PRESS RELEASE
17 MARCH 2023

NIKKO ASSET MANAGEMENT CO., LTD.

Revisions to Nikko AM’s Standards for Exercising Voting
Rights on Japanese Stocks
Nikko Asset Management Co., Ltd. (Nikko AM) is pleased to announce that we will revise our Standards for Exercising
Voting Rights on Japanese Stocks, and apply the revised standards beginning with the general meetings ofshareholders held in or after April 2023.
Nikko AM makes voting decisions in accordance with the firm’s Guidelines on Exercising Voting Rights and Standards
for Exercising Voting Rights on Japanese Stocks. The guidelines and standards are complementary. The Standards forExercising Voting Rights on Japanese Stocks set specific standards to enable Nikko AM to exercise voting rights in linewith its Guidelines on Exercising Voting Rights. An overview of these revisions is as follows.
Overview of revisions
We will make the below main revisions to our Standards for Exercising Voting Rights on Japanese Stocks, and apply therevised standards from April 2023.
1.
Shareholder returns criteria
2.
Performance standards
3.
Independence of outside directors
4.
Cross-shareholdings
5.
Sustainability criteria

1. Shareholder returns criteria
In principle, we will vote against resolutions for reappointing directors in any of the following cases:
1）A total shareholder return ratio below 30% and a return on equity (ROE) under 8% for the past three fiscal
years2）If a company is cash-rich and its total shareholder return ratio was below 40% and ROE was under 8% for thepast three fiscal years (a cash-rich company has a net cash to total assets ratio of at least 30% and an equity
ratio of at least 50%)3）If a company has posted net losses for three straight fiscal years and pays dividends
Background to revisions
We will deploy return on equity as a returns criterion, setting the ROE threshold at 8% and encouraging companies
with figures exceeding that level to grow by funding investments with retained earnings rather than returning
profits to shareholders. Companies with ROEs below that threshold should pay higher returns than before,
depending on their financial positions. We will change from “adverse impacts on financial soundness” to “payingdividends during three consecutive years of losses” to clarify our criteria.

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2. Performance standards
If a company’s ROE was under 5% for the past three fiscal years and is in the bottom 50% of its sector (one of theTokyo Stock Exchange’s 17 sectors), we will vote against reappointing directors for the relevant terms.
Background to revisions
We set our minimum ROE requirement for companies in our portfolio at 5%. We recognize that ROEs are chronically
low in some industries. We will accordingly vote against reappointing directors only if a company’s ROE is in thebottom 50% of its sector.
3. Independence of outside directors
We will vote against a resolution to appoint an outside director who has not been or will not be registered with afinancial instruments exchange as an independent director. We will continue to apply other requirements that weindependently stipulate.
Background to revisions
To represent the common interests of shareholders, we expect outside directors to oversee managements fromobjective perspectives, independently of those who execute operations. They should also oversee conflicts ofinterest between managements or controlling and minority shareholders. We simultaneously consider it important
to ensure diversity of abilities, experiences, and values among directors and to make boards of directors moreeffective. We accordingly consider the balance between independence and effectiveness among outside directors,
and employ independent director notification forms.
4. Cross-shareholdings
If cross-shareholdings account for 20% or more of net assets (although we would factor in quantitative reduction
targets and progress with those efforts), we will, in principle, vote against resolutions for appointing director whois top management.
Background to revisions
Reducing cross-shareholdings is a longstanding issue. Given those corporate efforts have lagged in this respect, weare deploying a new quantitative criterion to encourage managements to lower these shareholdings.
5. Sustainability standards
We will augment criteria we established during a previous revision with specific assessment items. In principle, wewill vote against resolutions to appoint a director who is top management if deeming that the actions of companies
with quite high greenhouse gas emissions are inadequate in three respects. The first is establishing medium- andlong-term emission reduction targets in keeping with the Paris Agreement. The second is formulating anddeploying roadmaps. The third is disclosing information in line with Task Force on Climate-Related FinancialDisclosures (TCFD) recommendations.
Background to revisions
We will clarify criteria by adding specific assessment items. We are currently conducting evaluations in line with theTCFD framework, basing decisions on these evaluations. In 2021, we joined the Net Zero Asset Managers initiative.
That global asset manager endeavour seeks to virtually eliminate greenhouse gas emissions by 2050. We arecommitted to leveraging suitable methodologies and knowledge to track progress with corporate climate change
efforts. We look forward to ongoing corporate action on key issues, including those relating to climate change.
Additional information:

Refer to our website for more detail. (https://en.nikkoam.com/voting-rights#votingrights2)– ENDS –en.nikkoam.com2

About Nikko Asset Management
With US$203.9 billion* under management, Nikko Asset Management is one of Asia’s largest asset managers, providing
high-conviction, active fund management across a range of equity, fixed income, multi-asset and alternative strategies.
In addition, its complementary range of passive strategies covers more than 20 indices and includes some of Asia’s
leading exchange-traded funds (ETFs).
Headquartered in Asia since 1959, Nikko Asset Management and its subsidiaries employ personnel representing around30 nationalities, including approximately 200 investment professionals**. The firm has a presence through subsidiaries
or affiliates in a total of 11 countries and regions. More than 400 banks, brokers, financial advisors and life insurancecompanies around the world distribute the firm’s products.
The investment teams benefit from a unique global perspective complemented by the firm's historic Asian DNA,
striving to deliver consistent excellence in performance. The firm also prides itself on its progressive, solution-driven
approach, which has led to many innovative funds launched for its clients.
For more information about Nikko Asset Management and to access its investment insights, please visit the firm’s
homepage.
* Consolidated assets under management and sub-advisory of Nikko Asset Management and its subsidiaries as of 31 December
2022.
** Including employees of Nikko Asset Management and its subsidiaries as of 31 December 2022.
Important Information
This document is prepared by Nikko Asset Management Co., Ltd. and/or its affiliates (Nikko AM) and is for distribution only under suchcircumstances as may be permitted by applicable laws. This document does not constitute personal investment advice or a personal
recommendation and it does not consider in any way the objectives, financial situation or needs of any recipients. All recipients are recommended
to consult with their independent tax, financial and legal advisers prior to any investment.
This document is for information purposes only and is not intended to be an offer, or a solicitation of an offer, to buy or sell any investments orparticipate in any trading strategy. Moreover, the information in this document will not affect Nikko AM’s investment strategy in any way. The
information and opinions in this document have been derived from or reached from sources believed in good faith to be reliable but have notbeen independently verified. Nikko AM makes no guarantee, representation or warranty, express or implied, and accepts no responsibility orliability for the accuracy or completeness of this document. No reliance should be placed on any assumptions, forecasts, projections, estimates orprospects contained within this document. This document should not be regarded by recipients as a substitute for the exercise of their own
judgment. Opinions stated in this document may change without notice.
In any investment, past performance is neither an indication nor guarantee of future performance and a loss of capital may occur. Estimates of
future performance are based on assumptions that may not be realised. Investors should be able to withstand the loss of any principal investment.
The mention of individual securities, sectors, regions or countries within this document does not imply a recommendation to buy or sell.
Nikko AM accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this document, provided
that nothing herein excludes or restricts any liability of Nikko AM under applicable regulatory rules or requirements.
All information contained in this document is solely for the attention and use of the intended recipients. Any use beyond that intended by Nikko
AM is strictly prohibited.
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intended for distribution to persons in Japan. Registration Number: Director of the Kanto Local Finance Bureau (Financial Instruments firms) No.
368 Member Associations: The Investment Trusts Association, Japan/Japan Investment Advisers Association.
United Kingdom: This document is communicated by Nikko Asset Management Europe Ltd, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority (the FCA) (FRN 122084). This document constitutes a financial promotion for the purposes of theFinancial Services and Markets Act 2000 (as amended) (FSMA) and the rules of the FCA in the United Kingdom, and is directed at professional
clients as defined in the FCA Handbook of Rules and Guidance.
Luxembourg and Germany: This document is communicated by Nikko Asset Management Luxembourg S.A., which is authorised and regulatedin the Grand Duchy of Luxembourg by the Commission de Surveillance du Secateur Financier (the CSSF) as a management company authorised
under Chapter 15 of the Law of 17 December 2010 (No S00000717) and as an alternative investment fund manager according to the Law of 12
July 2013 (No. A00002630).

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3United States: This document may not be duplicated, quoted, discussed or otherwise shared without prior consent. Any offering or distributionof a Fund in the United States may only be conducted via a licensed and registered broker-dealer or a duly qualified entity. Nikko AssetManagement Americas, Inc. is a United States Registered Investment Adviser.
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Comprehensive Risk Information on Mutual Funds: http://en.nikkoam.com/risk-information-mutual-funds

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