

3. Preconditions for Board Effectiveness- Corporate Governance Code Principle 4.11 -i.

Views on skill balance, diversity and size of board

34

Example of good practice for “Views on skill balance, diversity and size of board”

3. Preconditions for Board
EffectivenessMitsubishi Chemical Holdings Corporation (4188, First Section, Chemicals)
Corporate Governance Report（July 4, 2019）[Disclosure Based on the Principles of the Corporate Governance Code] * Excerpt<Supplementary Principle 4.11.1 View on the constitution of the Board of Directors>(Mitsubishi Chemical Holdings Corporate Governance Guidelines[Development of a framework that improves the soundness and efficiency ofmanagement]2(2))
In order to establish the Group’s basic management policies and oversee management appropriately, Directors who possess an advanced
level of knowledge and deep insight in management experience, finance and accounting, science technology, IT and production, risk
management, business strategy and marketing, laws and regulations, etc., and globalism and diversity are appointed.
Furthermore, in a bid to enhance oversight functions, a majority of Directors of the Board will not concurrently take on the role of Corporate
Executive Officer.
Notice of 14th Annual General Shareholders’ Meeting *Excerpt

 Corporate Governance Guidelines detail expertise andother skills, such as management experience, financeand accounting, science technology, IT and production,risk management, business strategy and marketing,laws and regulations, etc., and globalism and diversity,
required for director candidates .
 Skill matrix is described in the notice of the AGM,
illustrating board diversity and overall board balancewith background of the candidates regarding
expertise as indicated in the Corporate Governance
Guidelines.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

35

Example of good practice for “Views on skill balance, diversity and size of board”

3. Preconditions for Board
Effectiveness

Hitachi, Ltd. (6501, First Section, Electric Appliances)
Corporate Governance Report (June 28, 2019)<Supplementary Principle 4. 11. 1>
Articles 2 to 3 of Corporate Governance Guidelines of Hitachi, Ltd specify thesize of the board, composition of the board, qualification for directors, andcriteria for independency. Refer to the above <Principle 3.1 Full Disclosure> (iv).
[Corporate Governance Guidelines of Hitachi, Ltd] *Excerpt
Article 2. (Size of the Board)
Given the need for diversity of the Board views and efficiency of the Board, thenumber of directors shall be no more than 20.
The Nominating Committee shall consider the optimal size of the Board
following the policy described above in deciding the matters relating to a
proposal concerning election and removal of directors to be submitted to theGeneral Meeting of Shareholders.
Article 3. (Composition of the Board)
In nominating a director candidate, the Nominating Committee shall consider:
1.diversity in the experience and expertise, etc. possessed by the director
candidates, the composition ratio between outside directors and other directors(directors concurrently serving as executive officers and non-executive directors
from within the Hitachi Group), and other such matters in order to ensure theeffectiveness of the management supervision and decision-making functions of
the Board;
2.that to maintain the continuity of the Board, new candidates do not constituteall or almost all of the nominees; and3.the period of time since the candidate's assumption of office as theCompany's director and the candidate's age to keep bringing fresh ideas andviewpoints regularly to the Board.
In principle, a person will not be nominated as a director candidate after his or
her 75th birthday. However, the Nominating Committee may nominate a person
over 75 as a director candidate in special circumstances.

Article 4. (Qualification for Directors)
In nominating a director candidate, the Nominating Committee shall consider that:
1.such nominee has the highest personal and professional ethics, integrity andinsight; and2.such outside director nominee has distinguished records of leadership orexperience at policy making levels in business, law, administration, accounting or
education, etc., in addition to satisfying the criteria for independency as provided
for in Article 5.
Article 5. (Criteria for Independency)
The Nominating Committee considers an outside director to be independent unless:1.his or her immediate family member* is, or has been within the last three years, a
director or an executive officer of the Company or any of its subsidiaries;
2.he or she is currently an executive director, an executive officer or an employee ofa company that has made payments to, or received payments from, the Company
for property or services in an amount which, in any of the last three fiscal years,
exceeds 2% of any of the companies' consolidated gross revenues;
3.he or she has received during any of the last three fiscal years more than ¥10
million in direct compensation for his or her service as a specialist in law, accounting
or tax, or as a consultant from the Company, other than director compensations; or
4.he or she serves as an executive officer or director of a not-for-profit organization,and the Company's discretionary charitable contributions to the organization in anyof the last three fiscal years are more than ¥10 million and 2% of that organization's
annual gross revenues.
* An "immediate family member" includes a person's spouse, parents, children,
siblings, grand-parents, grand-children, mothers and fathers-in-law, sons anddaughters-in-law, spouses of siblings, grand-parents-in-law, grand-children-in-law,and brothers and sisters-in-law.

 The guidelines state that the number of directors shall be no more than 20, and that the optimal number shall be considered by thenomination committee to ensure diversified views and efficient steering of the board.
 The guidelines state that the diversity of candidates for directors is considered and that the tenure and age of directors are considered tocontinuously gain fresh ideas.
 Qualifications required for outside directors, suchas leadershiplaw, administration,accountingⒸ2019
Tokyo StockatExchange,
Inc. All rights
reserved.or education, are specified.

36

3. Preconditions for Board Effectiveness- Corporate Governance Code Principle 4.11 -ii. Initiatives for ensuring Board Effectiveness37

Example of good practice for “Initiatives for ensuring Board Effectiveness”

3. Preconditions for Board
Effectiveness

Kao Corporation (4452, First Section, Chemicals) -1
Corporate Governance Report （August 13, 2019）[Disclosure Based on the Principles of the Corporate Governance Code] * Excerpt
7 Stance on Balance among Knowledge, Experience and skills, and on Diversity
and size of the Board of Directors (Principle 4.11.1, Principle 2.4)
In accordance with the above policy on nomination, the company ensures diversity
and a balance among the knowledge, experience and skills of the Board of
Directors as a whole as follows. In addition, the Company sets the appropriate sizeof the Board of Directors in consideration of the simplification of the Board of
Directors to accelerate decision-making for dealing with business expansion andother matters, and the balance of diverse personnel required to conduct theproper deliberations and supervision of execution, premised on the delegation of
responsibility to appropriately placed Executive Officers.
Inside Directors are nominated with emphasis on their experience of theoperation, including global operation, of R&D, marketing, sales, production andother divisions related to Yoki Monozukuri and the operation of divisions related
to corporate functions that support these divisions, as well as theirunderstanding of the business environment in which the Company operates andthe Company’s strengths and issues for dealing with it, necessary for theappropriate planning and the deliberation of business strategies.
Outside Directors are nominated with the emphasis of diverse experience,expertise and high level of insight that cannot be obtained from Inside Directors
alone in deliberation on business strategies, together with consideration for their
independence. Examples include experience, including global experience,
managing a company that provides products and services in a different fieldfrom the Company, and consulting or academic experience. In addition, theCompany aims to have Outside Directors comprise approximately half of theBoard of Directors to ensure its diversity and influence.

Full-time Audit & Supervisory Board Members are nominated with emphasis on
the balance of business experience of each person to date and knowledge gained
therefrom, experience working overseas, and qualities that can ensure
independence from persons executing business.
The nominees are selected from inside the company from persons involved incorporate management of accounting and finance, operation of business, thesupply chain from R&D to production and sales and persons with overseas andother business experience.
Outside Audit & Supervisory Board Members are nominated with emphasis on
factors necessary for auditing including a high level of expertise, insight andabundance of experience relating to accounting, finance and laws and their highlevel of ethics as professionals, as well as by considering the legal and regulatory
requirement for externality and independence. In addition, to increase theindependence and neutrality of the Audit & Supervisory Board, a majority are
Outside Audit & Supervisory Board Members who meet the Standards forindependence. When nominating Audit & Supervisory Board Members, theCompany emphasizes experience, disposition, expertise and other characteristics
necessary for deliberation, etc. of the business strategies.
Moreover, the Company recognizes that, in addition to knowledge, experience andability, the diverse perspectives of people of various genders, races andnationalities and other contribute to the promotion of business, global
expansion and proper supervision and auditing, and promotes the appointmentof such diverse personnel as Directors, Audit and Supervisory Board Members
and Executive Officers.
（For further details of the active participation of women, please see “Other
Measures” in “Other” in “3. Measures to Ensure Due Respect for Stakeholders” in“Ⅲ Implementation of Measures for Shareholders and Other Stakeholders”
below）

 The report clarifies knowledge, experience, and skills required for internal and outside directors respectively, as
well as approximately half of the board members being outside directors to ensure diversity in the board.
 The company also emphasizes diversity including gender, race, and nationality and promotes diverse personnel as
directors and executive officers.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

38

Example of good practice for “Initiatives for ensuring Board Effectiveness”

3. Preconditions for Board
Effectiveness

Kao Corporation (4452, First Section, Chemicals) -2
Corporate Governance Report （August 13, 2019）[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt＜Measures to Promote the Active Participation of Women＞
The Company stresses the respect for diversity, which includes culture,nationality, belief, race, genfer, etc., in “the Kao Way,” the Company’s
corporate philosophy.
The Company believes that bringing out the power of diverse employees,
combining their diverse strengths, and capturing the changing times tocreate a new breakthrough will lead to the sustainable growth of thecompany. Based on this philosophy, the Company is promoting thedevelopment and promotion of employees in accordance with theirmotivation and abilities.
On a non-consolidated basis, the percentage of the female employees is23.8%, while the percentage of female employees in managerial positions id
16.8%.In particular, in areas such as marketing and product development ofconsumer products, consumer lifestyle research, customer communications
and product public relations, the ratio of men and women among employees isapproximately the same, and the ration of women in managerial position is36.1%. Many women play a leading role. Furthermore, Sofia Beauty Counseling
Co. Ltd. and Kanebo Beauty Counseling Co., Ltd. Were established in January
2018, and female took office as president of these companies.
While continuing to develop and promote motivated women, the Company
is going to increase the number of female candidates for executive positions
through the promotion of women’s participation in management training
and other initiatives.
The ratio of female employees and female leaders as of December 31, 2018 is
as shown below.
[The ratio of female employees]
Kao Corporation：23.8％ Kao Group in Japan：51.4％ The Entire KaoGroup：49.8％[ The ratio of female leaders]
Kao Corporation：16.8％ Kao Group in Japan：18.4％ The Entire Kao Group：27.3％
Included in MSCI Japan Empowering Women Index (WIN)FY 2018, the Company was included in MSCI Japan Empowering Women Index(WIN) for the first time. This is part of the MSCI environmental, social andgovernance (ESG) indexes, aim to represent the performance of companies
that are leading within their GICS®1 sector in terms of promoting andmaintaining gender diversity, while also meeting certain quality factor criteria.
1 The Global Industry Classification Standard (GICS) developed by MSCI Inc. and
S&P Global
Due to the positive evaluation of the Company’s principle pf respecting
diversity and inclusion, its measures to promote it, and its organizational
culture where employee can play an active role regardless of gender, theCompany was selected as a ”Nadeshiko Brand*” in 2913, 2015 and 2018.
Also, the company was selected as a “Diversity Management Selection100*” inMarch 2013.
*Nadeshiko Brand: The Tokyo Stock Exchange and the Ministry of Economy,
Trade and Industry jointly select and publicize enterprises listed on the firstsection of the Tokyo Stock Exchange that are exceptional in encouraging
women’s success in the workplace from 2013.
*Diversity Management Selection 100: The Ministry of Economy, Trade andIndustry selects enterprises that create innovation and conduct business whichleads to creation of value, by utilizing various human resources and by giving
them opportunities to fully show their competence from 2013.

 The report describes initiatives to encouraging
female employees to become executive candidates
and ratio of female employees and female leaders.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

39

Example of good practice for “Initiatives for ensuring Board Effectiveness”

3. Preconditions for Board
Effectiveness

The Gunma Bank, Ltd. (8334, First Section, Banks) -1
Corporate Governance Report (June 25, 2019)[Disclosure of reasons for not implementing the principles of the Corporate Governance Code] *Excerpt[Principle 4. 11 Preconditions for ensuring the effectiveness of the Board of Directors and Audit & Supervisory Board]
In the process of nominating director candidates including outside directors, the bank selected and narrowed down
candidates regardless of gender, age, industry, etc. Although the current gender composition is only men, we believethat gender diversity is important for ensuring the effectiveness of the Board of Directors, and we are working toachieve this.
Specifically, the bank has strengthened efforts to promote the active participation of women in order to create anenvironment in which women can work comfortably and maximize their power by setting numerical targets in its action
plan and actively promoting them. The ratio of female managers increased from 6.0% before the establishment of theaction plan (as of March 2016) to 10.3% as of March 2019. We believe that the number of women in the board of
director candidates will increase proportionately as we move forward.
When nominating candidates for outside directors, we will carry out procedures such as selecting people with a strong
awareness of having a board of directors with diverse values and perspectives based on different knowledge, experience,
and attributes.

 Insufficient gender diversity is indicated with an explanation of an action plan for personnel development of female
director candidates.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

40

Example of good practice for “Initiatives for ensuring Board Effectiveness”

3. Preconditions for Board
Effectiveness

The Gunma Bank, Ltd. (8334, First Section, Banks) -2
Corporate Governance Report (June 25, 2019)[Initiatives for respecting the position of stakeholders] *Excerpt<< Major initiatives to support women >>•We have been working on personnel assignment and manager training so that women can play an active role in more fields with a systemthat allows women to balance work and private life while maximizing their ability.
•
A female working group has been formed since November 2014, and a female professional team has been formed since April 2015, and weare continuously working to identify issues and propose solutions from the perspective of women. In April 2015, we organized a “Women's
Active Promotion Committee” chaired by the Chief Human Resources Officer, and general managers discuss and review proposals from thespecialized team. In the third term of the women's professional team in fiscal 2017, members directly made recommendations on the
promotion of women's active participation and work style reform to the Women's Active Promotion Committee, and finally to the president.
•
In June 2016, the personnel system was revised to replace the conventional 3-course system with a 2-course system for general and area
general managers with no restrictions on job responsibilities or positions, and a system that allows all employees, including women, to takeon higher positions.
•
In order to ensure that employees who take childcare leave can return to work smoothly, we have established a consistent follow-up system,
including interviews with those who are going to take maternity and childcare leave before they leave and return, as well as work returnsupport seminars, and self-development support during leave. In February 2017, we established early return allowance for childcare leaveand prepared a support system for various work styles.
•
Since August 2017, as a childcare support allowance, we have been paying JPY 200,000 to the second child, JPY 1,000,000 to the third child,and JPY 2,000,000 after the fourth child as a congratulatory gift. In addition, a special 5-day leave “Child Plan Leave” was established for the
purpose of infertility treatment.
•
In June 2017, in the development and execution of a childcare support plan based on the Act on Promotion of Measures to Support the Next
Generation of Nursing, it met certification standards that are higher than the Kurumin certification (acquired twice in the past) and obtained
a special certification (Platinum Kurumin).
•
In May 2016, we met 3 items out of 5 items as “standard-compliant general business owners” based on the Law for Promoting theAdvancement of Women, and were certified as “Eruboshi (2nd stage)”. In June 2018, fulfilling all five of the certifications we obtained thehighest ranking “Eruboshi (3rd stage)”.
•
In April 2019, based on the Law for Promoting the Advancement of Women, we established a General Employer Action Plan thatincorporates numerical targets and initiatives such as “20% increase in the ratio of female managers” and “improvement in the ratio of
female workers”. This is the second plan following that made in April 2016.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

41

4. Reduction of cross-shareholdings- Corporate Governance Code Principle 1.4 -42

Corporate Governance Code

4. Reduction of crossshareholdings

Principle 1.4 Cross Shareholdings
Principle 1.4 Cross Shareholdings
When companies hold shares of other listed companies as cross shareholdings, they should disclose their policy with respect todoing so including their policies regarding the reduction of cross shareholdings. In addition, the board should annually assess whether
or not to hold each individual cross shareholding, specifically examining whether the purpose is appropriate and whether the benefits
and risks from each holding cover the company’s cost of capital. The results of this assessment should be disclosed.
Companies should establish and disclose specific standards with respect to the voting rights as to their cross shareholdings, and votein accordance with the standards.

(Background and context of this Principle)

 Purposes for Establishing this Principle
 Companies have said that cross-shareholdings have a meaning in forming strategic alliances between companies.
 Investors expressed their concern about economic rationale such as the possibility of lower profitability or capital efficiency as wellas unstable finances and weakening of voting rights caused by a superficial function for monitoring through voting at AGMs.
 Deeper engagement is essential due to this large gap in perception between companies and investors. Enhancement of disclosure
is necessary.

 Disclosure of policies and views on reduction of cross-shareholdings
 Concrete disclosure is expected to include (i) a company’s views on holding/reduction of cross-shareholdings and (ii) concrete plan
to reduce cross-shareholdings in future.

 Assessment of appropriateness of having cross-shareholdings and disclosure of assessment results In addition to examining whether the purpose is appropriate, it is necessary to a) assess whether the benefits and risks from havingsuch cross-shareholdings cover the cost of capital and b) disclose the results.
 Disclosure information should include: (i) appropriateness of the purpose; (ii) focus points for criteria including whether the
benefits and risks from having such cross-shareholdings cover cost of capital; (iii) what has been discussed when assessing theappropriateness of having specific cross-shareholdings based on the criteria; (iv) results from the discussion and assessment.

 Establishment and disclosure of specific standards with respect to voting rights for cross-shareholdings
 Setting and disclosing the specific standards for cross-shareholdings is required to ensure appropriate exercise of voting rights.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

43

4. Reduction of cross-shareholdings- Corporate Governance Code Principle 1.4 -(i) Policies and views on reduction of cross-shareholdings
Assessment of appropriateness of cross-shareholdings

44

Example of good practice for “Policies and views on reduction of cross-shareholdings,
and assessment of appropriateness of cross-shareholdings

4. Reduction of crossshareholdings

Mitsubishi UFJ Financial Group, Inc. (8306, First Section, Banks) -1
Corporate Governance Report (November 1, 2019)[Disclosure Based on the Principles of the Corporate
Governance Code] * Excerpt[Principle 1-4]
1. Strategic shareholdings policy
The circumstances surrounding strategic shareholdings (1) havechanged greatly in recent years due to, among other things, thetightening of international financial regulations and theintroduction of the Corporate Governance Code in Japan.
Based on these changes, MUFG has adopted a basic policy that
its Group banks (2), taking into account shareholding risk, capitalefficiency and international financial regulations, shall reduce
the amount of shares held for the purpose of strategic
investment (3), following sufficient consultation with therelevant corporate business clients.
Shares held for the purpose of strategic investment will be
examined for their significance and economic rationale fromthe perspectives of our corporate business clients’ growth andearnings and the strengthening of business relations. We shallproceed with selling those shareholdings for which there isinsufficient rationale, after securing an understanding of therelevant corporate business clients. Even where there issufficient rationale, we may sell those shareholdings inaccordance with our basic policy of reducing strategic
shareholdings, taking into account, among other things, themarket environment and our business and financial strategy.

In fiscal year 2018 , MUFG reduced its strategic shareholdings
by approximately 127 billion yen (simple combined revenue ofGroup banks, acquisition cost basis), and its ratio of equity
holdings at acquisition price over Tier1 capital declined from
14. 2 % to 13.4 % as of March 31, 2019 .
MUFG aims to lower this to around 10% by the end of theMedium term Business Plan (March 31, 2021).
Note:(1) “Strategic shareholdings” refers to shares excluding trading
investments (shares of subsidiaries and affiliates are not included).
These are classified into three categories: 1. strategic investments, 2.
business strategy and 3. revitalization support, with most falling under 1.
(2) “Group banks” refers to MUFG Bank, Ltd. and Mitsubishi UFJ Trustand Banking Corporation, consolidated subsidiaries of MUFG.
(3) “Shares held for the purpose of strategic investment” refers to shares
held for the purpose of increasing the medium- to long-term economic
profits of MUFG and Group banks through maintaining and expanding
comprehensive business relations with our corporate business clients.

 The company indicates that the total amount of crossshareholdings compared with equity holdings(acquisition price over Tier 1 capital) and the target ofcross-shareholding reduction.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

45

Example of good practice for “Policies and views on reduction of cross-shareholdings,
and assessment of appropriateness of cross-shareholdings

4. Reduction of crossshareholdings

Mitsubishi UFJ Financial Group, Inc. (8306, First Section, Banks) -2(Continued)
2. Examination of significance and economic rationale ofshareholdings
At each Group bank, all shares held for the purpose of strategic
investment are being confirmed for their significance andeconomic rationale (risk-return) over the medium- to long-termfrom the perspectives of our corporate business clients’ growthand earnings and the strengthening of business relations. Basedon Principle 1-4 of the Corporate Governance Code, individual
strategic shareholdings (4) are examined by MUFG’s Board of
Directors.
Economic rationale is examined based on MUFG’s overallbusiness RORA(5), which is based on its ROE target, as a target
value.
The results of the March 31, 201 9 validations are as follows
 We confirmed the validity of the significance of theseshareholdings as most of the validation targets were heldwith the aim of enhancing the medium- to long-term
economic interests of MUFG and Group banks.

 Regarding economic rationality, the overall business RORA
of all of the verification targets as a whole exceeded 1.7
times larger than the target value. As for companies as thevalidation targets, approximately 80% of the business
partners satisfy the target value and approximately 90% of
the said shares MUFG held, both in terms of book value andmarket value, are issued by them. (6) We aim to improve
profitability from business with the business partners which
do not meet the target value and, if the profitability is not
improved within a certain time of period, may consider
selling their shares.
Note:(4) The aggregate market value held as of March 31, 2019 was approx.
4.9 trillion yen (book value: approx. 2.3 trillion yen).
(5) Overall business RORA (Return on Risk-Weighted Assets) is calculatedby dividing Profit (Income from banking transactions and trust banking
transactions with a concerned business partner group as well as stock
dividends from the said group - Expected loss - Expenses etc.) by risk
assets (total value of credits and shares) which are based on the internalrating based approach in comply with the capital adequacy requirements.
In addition, risk asset shares are calculated based on market values.
(6) The profitability is determined by whether overall business RORA of aconcerned business partner group exceeded a target value or not.

 The report states that cross-shareholdings are sold if the company deems that there is no reason for crossshareholdings or that economic rationality for cross-shareholdings is not adequate. It also indicates the method
for examining the economic rationality based on its overall business RORA.
 The report disclosed the latest examination results and states that cross-shareholdings that fell below the target
value will be considered sold if they do not improve profitability within a certain period.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

46

4. Reduction of cross-shareholdings- Corporate Governance Code Principle 1.4 -(ii) Exercise of voting rights on cross-shareholdings

47

Example of good practice for “Exercising of voting rights for cross-shareholdings”

4. Reduction of crossshareholdings

SHIBUYA CORPORATION (6340, First Section, Machinery)
Corporate Governance Report (December 10, 2018)[Disclosure Based on the Principles of the Corporate Governance Code]*Excerpt[Principle 1.4 Cross-Shareholdings]
The company holds policy-owned shares on the premise of long-termholdings for the purpose of maintaining and strengthening business andcollaborative relationships with issuing companies. However, from theviewpoint of economic rationality, we will consider future performanceand recoverability of each issue without dividend or with poor
performance, including the possibility of reduction from the perspective ofimproving capital efficiency before assessing whether or not to keep eachcross-shareholding.
Exercise of Voting Rights Policies
1. Basic policies(1) Whether issuing companies have a corporate governance system.
(i) Whether appropriately deal with legal scandals and formulate
preventive measures.
(ii) Whether outside officers have an independency to perform theirfunctions.
(2) Whether issuing companies do not continue poor performance for a
few periods including the most recent period.
(3) Whether the balance between issuing company’s internal reserves
retained earnings and shareholder returns is appropriate.

2. Specific criteria(1) Appointment of directors
We oppose appointment of the president if deficit continues for acertain period and the prospects for improvement in performance arelow.
We also oppose the proposal if independence of outside directors is
considered to be low.
(2) Appointment of kansayaku
We oppose the proposal if independence of outside kansayaku is
considered to be low.
(3) Takeover defense measures
We oppose the proposal if the takeover defense measures are not
managed objectively, there is no outside committee, or outsidecommittees whose members are not independent.
(4) Payment of dividends
We oppose the proposal if internal reserves are excessive while
shareholder returns are insufficient.
(5) Other
Other proposals are carefully examined.

 Views on the governance system, recent performance, appropriate balance between internal reserves andshareholder returns, etc. are indicated as basic policies on exercising voting rights.
 Specific criteria for exercising voting rights for major proposals, such as appointment of directors, are disclosed.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

48

Example of good practice for “Exercising of voting rights for cross-shareholdings”

4. Reduction of crossshareholdings

NIHON PLAST CO., LTD. (7291, First Section, Transportation Equipment)
Corporate Governance Report (July 10, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Principle 1.4] Cross-Shareholdings<Policy on Cross-Shareholdings>- In view of the changes in the circumstances surrounding the Corporate
Governance Code and the risk of stock price fluctuations having a significant
impact on the financial situation, it is the basic policy of the company to not holdcross-shareholdings unless such holdings are recognized as significant.
- Cases where such holdings are recognized as significant are cases where it isconsidered to contribute to maintain and improve the corporate value of ourbusiness partner and our group based on the growth potential, future potential, or
potential for business recovery of the business partner, and the assessment
results on the profitability, etc. as of now and cost of capital is taken into
consideration.
- We periodically and continuously assess the significance of holdings for eachindividual stock. For stocks that are considered to be less significant, we sell themwhile taking into considerations such as the impact on the market.
<Verification Process>- We keep holding shares satisfying profitability criteria by “quantitative
assessment”. However, considering the change in the circumstances surrounding
the Corporate Governance Code and the risk of stock price fluctuations could havea significant impact on the financial situation, we will consider selling them if
deemed necessary.
- For stocks that are considered for sale based on a “quantitative assessment”, wewill sell them unless we deem them necessary to hold to improve our corporate
value in mid-to-long-term by comprehensively taking into account businessstrategies and business relationships with business partners.
- For stocks in question in quantitative assessment, we will periodically check the
progress and review the assessment of holding such stocks once a year.
- Based on the results of the assessment process described above, we decided tocontinue holding all the stocks at the board of directors in FY2019.

<Criteria for Exercising Voting Rights>- The company believes that exercising voting rights has an impact on the
management of issuing companies and is important means of improving corporate
value. In addition to considering whether proposals meet our objectives,
whether an issuing company has established an appropriate governance system
and is making appropriate decisions that will increase corporate value over the
medium to long term, and whether holding shares will enhance the corporate
value of the group, we comprehensively judge the pros and cons before
exercising voting rights. When we do not approve the proposal, we consider
whether the stock needs to be sold.
<Process of Exercising Voting Rights>- We exercise voting rights in accordance with the voting rights exercise criteria forcross shareholdings. Each proposal is reviewed with the following items. In
addition, we carefully examine each proposal as necessary before deciding
whether to approve or disapprove the proposal.
- Major proposal types and items for careful examinationi) Shareholder returns (e.g. low dividend payout ratio in the proposal for
disposing surplus)ii) Appointment and dismissal of directors (e.g. poor performance, scandal, no
outside director appointed)iii) Director remuneration, retirement benefits (e.g. poor performance, scandal)iv) Issuance of stock options (To be issued to outside kansayaku.)v) Changes in articles of incorporation (e.g. changes which significantly impair
rights of shareholders.)vi) Takeover defense measuresvii) Business restructuring, etc.

In addition to basic policies for exercising voting rights, items
carefully examined for major proposals are disclosed.
 The company indicates that it will consider selling the crossshareholdings if it disapproves proposals presented by acompany for which it holds shares.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

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5. Roles of Asset Owners- Corporate Governance Code Principle 2.6 -50

Corporate Governance Code

５．Roles of Asset Owners

Principle 2.6 Roles of Corporate Pension Funds as Asset Owners
Principle 2.6 Roles of Corporate Pension Funds as Asset Owners
Because the management of corporate pension funds impact s stable asset formation for employees and companies’ own financial
standing, companies should take and disclose measures to improve human resources and operational practices, such as the recruitment
or assignment of qualified persons, in order to increase the investment management expertise of corporate pension funds (including
stewardship activities such as monitoring the asset managers of corporate pension funds), thus making sure that corporate pension
funds perform their roles as asset owners. Companies should ensure that conflicts of interest which could arise between pension fundbeneficiaries and companies are appropriately managed.

(Background and context of this Principle)
 Purposes for Establishing this Principle
 In order to advance corporate governance reform and promote the role of the investment chain, asset owners have a crucial role toplay in that they are close to final beneficiaries and promote and monitor asset managers who have direct engagement withcompanies. However, at the Council of Experts, it is pointed out that many companies had yet to establish a system to advancestewardship activities for corporate pension funds.

 Expected stewardship activities for corporate pension funds

Corporate pension funds are not always expected to exercise voting rights based on their own judgement or to have direct
engagement with the companies in which they invest but to monitor asset managers.
Listed Companies should take measures to improve human resources and operational practices in order to increase the investment
management expertise of corporate pension funds, thus making sure that corporate pension funds perform their roles as asset
owners.

 Appropriate management of conflicts of interest that could arise between pension fund beneficiaries andcompanies Corporate pension funds are required to select companies they invest in to maximize benefits for beneficiaries and exercise voting
rights while appropriately managing conflicts of interest.

 Expected initiatives of companies that adopt defined contribution pension plans This principle is basically aimed at defined benefits pension plans (fund type or contract type) and employees' pension fund.
However, companies that adopt defined contribution pension plans are also expected to teach their employees about asset
management in terms of stable asset formation.

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5. Roles of Asset Owners- Corporate Governance Code Principle 2.6 -(i) Initiatives of companies that adopt fund type
corporate pension plans

52Example of good practice for “Initiatives of company that adopts fund type corporate pension plan”

５．Roles of Asset Owners

Panasonic Corporation (6752, First Section, Electric Appliances) -1

Corporate Governance Report (June 28, 2019)[Disclosure Based on the Principles of the Corporate Governance Code]* Excerpt[Principle 2.6 Roles of Corporate Pension Funds as Asset Owner]
The accumulated fund of the Company’s pension fund is managed by “Panasonic Pension Fund”. This
fund exerts function as expected as the asset owner, such as accepting the Stewardship Code in Feb
2018 and working on Stewardship activities for the fund operating agencies.
The Company continues to develop the human resources for the fund in a planned manner to increase
not only the investment management expertise but also the quality of its overall operations. In cases
where the operating agencies of the fund exercise voting rights for other companies than our groupcompanies, we, the Company ensures that conflicts of interest which could arise between the pension
fund beneficiaries and the Company are appropriately managed.
(The detail can be referred at the “Policy for fulfilling the stewardship responsibility” on our PanasonicPension Fund web page. http://nenkin.jpn.panasonic.com/swship/index.html)
 The company’s pension fund has accepted the stewardship code and developed a system that allows
the fund to exert its expected function as an asset owner.
 The company develops the human resources for the fund to increase the quality of overall investment
management expertise.
 Conflicts of interest due to exercising voting rights will be avoided by respecting the judgment of theinvestment managers.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

53

Example of good practice for “Initiatives of company that adopts fund type corporate pension plan”

５．Roles of Asset Owners

Panasonic Corporation (6752, First Section, Electric Appliances) -2
Panasonic Pension Fund” Policy for fulfilling the stewardship responsibility”(Partially omitted and processed)
1. Basic policy
The fund expresses its acceptance of the “Responsible Institutional Investor”
Principles: Japan Stewardship Code in order to properly fulfill its stewardship
responsibilities as a responsible institutional investor.
As a member of the Panasonic Group, the fund recognizes its social
responsibility and fulfills its duties based on the philosophy of “Company is a
public organ of society”. In addition, we will fulfill our stewardship responsibilities
as a responsible institutional investor in order to respond to the fiduciary of ourbeneficiaries.
Since the fund does not directly manage Japanese stocks but directly holds
stocks through asset managers, as an asset owner, it requests stewardship
activities from asset managers that manage Japanese stocks, and entrusts them.
By conducting evaluations and monitoring of stewardship activities carried out
by asset managers, we will work to make the stewardship activities effective.
2. Response to Stewardship Code principles
Principle 1. Institutional investors should have a clear policy on how they
fulfill their stewardship responsibilities, and publicly disclose it.
The fund developed and publish these policies because engagement with aconstructive purpose based on in-depth understanding of investee companies
and their business environment, we believe helping enhance their corporate
value and sustainable growth from a mid- to long-term perspective will lead to
profit expansion for beneficiaries, etc. and establish this policy and announce
this.
(snip)
The fund will monitor the stewardship activities of the investment managers
utilizing interactive discussions with the investment managers and selfevaluation of the investment managers and reflect them in the evaluations of
the investment managers. When monitoring investment managers, we will
focus on the quality of engagement between managers and investee companies.

Principle 2. Institutional investors should have a clear policy on how they
manage conflicts of interest in fulfilling their stewardship responsibilities
and publicly disclose it.
The fund will avoid conflicts of interest anticipated by the fund byrespecting the judgment of investment managers when investment
managers exercise voting rights to the Panasonic Group.
The fund requires investment managers to establish and publish clear
policies to properly manage conflicts of interest that may be unavoidable
in conducting stewardship activities. We request their policies thatspecifically identify when conflicts of interest arise such as a significant
impact on voting rights and engagement, and state specific measures thatavoid such conflicts and effectively eliminate impact for each identified
phase.
The fund requests contract managers to, for example, develop agovernance system such as an independent board of directors and a third
party committee for decision making and supervision of voting rights toensure interests of beneficiaries, etc. and to prevent conflicts of interest.
We also request management teams of contract managers to recognizethat they have an important role / responsibility for strengthening
governance and managing conflicts of interest, and to promote initiatives
related to these issues. (omitted below)
 The company indicates its engagement in stewardship activities
expected of pension funds, such as monitoring managers, under its
basic policies.
 The policies aim to help enhance corporate value through engagementwith the companies they invest in and expand benefits of beneficiaries.
 Upon monitoring the investment managers, self-evaluation made by theinvestment managers is utilized and the quality of engagement between
the investment managers and companies that they invest in is focused.
 Investment managers are requested to establish and publish
management policies for managing conflicts of interest and to develop
appropriate governance systems.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

54

Example of good practice for “Initiatives of company that adopts fund type corporate pension plan”

５．Roles of Asset Owners

Seven & I Holdings Co., Ltd. (3382, First Section, Retail Trade) -1
Corporate Governance Report (June 28, 2019)[Disclosure Based on the Principles of the Corporate Governance Code]* Excerpt

Information on the Company’s corporate governance systems and initiatives, including “Disclosures based on the principles of Japan’s
Corporate Governance Code”, can be found in “Seven & i Management Report”, based on the purpose and sprit of the Corporate Governance
Code (revised on June 1, 2018).
Please refer to the following URL for “Seven & i Management Report”.
https://www.7andi.com/en/ir/file/library/mr/pdf/201908_all_b.pdf[Seven & I Management Report] * Excerpt
Roles of Corporate Pension Funds as Asset Owners [ CGC Principle 2.6 ]Investment management of the Group’s corporate pensions is operated mainly by Seven & i Holdings Employees’ Pension Fund (the “Corporate
Pension Fund”). The Company confirms that the Corporate Pension Fund performs the roles of corporate pension funds as asset owners.
1. Scheme of the Corporate Pension Fund

 The company allocates personnel withknowledge of finance and human resources tothe secretariat of the fund to monitor theinvestment managers.

The Board of Representatives consists of an equal number of appointed representatives (company side) and mutually elected representatives(employee side); the Board confirms the status of asset management twice a year and resolves the investment policy for investment portfolios
as necessary. The Executive Board executes business based on the investment policy.
As an advisory body to the Executive Head, the Pension Investment & Finance Committee consists of members belonging to finance andaccounting divisions of the Group and performs monitoring every two months based on their expert knowledge.
The Secretariat has staff members with knowledge of finance and human resources, which enables expert investment management,
including monitoring of investment managers. Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

55

Example of good practice for “Initiatives of company that adopts fund type corporate pension plan”

５．Roles of Asset Owners

Seven & I Holdings Co., Ltd. (3382, First Section, Retail Trade) -2(Continued)
2. Management of the Corporate Pension Fund

The Corporate Pension Fund confirms that all investment managers for domestic shares have accepted the Stewardship Code. The Company
monitors investment managers regarding their constructive dialogue with investee companies and status of exercising voting rights, and on
those occasions, confirms their status, including specific instances of stewardship activities. Further, the Company shares information onthese activities and investment results with employees via group magazines and other means.
Conflicts of interest are appropriately managed by executing a discretionary agreement with each investment manager for selection ofindividual investee companies and exercise of voting rights.

 Investment managers that have accepted the stewardship code are selected as asset managers.
 The report indicates that the fund monitors how the investment managers engage with companies they invest in, as
well as in their exercise of voting rights.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

56

Example of good practice for “Initiatives of company that adopts fund type corporate pension plan”

５．Roles of Asset Owners

CORONA CORPORATION (5909, First Section, Metal Products)
Corporate Governance Report (June 28, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Principle 2.6] (Roles of Corporate Pension Funds as Asset Owners)
The company has adopted a fund-type corporate pension system, and has established a system that allows the fund tofunction as an asset owner, thereby maximizing the benefits of beneficiaries.
In terms of personnel, we support the corporate pension fund to carry out appropriate activities such as monitoring
investment managers, such as assigning human resources with appropriate qualities from the parent company to the
executive director of the corporate pension fund.
When the fund manages assets, it entrusts the management of pension assets to investment managers that haveexpressed acceptance of the stewardship code. In addition, the Investment Management Committee, which consists ofpersonnel who are familiar with asset management and corporate pension plans, is held quarterly to select investment
managers, considers shares, and examines investment products based on the results of monitoring the operation
status. We have established a system to realize proper asset formation and appropriate management of pension fundfinance, and the annual performance is reported to the board of directors of the company.
Furthermore, because of the necessity to supplement the expertise of corporate pensions, we have established basic
management policies and management rules for managing pension assets. In addition, based on the fund terms,
important matters related to operation management are resolved at a delegation meeting, where half of members are
the delegations from employees who are beneficiaries, and conflicts of interest that may occur between the company
and the beneficiaries are also properly managed.
Appropriate personnel is allocated to the executive director of the pension fund for monitoring investment managers.
Investment managers are selected from among those who have accepted the stewardship code.
Investment management is regularly monitored, and the results are used when selecting contract managers.
Conflicts of interest are managed in delegation meetings where half of the members are a delegation composed of
employees who are beneficiaries.
Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

57

(Reference)
5. Roles of Asset Owners- Corporate Governance Code Principle 2.6 -(ii) Initiatives of companies that adopt defined
contribution corporate pension plans

58

(Reference) Example of good practice for “Initiatives of companies that adopt
defined contribution corporate pension plan”

５．Roles of Asset Owners

NIPPON EXPRESS CO., LTD. (9062, First Section, Land Transportation)
Corporate Governance Report (July 9, 2019)[Disclosure Based on Principles of the Corporate Governance Code]* Excerpt[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
In order to support our employees’ asset formation and reduce management risk of corporate pension funds,
we adopted the fixed contribution pension system in 2007.
In order to teach our employees how to increase their assets, we are working to educate them in how toproperly do this. As a part of new employee education, we implement fixed contribution pension seminars
and teach basic knowledge on the systems used to start asset management and relevant precautions.
We conduct investment educational seminars once a year for our pension fund beneficiaries and teachemployees the importance of long-term investments, continuous investments and diversified investments,
depending on their individual future plans. In order to make this more effective and realistic, we review theeducational content based on the monitoring results of operation status in cooperation with the operation
management institution.

 The introductory training, including basics of asset management, is provided to new employees.
 Investment educational seminars are periodically provided to all beneficiaries.
 Educational programs are reviewed based on results of monitoring operation status of beneficiaries.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

59

(Reference) Example of good practice for “Initiatives of companies that adopt
defined contribution corporate pension plan”

５．Roles of Asset Owners

Haruyama Holdings Inc. (7416, First Section, Retail Trade)
Corporate Governance Report (July 10, 2019)[Disclosure Based on the Principles of the Corporate Governance Code] *Excerpt[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The company does not have a corporate pension fund system, but has introduced a defined
contribution pension system for the stable asset formation of employees. With regard to investment
products, we have mainly chosen investment products not with high risks as much as possible but withlow fees, with a view to forming assets after retirement.
As for employee education related to investment management, in addition to posting results ofinvestment products on a dedicated site, distribution of basic knowledge videos of defined
contribution pension plans, and provision of information on each life plan and simulation. We are also
working on the training of defined contribution pension education personnel with appropriatequalities by sharing the contents of monitoring reports with DC providers and participating inseminars.
 Investment products are selected to contribute to stable asset formation for employees.
 A dedicated site is created to provide useful information such as on investment products, defined
contribution pension plans in general, and life planning.
 The company indicates that it provides training to personnel in charge of the defined contribution
pension plan.

Ⓒ2019 Tokyo Stock Exchange, Inc. All rights reserved.

60