Corporate Governance
Last Update: Jan 23, 2024
Isetan Mitsukoshi Holdings Ltd.
Toshiyuki Hosoya, Director, President and CEO(Representative Executive Officer)
Contact: General Affairs Department,
General Affairs Planning Division
Securities Code: 3099
https://imhds.co.jp/en/themes/132
The current corporate governance measures at Isetan Mitsukoshi Holdings Ltd. (the “Company”) are as
follows.

I

Basic Views on Corporate Governance, and Basic Information on Capital Structure,
Corporate Attributes, and Other Matters

1. Basic Views
Please refer to the Corporate Governance section of the Company website regarding basic views and policy forcorporate governance at Isetan Mitsukoshi Holdings.
(URL: https://imhds.disclosure.site/en/themes/132): Section titled Corporate Governance[Reasons for non-compliance with each of the principles of Japan’s Corporate Governance Code]
The Company complies with all principles of Japan’s Corporate Governance Code.
[Disclosure based on each of the principles of Japan’s Corporate Governance Code] Updated[Principle 1-3]
Basic Principles of Capital Policy
The Company addresses its capital policy and returns profits to shareholders based on its basic policy of “pursuing
the financial soundness, improvement of capital efficiency, and enhancement of shareholder returns in a wellbalanced manner while increasing corporate value through business growth.” With regard to dividends, theCompany’s basic approach is to maintain a stable level of dividends while comprehensively considering themanagement environment, business performance, and the soundness of the Group’s financial position, with a viewto steadily increasing dividends over the medium- to long-term in line with profit growth. As for the acquisitionof treasury stock, the Company will keep it in consideration on a continuous and flexible basis while giving priority
to growth investment.
[Principle 1-4, Supplementary Principles 1-4 (1)(2)]
Cross-shareholdings(1) Policy on cross-shareholdings
The basic policy of the Group is to not acquire or hold cross-shareholdings in principle, except when crossshareholdings are deemed conducive to sustainable growth and enhancement of corporate value of the Group overthe medium- to long- term. With regard to the cross-shareholdings the Company currently holds, every year at theBoard of Directors, the Company comprehensively verifies whether it is rational to continue holding such crossshareholdings from quantitative and qualitative aspects including the purpose of holding, transaction status, anddividend earnings. Regardless, the Company will proceed with phased sales in consideration of factors such as themarket environment and status of shares held with the aim of reducing cross-shareholdings.

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The number of shares held by Isetan Mitsukoshi Ltd., the largest shareholder of cross-shareholdings, was 36 as ofMarch 31, 2022. In FY2022, it sold 3 shares and holds 33 shares as of March 31, 2023.
(2) Standards for exercising voting rights in relation to cross-shareholdings
Regarding the exercise of voting rights for cross-shareholdings, an overall judgment is made as to whether or not
exercise of such rights would spur sustainable corporate value of said company or contribute to sustainable growthand enhancement of corporate value of the Group over the mid- to long-term. Such voting rights are duly exercisedfor each agenda item.
(3) Policy in the case that cross-shareholders indicate their intention to sell shares
When shareholders who hold the Company’s shares for the purpose of cross-shareholding (cross-shareholders)
indicate their intention to sell their shares, the Company will not hinder the sale of the shares by, for instance,
implying a possible reduction of business transactions.
[Principle 1-7, 4-3]
Transactions between Related Parties
Regulations on officers including the Regulations of the Board of Directors and Regulations of Executive Officers
stipulate that, in the event that a material transaction, conflict of interest transaction, or competitive transaction isentered into between the Company’s officers themselves such as Directors and Executive Officers or their
specified relatives and the Company, or between a company or organization where officers themselves or their
specified relatives hold a position as officers and the Company, the important facts of such transactions are to bedisclosed to the Board of Directors in advance for the Board of Directors to reach a decision on approval after due
deliberation of the transaction. The regulations also stipulate that, when such transactions are carried out, theimportant facts of the transactions are to be reported to the Board of Directors without delay. This rule isdisseminated throughout the Company.
In addition, the Regulations of the Board of Directors stipulate that, in the event that a material transaction, conflictof interest transaction, or competitive transaction is entered into between the Company’s major shareholders(shareholders who hold 10% or more of the Company’s voting rights) and the Company, similar procedures areto be followed. This rule is also disseminated throughout the Company.
[Principle 2-4(i)](1) Ensuring diversity
The Group believes that incorporating various perspectives and values inside the organization can be an advantage
in securing the sustainable growth of a company. Based on this recognition, the Group works to construct afoundation on which all employees can be active, and creates an environment where various human resources canfully demonstrate their capabilities regardless of gender or employment arrangements.
In addition, the Group conducts a development program called the business leader program for human resourcesof Stage A status (general manager class) in the fourth year onwards to create a pool of human resources who may
become future board members, thereby systematically ensuring diversity within the organization.
*Managerial positions Stage A status: general manager class, Stage B status: section manager/sub-section manager
class<Promoting female employees to managerial positions>
We have built various institutional frameworks to promote the career advancement of women and create anenvironment that enables them to continue working.
(FY2022: 31.0% FY2023: 30.6% *Group total including overseas)
As for targets, the Group plans to gradually increase the ratio to 33% in 2024 and 38% in 2030.
<Promoting foreign nationals to managerial positions>
The Group hires foreign nationals in line with its ideal candidate profiles regardless of nationality and has
established the same career progression framework as Japanese human resources.
(FY2022: 10.9% FY2023: 9.7% *Group total including overseas)

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The Group will maintain the current number of foreign nationals and further enhance its efforts in designing
institutional frameworks.
<Promoting mid-career hires to managerial positions>
The Group will increase the number of mid-career hires in the future to more actively incorporate new ideas, skills,
and know-how based on diverse backgrounds as a means to create innovation.
(FY2022: 6.5% FY2023: 7.8% *Group total in Japan)(2) Policies on development of human resources, creation of internal environment, and others for ensuring
diversity
The Isetan Mitsukoshi Group develops ideal human resources for the Group’s sustainable growth through the
MANABI NO MORI, a grand design for human resource development in which manabi (learning) issystematically organized, to provide employees with an environment and opportunities where they canautonomously learn, grow, and advance their careers.
As the foundation for human resource development, the Group also develops an environment in which employees
can truly feel satisfied and comfortable with their jobs, so that they can ensure physical and mental health andimprove work-life balance. The Group is working on efforts to enable each individual to work flexibly andsustainably, such as by building systems to appropriately address issues encountered by employees at different life
stages and life events, providing support for health, and facilitating diverse workstyles.
[Principle 2-6]
Functional Roles as Corporate Pension Fund Asset Owners
The Company’s retirement pension plan has transitioned to a defined contribution corporate pension plan.
Although the defined benefit corporate pension plan is still available for some retired employees, its influence on
the Company’s financial position is extremely limited. For pension investment management, qualified persons
suitable for such duties are placed in relevant departments, and we receive periodic reports on investment statusfrom financial institutions for monitoring.
[Principles 2-1,3-1(i)]Purpose of the Company (Management Philosophy, etc.), and Management Strategies and Management Plans
In order to sustain continuous growth as a company in a time of rapid change, the entire Group will take on thechallenge of continuously reinventing itself. With regard to management strategies and management plans, theGroup will transform our business model from the conventional model, promote structural reforms, and createbusiness foundations even more swiftly than before under the new Medium-term Management Plan (FY2022 to
FY2024) formulated and announced in November 2021. We have identified “a ‘special’ department store-centeredretail group that enriches the lives of its customers” as our long-term vision to be realized by utilizing ouradvantages of “goodwill,” “customers,” “human resources,” and “stores and real estate.”
In order to transform our Vision into reality, we reorganized our corporate philosophy to clarify our Mission andValues, and in 2023, we established a new “Isetan Mitsukoshi Group Corporate Philosophy.”https://www.imhds.co.jp/en/company/philosophy.html[Principle 3-1(ii)]
Basic Views and Policy Regarding Corporate Governance Based on Each of the Principles in Japan’s Corporate
Governance CodeThe Group is overhauling its corporate governance structure by ongoing efforts toward securing the transparencyof our corporate activities, speeding up management decision-making, strengthening management oversightmechanisms and enhancing internal control systems.
The Company has adopted a company with a nominating committee, etc. as its organizational design.
In order to build excellent relationships with customers, employees, shareholders and investors, business partners
and the local and wider communities—our stakeholders—we examine the status of our corporate governance andmake necessary improvements.
Refer to the Corporate Governance Guidelines on the Company website for more details.
https://imhds.disclosure.site/en/themes/132#1071

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[Principles 3-1(iii), 4-2, Supplementary Principle 4-2(1)]Policies and Procedures with Regard to Board of Directors’ Decisions Concerning Remuneration of Senior
Management Executives and Directors(1) Policy regarding the remuneration, etc. of officers
At a meeting of the Compensation Committee held on November 11, 2020, the Company established the Basic
Principles on Officer’s Compensation, which is a policy regarding the details of remuneration, etc. for individual
Executive Officers and other executives, an outline of which is as shown below.
The Company has established the following four basic principles regarding executive remuneration (excluding
External Directors) to provide incentives for demonstrating sound entrepreneurship:
1) Promotion of common interests between shareholders and officers
2) Expansion of incentive effects to improve financial results and shareholder value
3) Provision of remuneration at a level by no means inferior to the standards of overall industry (upon achieving
goals)
4) Ensuring objectivity and transparency in methods of evaluation and remuneration decision
Based on the aforementioned Basic Principles on Officers’ Compensation, the Compensation Committee, which
is a statutory committee consisting solely of External Directors, determines the policy regarding compensation,and deliberates and determines the amounts of individual compensation. The Committee is continuing to consider
making the executive compensation system even more functional as a sound incentive for the sustainable growthof the Company.
(2) Matters concerning the process for determining executive remuneration
Under the above Director Remuneration Principles, the objectivity and transparency of the entire process ofdetermining executive remuneration are ensured through the effective deliberation at the Compensation
Committee, a statutory committee that is comprised of a majority of Outside Directors and chaired by one of them.
(3) Types of remuneration, etc. of officers and the method by which they are determined
Under the Director remuneration system of the Company, executive remuneration is composed of three elements:“basic remuneration” as fixed remuneration, “bonuses” linked to annual performance, and “share-based
remuneration” as a medium- and long-term incentive. For Executive Officers, including the President and CEO(Representative Executive Officer), bonuses that are paid as a form of performance-linked remuneration shallaccount for 25% (±0% compared to FY2022) of the total annual remuneration for each individual, with the aim ofclarifying their responsibilities for business execution. (Bonuses shall not be paid to internal Directors except for
those who concurrently serve as Executive Officer, and Outside Directors.)
Meanwhile, with a view toward promoting common interests between officers and shareholders, and raising theeffectiveness of the incentive for enhancing the Group’s medium- to long-term performance and our corporate
value, the Company introduced a Restricted Share-based Remuneration System linked to share price performancein FY2020, the remuneration percentage of which is being raised gradually. For FY2023, share-based
remuneration shall account for 20% (+5% compared to FY2022) of the total annual remuneration for eachindividual.
<Bonuses>
For Executive Officers including President and CEO (Representative Executive Officer), performance-linked
bonus as described hereunder has been introduced as a strong motivation towards the achievement of goals basedon the Director Remuneration Principles. Bonuses are not paid to Directors who do not concurrently serve as
Executive Officer.
[1] Bonus payment calculation formula
Executive Officers: Base amount of bonus (monthly remuneration (5 months)) x corporate performance payment
rate x Company-wide ESG indicators[2] Corporate performance payment rate
The Group has adopted consolidated operating income as its indicator to strongly motivate officers to achievegoals under the Medium-term Management Plan and annual goals in line with the plan, with a view toward quickly

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establishing a sound operational base for the Group and launching its management on a growth track into the
future.
Specifically, the payout ratio shall be 1.00 (100%) upon the full achievement of the operating income goal the
Company should aim for, and designed to vary in proportion to the degree of achievement, with 0.00 (0%) at theminimum and no cap for the maximum. The operating income goal the Company should aim for shall be
determined for each fiscal year, based on the absolute standards of the targeted amount, with a view toward
providing clear and effective incentives.

[3] Company-wide ESG indicators
From FY2023, ESG indicators have been incorporated in the evaluation of officers’ bonuses as a motivation toachieve the Company’s mid- to long-term goal of promoting sustainability. The KPI indicators shall be determinedfor each fiscal year and are designed to reflect the individual’s degree of achievement within a ±5% range of thebase amount of bonus x corporate performance payment rate.
<Restricted Share-based Remuneration System>
In FY2020, we implemented a share-based remuneration system with restriction of transfer, with a view to further
enhancing the awareness of the Company’s Directors, including Outside Directors, and Executive Officers towards
improving shareholder value.
1) Amount of monetary remuneration receivable under the Restricted Share-based Remuneration System
For Executive Officers (including those concurrently serving as Director): Basic monthly remuneration x 4(months)
For non-executive Directors: Basic monthly remuneration x 1 (month)2) Determination of the number of shares allotted
Individual monetary remuneration receivable / Reference share price (*) (Figures under one hundred sharesare to be disregarded.)*Reference share price: the final closing price of the Company’s share at Tokyo Stock
Exchange on one business day prior to resolution on allotment (or, if no closing price is quoted on such day,the final closing price of the immediately preceding business day)3) Period during which the transfer of shares is restricted and conditions under which the restriction is lifted
Period during which the transfer of shares is restricted: 30 years
Transfer restrictions shall be lifted if the recipient retires from all offices within the Group due to the
expiration of his or her term of office, or for reasons deemed justifiable by the Company’s Board of Directors
during the transfer restriction period.
[Principles 3-1(iv)(v), Supplementary Principles 4-1(3), 4-3(1)(2)(3), Principle 4-11]
Explanation on Policies and Procedures on the Board of Directors’ Selection/Dismissal of Management Executives
and Nomination of Candidates for Director, and Individual Selection/Dismissal(1) Policies on selection and dismissal of management executive officers
The Company stipulates the maximum age and the maximum term of office for each position of senior
management Executive Officers in the Regulations of Age Limits of Executive Officers in Office to promote
appropriate rotation. Given this, selection of Executive Officers, including Representative Executive Officers andExecutive Officers with special titles, and their reappointment after the expiration of the appointment contract
shall be determined by the Nominating Committee by appropriately evaluating quantitative results of respective
Executive Officers during their term of appointment contract, as well as objective data such as management
personnel evaluation, etc. prepared by third-party agencies. In March 2022, the Company formulated the Isetan
Mitsukoshi Group Officer Policy, which sets the criteria for the appointment and dismissal of officers to ensuretransparency.

5(2) Decision on selection and reappointment of the CEO and the succession plan
The Company has positioned decision on the selection and reappointment of the CEO and the succession plan as
one of the most important tasks of the Nominating Committee, and has worked on this while ensuringtransparency and fairness. The Committee is working to further enhance such initiatives, including by obtaining
the opinions of all External Directors other than the Committee members in the deliberation process.
Specifically, in the first year of inauguration of the CEO, the Nominating Committee deliberates on the vision for
the term of office, and the CEO explains and shares the progress of management plans, future outlook, issues tobe addressed, etc. to the Nominating Committee each fiscal year. The Company has established a system underwhich External Directors who are members of the Nominating Committee independently determine theacceptance/non-acceptance of the reappointment.
In addition, the Company thoroughly shares all information on candidates for a CEO successor with theNominating Committee, including screening results of each candidate by an external management personnel
evaluation agency, training plans, and plans for relocation to sectors that each candidate should experience. The
Nominating Committee deliberates on and confirms CEO candidates for emergencies (acting CEO) at the
beginning of each fiscal year.
(3) Policy on nomination of candidates for Director
With regard to nomination of candidates for Director, the policy of the Company is to have the Board of
Directors comprised of members from a diverse range of people with broad and highly specialized knowledge
and skills, as well as high ethical standards.
When selecting candidates for Director, the Nominating Committee, which is composed of a majority ofExternal Directors and chaired by one of them, makes decisions based on the above policy on the compositionof the Board of Directors and the selection standards as below, and the proposal is submitted to the general
meeting of shareholders.
1) Must have knowledge and experience that are meaningful to the management of the Company and be wellversed in various management issues2) Must have accurate insight into and a grasp of the global trends as well as changes in the market and customers3) Must be eager to learn new knowledge and able to develop new views on management and directions based onsuch knowledge4) Must have excellent character and insight and be physically and mentally healthy5) Must have a strong sense of ethics and compliance, as well as values and personality that are appropriate for a
Director
Furthermore, for External Directors, the Company invites people from different fields and industries, primarily
those with practical management and business-world experience, while giving due consideration to ensuring
diversity of the Board of Directors when selecting candidates, in order to actively take in a wide range of opinionsfrom an objective perspective and ensure well-balanced management.
Regarding senior management Executive Officers, the Board of Directors shall determine candidates after the
deliberation by the Nominating Committee.
The reasons for nomination of each candidate for Director are described in the “Notice of the Convocation of
the Ordinary General Meeting of Shareholders” (Reference Documents for the General Meeting of Shareholders).
https://www.imhds.co.jp/en/ir/stockholder/meeting.html: Section titled General Meeting of Shareholders[Supplementary Principle 3-1(3)]The Group has positioned the promotion of sustainability as the foundation for its management strategies andidentified three priority efforts (material issues). In its Sustainability Report, the Group discloses various initiatives
for contributing to the building of a low-carbon society, managing the overall supply chain including partners,
facilitating dialogue activities, achieving the proper work-life balance of employees, etc., which comprise thesepriority efforts.

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<Investments in human capital and intellectual properties>
The Group considers people as the most important factor in achieving its management plans. Therefore, the Groupaims to improve employee satisfaction by enhancing various systems aimed at making employees feel greatly
satisfied and comfortable with their jobs. The Group also provides support for employees to autonomously build
up learning and wide-ranging experience, and fosters a culture that facilitates such efforts.
As for investments in human capital, various expenses on human resource development include personnel
expenses for training, training and education expenses, and recruiting and human resource development expenses.
The Group plans to maintain the current level of investments going forward.
(Investment in human capital for FY2022: 1.20 billion yen, expected investment for FY2023: 1.30 billion yen*Group total in Japan)
Furthermore, the appeal of department store goodwill and knowledge of sales and store development the Group
has accumulated over the years, the know-how on building individual relationships with customers, andinvestments in new digital businesses are important intellectual properties that are essential to the value creation
process of the Group. In the Medium-term Management Plan (FY2022 to FY2024), the Group has clarified its
plans to actively allocate management resources to these investments.
The Board of Directors will periodically and continuously monitor these investments in human capital andintellectual properties, in addition to following up on the progress of the Medium-term Management Plan.
<Response to the Task Force on Climate-related Financial Disclosures (TCFD)>
The Group has positioned addressing climate change as an important issue in conducting corporate activities andendorsed TCFD to promote responses more actively to climate change as a group. The Group will continue
reviewing its evaluation and analysis with more quantitative information based on environmental changes. The
Company is disclosing information on scenario analysis according to the TCFD Recommendations, which
includes responding to the risks and opportunities associated with climate change and climate-related financial
information concerning initiatives and impacts.
[Principles 4, 4-1, Supplementary Principle 4-1(1)]Responsibilities of the Board of Directors
In light of the Company’s fiduciary responsibilities and accountability to shareholders, the Board of Directors will
aim to promote the Group’s sustainable growth and enhancement of corporate value over mid- to long-term byfocusing on the establishment of general direction of the Group and the oversight/monitoring of business execution.
The Company clearly separates the roles between “execution” and “oversight” and has selected a company with anominating committee, etc. as its organizational design in order to enhance the oversight and monitoring functionof the Board of Directors and achieve rapid business execution.
The Company has built a highly objective and transparent oversight system, led by External Directors by having
Independent External Directors comprise a majority of the Board of Directors as well as establishing a statutory
Nominating Committee, Compensation Committee, and Audit Committee, whose majority members are External
Directors.
The Company has clearly set forth criteria for making proposals to be decided upon by the Board of Directors in
the Articles of Incorporation and the Regulations of the Board of Directors and other internal regulations in addition
to those stipulated by laws and regulations. As for other important matters, the Company has delegated authority
to deliberate and make decisions to Executive Officers in order to enhance the maneuverability of management.
[Principles 4-6, 4-7, 4-8, 4-11, Supplementary Principle 4-11(1)(2)]Composition of the Board of Directors
The Board of Directors shall be comprised of a diverse range of people with broad and highly specialized
knowledge, knowledge in specified business fields, and skills based on experience in corporate management, etc.
as well as high ethical standards. For External Directors in particular, the Company will invite people fromdifferent fields and industries, primarily those with sufficient management and executive experience in thebusiness world, and select people with due consideration to ensure diversity of the Board of Directors.
The Company’s Articles of Incorporation stipulates that the number of Directors shall not exceed 15. The number
of Directors shall be such that the functions of the Board of Directors can be effectively and efficiently
demonstrated. In addition, a majority of the Board of Directors shall be Independent External Directors so that7

highly objective and transparent oversight functions are demonstrated. All External Directors satisfy the
Independence Standards of the Company. (Please refer to Principle 4-9 below.)
When selecting candidates for Director, the Nominating Committee, which is composed of a majority of External
Directors and chaired by one of them, makes decisions based on the above policy on the composition of the Boardof Directors and the selection standards in [Principle 3-1(iv)(v), Supplementary Principles 4-1(3), 4-3(1)(2)(3),
Principle 4-11] “(3) Policy on nomination of candidates for Director,” and the proposal is submitted to the general
meeting of shareholders.
Furthermore, the Regulations of the Board of Directors set out that the Board of Directors shall be chaired by anon-executive Director, and the Board of Directors has been chaired by an External Director since April 2021.
In addition, the Company identifies required skills, etc. for the Company’s Board of Directors and discloses themas a skills matrix.
[Principle 4-9]
Independence Standards and Qualifications for Independent Outside Officers
In designating Outside Directors and as independent officers, the Company has compiled its proprietary“Independence Standards for Independent Directors and Independent Auditors of Isetan Mitsukoshi Holdings Ltd.,”
for assessing their independence and outside officers who do not come under any of the following categories arenominated as independent officers.
1) Business executives of the Group2) A person for whom the Group is a major business partner, or an executive director, executive or manager thereof3) A major business partner of the Group, or an executive director, executive, manager or other employee thereof4) An executive officer of a principal lender of the Group
5) A consultant or accounting or legal expert who has received financial or other economic benefits from theGroup exceeding a certain sum, other than remuneration of Directors or Audit & Supervisory Board Members
6) A shareholder or an executive officer thereof who holds at least 5% of the total issued shares of the Company
7) Any person who has come under categories 1) to 5) above in the last three years8) Spouses or relatives within the second degree of kinship of anybody coming under categories 1) to 5) above
A “major business partner” in 2) and 3) above means “any business partner for whom the annual transaction
amount with the Company, on a consolidated basis, exceeds 1% of the total annual transaction amount of either
party, over the preceding three years, even if this occurs on only one occasion,” a “principal lender” in 4) abovemeans “any lender from whom the Group’s balance of borrowings exceeds 2% of the consolidated total assets of
the Company as of the end of the fiscal year,” and a “certain sum” in 5) above means “a sum of at least 10 million
yen in any of the preceding three fiscal years.”[Principle 4-3,4-7,4-10, Supplementary Principle 4-3(1),4-10(1)]Systems to Enhance Governance Functions of the Company
The Company currently adopts a company with a nominating committee, etc. as its organizational design.
[Supplementary Principle 4-11(3)]Effectiveness Evaluation of the Board of Directors
The Company is conducting the analysis and evaluation of the effectiveness of the Board of Directors on an
ongoing basis through such means as self-evaluation questionnaires and interviews with Directors including
External Directors, which also incorporate a perspective of third-party agencies. Furthermore, the Board of
Directors discusses how to enhance its effectiveness based on the analysis and evaluation, and strives to make
improvements through formulation and implementation of action plans. An outline of the effectiveness evaluationof the Board of Directors conducted for the fiscal year ended March 31, 2022 is as follows:(1) Process
Following discussions at the Board of Directors on interim evaluations of the improvement status of issues
extracted in fiscal 2022, the Board of Directors conducted “questionnaires” and “interviews” for Executive
Officers as well as all Directors regarding the composition of the Board of Directors, content of deliberations, andoperational aspects of support.

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<Major items for questionnaire>- Roles and responsibilities of the Board of Directors- Size and composition of the Board of Directors- Operations and discussions of the Board of Directors- External Directors’ meetings- Constructive dialogue with stakeholders- Support for External Directors- Effectiveness of the three statutory committees
Next, the quantitative responses from the questionnaire and qualitative opinions from the interviews were collated
and discussed among External Directors and among Directors and Executive Officers. The results of theseevaluations were reported to the Board of Directors and multiple discussions were held among External Directors,
Executive Officers, and Directors and Executive Officers regarding policies that had been set for the next fiscal
year, based on which plans (operating policy, action plan, draft for the annual agenda schedule) were formulated
for the next fiscal year. In addition, the Nominating Committee, Compensation Committee, and Audit Committee
similarly engaged in reflections and discussions of the issues, and formulated plans for the next fiscal year.
(2) Analysis and evaluation results
The evaluation results showed that more than a certain percentage responded with “effective” or “generally
effective” to many of the questions, confirming that the effectiveness of the Board of Directors and Nominating,Compensation, and Audit Committees is ensured.
In particular, there was a marked improvement in the score for “operations and discussions of the Board of
Directors,” with a certain degree of evaluation and satisfaction regarding to improvements in agenda items,
frequency of meetings, and the implementation of open-minded and constructive discussions, etc.
With regard to “roles and responsibilities of the Board of Directors” an opinion that emerged was that “As theGroup moves from the Department store phase to the more challenging Deployment and Fruiting phases, it isnecessary to evolve the monitoring perspective of the Medium-Term Management Plan to stimulate discussions
from a long-term perspective.”
The main assessments and issues identified by the Directors and Executive Officers captured by this year’s
evaluation of the effectiveness of the Board of Directors are summarized below.
The following items in the previously formulated action plan were evaluated as having improved or having been
implemented this fiscal year:- Clarification of strategic direction by way of periodic reporting on key strategies- Establishment of a centralized system for managing the Group’s management issues- Enhancement of discussions regarding business execution through the leadership of the CEO and improved
effectiveness of the Board of Executive Officers
On the other hand, the common view was that it was necessary to continue working on these items:- Discussion of agenda items and selection of themes for the next Medium-Term Management Plan and otherissues relevant to the Company’s future from a long-term perspective- Utilizing the Board of Directors meetings for reporting and sharing information about risks- Reporting on progress on the action plans of the three statutory committees- Enhancing training that contributes to the understanding of the Company- Further improving the content (quality and quantity) of materials(3) Action plan for the next fiscal year
As a result of discussions between External Directors and Executive Officers and the Board of Directors that took
into account the evaluation results, the following operating policy and action plan for the next fiscal year havebeen established.

9<Operating policy >- Evolve the Board of Directors’ monitoring capability and create an environment that supports appropriate
executive risk-taking.
- Achieve alignment on the direction of the next Medium-Term Management Plan through discussions about theCompany’s future from a long-term perspective.
<Action plan>
1. Global direction of the Group (engage in discussions from long-term perspective)
2. Supervision and monitoring of business execution (clarify points for monitoring)
3. Improving the effectiveness of the Nominating, Compensation, and Audit Committees (cooperation between
the Board of Directors and each committee)
4. Continuously improving operations and support (enhance support for External Directors, improve efficiency of
secretariat management)(4) Summary
The Company will steadily implement the action plans formulated and periodically check the progress and statusof improvements on the issues at Board of Directors meetings, in an effort to further enhance the effectiveness of
the Board of Directors.
[Supplementary Principle 4-14(2)]Training Opportunities for Directors
The Company continuously provides Directors and Executive Officers with training to enable them to acquire
knowledge and improve their skills in accordance with their required roles and responsibilities.
For External Directors in particular, the Company ensures that they are provided with opportunities to understandthe current status of the Company and promote recognition of issues before assumption of office, as well as
opportunities to continuously update and exchange information after assumption of office.
In addition, the Company continuously provides to External Directors explanation on the environment surrounding
the Group and its business, financial position, and organizational structure when assuming their position andduring their service so that they are able to fully recognize the Group’s important management issues and makebest decisions based on their beliefs at the Board of Directors and other committee meetings.
Meanwhile, the Company continuously provides internal Directors and Executive Officers with opportunities toenhance their skills, such as external seminars, in-house discussion sessions on corporate management, and online
learning systems. In addition, the Company believes that the most important matter is to provide opportunities todevelop self-awareness and recognition as leaders who steer management for Operating Officers and presidentsof Group companies who will be candidates for Directors and top management in the future. The Company offers
opportunities to acquire knowledge necessary as officers and develop self-awareness as officers for new executive
officers and presidents of Group companies when they are newly appointed and systematically carries out anannual program, which meets attributes of each target officer, in the second year and onward.
In addition, the Company arranges external seminars as needed.
[Principle 5-1, Supplementary Principle 5-1(1)(2)]
Policy for Dialogue with Shareholders and Investors
The Company, recognizing that dialogue with shareholders and investors is important for realizing sustainablegrowth and enhancing corporate value over mid- to long-term, has formulated and disclosed a “Stakeholder
Engagement” that sets out our policies for dialogue with stakeholders.
Moreover, a liaison office for dialogue with shareholders has been established within the General Affairs
Department, and opportunities are provided for dialogue through face-to-face meetings for individual domestic
and overseas institutional investors as well as interviews and briefing sessions, in a proactive and continuous
manner to the extent reasonable. Opinions gathered from such activities will be reflected in management.
The Company practices timely and accurate disclosure by establishing Timely Disclosure Regulations and otherregulations and policies about information disclosure. Furthermore, based on its IR Policy, the Company provides
opportunities for dialogue through interviews and briefing sessions, such as results briefings by top management,

10small meetings for analysts, face-to-face meetings for individual domestic and overseas institutional investors, inaddition to the general meeting of shareholders, in a proactive and continuous manner to the extent reasonable..
In addition, Directors including External Directors appropriately respond to the extent reasonable from the positionof providing oversight (monitoring). We will continue holding dialogue with shareholders and investors.
Specific Systems and Measures to Encourage Constructive Dialogue with Shareholders and Investors
1) To promote constructive dialogue with shareholders, the President and CEO (Representative Executive Officer),Managing Executive Officer and CFO (Corporate Finance and IR), Managing Executive Officer and CSDO
(Corporate Strategy) and other senior management cooperate to develop a platform, with General Affairs
Department serving as a liaison office.
2) As a department that assists dialogue with shareholders, General Affairs Department prepares disclosurematerials and shares information, as well as providing information to responsible officers, etc.
3) The Company promptly provides information subject to disclosure to media organizations, and carries suchinformation on its website. In addition, shareholder newsletters and other notifications are prepared using easy-tounderstand terms. Furthermore, the Company organizes dialogues including dedicated meetings held by persons
in charge of investor relations with institutional investors, securities analysts, etc.
4) Opinions provided by shareholders and investors are reflected in the improvement of corporate value by broadly
sharing such information in-house and providing feedback to the management.
5) Based on the IR Policy, the Company observes a “Quiet IR Period,” during which it desists from investor
relations activities. During this period, officers and other employees of the Company desist from commenting toexternal parties on earnings results and targets, as well as other information relating to financial accounts. In
addition to the “Quiet IR Period,” pursuant to the Insider Trading Prevention Regulations, the Company neverrefers to significant matters, etc., that have not yet been publicly disclosed.
The implementation status of dialogues is described in the “2. IR Activities” of this report (status as ofDecember 2023).
[Principle 5-2]
Formulating and Publishing Management Strategies and Management Plans: “Action to Implement
Management that is Conscious of Cost of Capital and Stock Price”
1) Capturing the cost of capital
The Company calculates its cost of equity at regular intervals using the capital asset pricing model (CAPM) andworks out the weighted average cost of capital (WACC) based on the weighted costs of equity and debt. The
Company is also aware of the need to capture its cost of capital through dialogue with investors.
2) Generating ROE in excess of the cost of equity
Aiming to improve capital efficiency, the Company announced in May 2023 that it would provide returns
keeping in mind a total payout ratio at a level of 50%. Backed by the profit growth achieved through its longterm strategy, the Company raised the level of shareholder returns by doubling the amount of interim dividend
from 6 yen per share for the fiscal year ended March 31, 2023, to 12 yen per share for the fiscal year ending
March 31, 2024. Combining such boosting of shareholder returns with the enhancement of profit based on its
business strategy, the Company aims to achieve an ROE in a range of 7% to 8% in the near future.
3) Earnings management on the business segment level
In order for the Group as a whole to generate earnings that exceeds the cost of capital, the Company isestablishing a managerial accounting system to gauge the profitability of each business segment. By setting
ROIC targets and hurdle rates for investment that are commensurate with the distinctive features of eachbusiness segment, the Company will work to spread the behavioral change toward capital cost consciousness
across the entire Group.

11*Please refer to the Company website for details of our initiatives.
Integrated Report 2023: https://imhds.disclosure.site/en/themes/136 (p.36-37)
Material for the business results explanation meeting for the second quarter of the fiscal year ending March 31,
2024: https://pdf.irpocket.com/C3099/FpHG/ESWx/qyws.pdf (pp.12, 14, 30, 31)
Material for the financial results explanation meeting for the fiscal year ended March 31, 2023:
https://pdf.irpocket.com/C3099/CaoZ/nYvw/fIh3.pdf(pp.28-30)

2. Capital Structure
Ratio of shares held by overseas shareholders

From 10% to less than 20%[Current Major Shareholders] Updated

The Master Trust Bank of Japan, Ltd. (Trust account)

65,758,500

Percentage
(%)
17.21

Custody Bank of Japan, Ltd. (Trust account)

32,668,600

8.55

The Mitsukoshi Health and Welfare Foundation

13,067,832

3.42

Isetan Mitsukoshi Group’s partner holding companies

8,230,578

2.15

SHIMIZU CORPORATION

6,200,000

1.62

Meiji Yasuda Life Insurance Company

5,697,279

1.49

JP MORGAN CHASE BANK 385781

4,744,637

1.24

Isetan Mitsukoshi Group Employees Shareholding Association

4,443,586

1.16

STATE STREET BANK WEST CLIENT-TREATY 505234

4,282,200

1.12

TAIJU LIFE INSURANCE COMPANY LIMITED

3,806,300

1.00

Name / Company name

Number of shares owned

Controlling shareholders (excluding parent company)-

Parent company

None

Supplementary explanation-

3. Corporate Attributes
Tokyo Prime Market;

Listed stock exchange and market section

Fukuoka Stock Exchange

Fiscal year-end

MarchType of business

Retailing

Number of employees (consolidated basis) as of the end of
the previous fiscal year

12

More than 1,000

Net sales (consolidated basis) as of the end of the previous
fiscal year
Number of consolidated subsidiaries as of the end of theprevious fiscal year

From ¥100 billion to less than ¥1 trillion
From 10 to less than 50

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholders-

5. Other Special Circumstances Which May Have Material Impact on Corporate GovernanceIsetan (Singapore) Ltd., a subsidiary of the Company in which Isetan Mitsukoshi Ltd. holds shares, is listed on the
Singapore Exchange. Negotiations regarding major policies take place as and when required among the Company,
Isetan Mitsukoshi Ltd. and the subsidiary in question. However, the independence of the Board of Directors of thesubsidiary will be respected. The Company holds 52.7% of the voting rights in Isetan (Singapore) Ltd.

IIBusiness Management Organizations and Other Corporate Governance Systems
regarding Management Decision-Making, Execution of Business and Oversight inManagement

1. Organizational Composition and Operation
Organizational form

Company with a nominating committee, etc.

[Directors]
Maximum number of Directors
stipulated in the Articles of

15

Incorporation
Terms of office of Directors stipulated
in the Articles of Incorporation

1 yearChair of the Board of Directors

Outside Director

Number of Directors

9[Outside Directors]
Number of Outside Directors
Number of Outside Directors designatedas independent officers

6
6

13

Relationship with the Company (1)Name

Relationship with the Company (*)

AttributeaMiwako Doi

Joined the Company from another company

Hidetoshi Furukawa

Joined the Company from another company

Fukutaka Hashimoto

Attorney

Tomoko Ando

Joined the Company from another company

Hitoshi Ochi

Joined the Company from another company

Toshio Iwamoto

Joined the Company from another company

*
*

b

c

d

e

f

g

h

i

j

△

△

Categories for “Relationship with the Company”“○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲” when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Executive or non-executive director of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides remuneration as a Director/Audit & Supervisory Board Member
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal
entity)h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the Director himself/herself only)
i. Executive of a company, between which and the Company’s outside Directors/Audit & Supervisory Board
Members are mutually appointed (the Director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the Director
himself/herself only)
k. Others

14kRelationship with the Company (2)Committee
Name
MiwakoDoi

Nominating

Compensation

○

○

Audit

Indepen-dent
Director○

Supplementary
explanation of therelationship
Auditor,National Institute ofInformation andCommunications
Technology
Executive Director(Part-time),
Nara Institute of Scienceand Technology
Vice President (Parttime),
TOHOKU
UNIVERSITY
External Director,
SUBARUCORPORATION
External Director,
NGK SPARK PLUG
CO., LTD.

Hidetoshi
Furukawa○○○

Special Advisor,
SMBC Trust Bank Ltd.
Chairman,
General Incorporated
Company, Kobe City
Property Research
Outside Director,
Toagosei Co., Ltd.

15

Reasons for appointment
Ms. Doi has significant expert achievements,
extensive knowledge, and experience in the IT anddigital fields, having worked as a researcher andmanager in the information technology field at
TOSHIBA CORPORATION. At the Company, sheoffers the Board of Directors valuable advice based ona range of perspectives, including insight in thesefields. She has played a leading role in the objective
and transparent management of meetings as Chairmanof the Compensation Committee, in deliberations on
the executive compensation system and thedetermination of individual compensation amounts. Asa member of the Nominating Committee, she has
contributed to deliberation on matters including thereappointment and succession plan of the
President/CEO, the determination of candidates for
Directors, personnel change proposals for committee
members, Operating Officers and others.
Although Ms. Doi has not been involved in corporate
management other than as External Director, theCompany has reappointed her as External Director
because it expects her to utilize her extensive
knowledge and experience in the IT and digital fields
in the supervision of the Company’s management, andcontinue to demonstrate leadership as Chairman of theCompensation Committee and a member of theNominating Committee.
Mr. Furukawa has directed sales activities both inJapan and overseas, and supervised investmentbanking and corporate finance operations, at
Sumitomo Mitsui Banking Corporation. He also
served as President and Chief Operating Officer of
SMBC Trust Bank Ltd. in 2015, carrying out PMI, andpossesses extensive experience in corporate
management as well as deep knowledge in finance andaccounting based on his many years of experience atfinancial institutions. At the Company, he has
provided valuable advice at the Board of Directors
based on his expert feeling for operations, his
advanced insight into corporate management and his
specialized knowledge of finance and accounting. At
the same time, as a member of the Nominating
Committee, he has contributed to deliberation onmatters including the reappointment and succession
plan of the President/CEO, the determination ofcandidates for Directors, personnel change proposals
for committee members, Operating Officers andothers. As a member of the Audit Committee, he has
audited the execution of duties by Operating Officers
and Directors from an independent standpoint, andcontributed to a more substantial audit system
encompassing the entire Group.
The Company has reappointed Mr. Furukawa as
External Director because it expects him to utilize his
extensive experience in corporate management and his
knowledge of finance and accounting in the
supervision of the Company’s management, and toCommittee
Name

Fukutaka
HashimotoNominating

Compensation

Audit

○

Representative Partner
Attorney and Director,
Tokyo Hatchobori Law
OfficeOutside Audit &Supervisory Board
Member,
Sompo Japan InsuranceInc.
Outside Auditor,
KOKUYO Co., Ltd.

○○

Outside Director,
PRESS KOGYO CO.,LTD.
Outside Director,
Kansai Paint Co., Ltd
Representative Director,
Open the Door Ltd.

○

○

None

Ando

HitoshiOchi○

Supplementary
explanation of therelationship○○

TomokoIndepen-dent
Director

16

Reasons for appointment
contribute to further enhancing its governance as amember of the Nominating Committee and a memberof the Audit Committee.
Mr. Hashimoto possesses a high level of specialized
knowledge and experience in corporate legal affairs,
having played a leading role as an attorney-at-law formany years, appointed Representative Partner
Attorney and Director of Tokyo Hatchobori Law
Office in 2008. In addition, he has deep insight into
auditing, through his experience serving as Outside
Corporate Auditor and Outside Audit & Supervisory
Board Member of Japan’s leading listed companies.
At the Company, he has provided valuable advice at
the Board of Directors based on his specialist
perspective as an attorney-at-law, and since June
2022, he has managed the Board of Directors
appropriately as Chairman of the Board of Directors,
and contributed to strengthening the management
supervisory functions of the Company.
Although Mr. Hashimoto has not been involved incorporate management other than as External Director,
the Company has reappointed him as External Director
because it expects him to utilize his specialist
knowledge in corporate legal affairs and his insight
into auditing in the supervision of the Company’s
management, and to contribute to further enhancing
the Company’s governance as Chairman of the Boardof Directors and Chairman of the Nominating
Committee.
Ms. Ando possesses extensive knowledge andexperience concerning brand marketing, sales
planning, and strategic human resources at top global
companies from Japan, the United States and Europe,
as well as a high level of insight and experience as acorporate manager. At the Company, she offers theBoard of Directors valuable advice based on a range ofperspectives. She has contributed to deliberations on
the executive compensation system and thedetermination of individual compensation amounts asa member of the Compensation Committee. As amember of the Audit Committee, she has audited theexecution of duties by Operating Officers andDirectors from an independent standpoint, andcontributed to a more enhanced audit system
encompassing the entire Group.
The Company has reappointed Ms. Ando as External
Director because it expects her to appropriately
monitor its management from a fair and neutral
standpoint, and to contribute to further enhancing theGroup’s corporate value as a member of theCompensation Committee and a member of the Audit
Committee by actively providing comments from theperspective of an expert in corporate management,
marketing, and management personnel development.
Mr. Ochi has served in management at Mitsubishi
Chemical Holdings Corporation (currently Mitsubishi
Chemical Group Corporation), where he advocatedsustainability
management,
transformed
thecompany’s business model, promoted DX (DigitalCommittee
NameToshioIwamotoNominating○

Compensation

○

Audit

Indepen-dent
Director○

Supplementary
explanation of therelationship

Consultant,
NTT DATA
Corporation
Outside Audit &Supervisory Board
Member,IHI Corporation
Outside Director,
Daiwa Securities GroupInc.
Outside Director,
East Japan Railway
Company

17

Reasons for appointment
Transformation), and strived to carry out bold businessrestructuring and strengthen business foundations
through M&A. In addition, he changed theorganizational structure of the company to one with anominating committee, etc., and has extensive
experience in corporate management and deep insight
into IT, DX, and governance, including through thecreation of a flexible management system, while
ensuring transparency and objectivity.
The Company has newly appointed Mr. Ochi as
External Director because it expects him to utilize his
extensive experience in corporate management, hisknowledge of IT and DX, and his insight ofgovernance in the supervision of the Company’s
management, and to contribute to further enhancing its
governance as a member of the Nominating
Committee and a member of the Audit Committee.
Mr. Iwamoto has served in management at NTT
DATA Corporation for many years, and has extensive
experience in corporate management, including
systems development and the establishment of a global
brand for the company, as well as deep insight into IT
and digital, and global business. He also has deep
insight into governance, with experience as Outside
Director of one of the foremost listed companies inJapan.
The Company has newly appointed Mr. Iwamoto as
External Director because it expects him to utilize his
extensive experience in corporate management, hisknowledge of IT and digital, and his insight into
governance in the supervision of the Company’s
management, and to contribute to further enhancing
the Company’s governance as a member of theNominating Committee and member of theCompensation Committee.

[Committees]
Composition and attributes of chair(s) at each committee
Total ofmembers

Full-timemembers

Internal
Directors

OutsideDirectors

Chair

Nominating Committee

5

0

0

5

Outside Director

Remuneration Committee

3

0

0

3

Outside Director

Audit Committee

4

0

1

3

Internal Director[Executive Officers]
Number of Executive Officers

4

Concurrent service

Name
Toshiyuki Hosoya
Yoshinori Makino
Akira Kimbara
Takuya Yamashita

Company
Representation
Yes
No
No
No

Yes
Yes
No
No

Concurrent service as Director
Nominating
Remuneration
Committee member
Committee member
×
×
×
×
×
×
×
×

18

Concurrent
service as
employee
None
None
None
None

[Audit Framework]
Directors and employees to assist the Audit
Committee with its duties

Available

Matters related to the independence of these Directors and employees from the Executive Officers
In accordance with the Basic Policies for Internal Control Systems determined by the Board of Directors, theCompany has established and is operating an organizational unit dedicated to the role of assisting the Audit
Committee under the instruction thereof. Personnel matters (appointment and transfer, etc.) of its staff shall require
the consent of the Audit Committee.
Cooperation between the Audit Committee, the accounting auditors and the Internal Audit Division
The Audit Committee and the Internal Audit Division receive explanations from the accounting auditors on theiraudit plan and audit results and hold periodical meetings, etc. to ensure adequate cooperation.
If the accounting auditors submit a report to the effect that there are misconducts committed regarding executionof duties by Executive Officers or Directors, or material facts regarding laws and regulations or the Articles ofIncorporation (including facts that may impact ensuring adequacy of documents on financial calculation),
necessary investigations will be conducted after deliberation at the Audit Committee and necessary measures will
be taken in a timely manner such as reporting to the Board of Directors or providing advice or recommendations
to Executive Officers.
In addition, the Company ensures the cooperation between the Internal Audit Division and the Board of Directors
as well as the Audit Committee by stipulating provisions under various internal regulations. The Internal Audit
Division reports to the Audit Committee on the internal audit plan, audit results and the progress of audits acrossthe Group, while coordinating information exchange.

[Independent Officers]
Number of Independent Officers

6

Matters relating to Independent Officers
The Company designates all outside officers qualifying as independent officers as independent officers.

[Incentives]
Implementation status of incentive policies for

Performance-Linked Remuneration,

Directors and Executive Officers

Other

Supplementary explanation
Under the Director remuneration system of the Company, executive remuneration is composed of three elements:“basic remuneration” as fixed remuneration, “bonuses” linked to annual performance, and “share-based
remuneration” as a medium- and long-term incentive. For Executive Officers, including the President and CEO(Representative Executive Officer), bonuses that are paid as a form of performance-linked remuneration shallaccount for 25% (±0% compared to FY2022) of the total annual remuneration for each individual, with the aimof clarifying their responsibilities for business execution.

19

(Bonuses shall not be paid to internal Directors except for those who concurrently serve as Executive Officer,
and Outside Directors.)
Meanwhile, with a view toward promoting common interests between officers and shareholders, and raising theeffectiveness of the incentive for enhancing the Group’s medium- to long-term performance and our corporate
value, the Company introduced a Restricted Share-based Remuneration System linked to share priceperformance in FY2020, the remuneration percentage of which is being raised gradually. For FY2023, sharebased remuneration shall account for 20% (+5% compared to FY2022) of the total annual remuneration for eachindividual.
Recipients of stock options
Supplementary explanation-[Remuneration for Directors and Executive Officers]
Disclosure (of individual Director’s remuneration)

No disclosure of individual remuneration

Disclosure (of individual Executive Officer’s

No disclosure of individual remuneration

remuneration)
Supplementary explanation

The following has been disclosed in the FY2023 Annual Securities Report, business report and notice of the
convocation of General Meeting of Shareholders.
Director remuneration
Total amount of remuneration, etc.: 11 Directors, ¥170 million (including 7 Outside Directors, ¥86 million)
Executive Officer remuneration
Total amount of remuneration, etc.:4 Executive Officers, ¥249 million

Policy on determining remuneration amounts andcalculation methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Details are described in [Disclosure based on each of the principles of Japan’s Corporate Governance Code].

[System for Supporting Outside Directors]
The Company provides the following support for Directors and Audit Committee members inside and outside
the Company such that they may sufficiently fulfil their roles.
(1) Support System for Information Provision
The Company has put in place dedicated staff members who support the Board of Directors, allowing
appropriate information to be provided additionally as necessary.

20

We are working to improve the cooperative system by regularly providing opportunities for meetings ofExternal Directors, meetings of non-executive Directors, and opinion exchange meetings among External
Directors and the President and CEO.
(2) Training Opportunities
The Company continuously provides to Outside Directors explanation on the environment surrounding theGroup and its business, financial position, and organizational structure when assuming their position and during
their service so that they are able to fully recognize the Group’s important management issues and make best
decisions based on their beliefs at the Board of Directors and other committee meetings. During their service,
External Directors are provided with opportunities to visit our stores and offices, as well as to promote mutual
understanding through information provision and exchange at meetings of External Directors and on otheroccasions.

[Former Representative Director and President, etc.]
Names, etc. of consultants and advisers, etc. who are former Representative Director and President, etc.

Name

Titles andpositions

Duty

Arrangements and conditions(Full-time/part-time;
with/without remuneration,etc.)

Date ofretirement
as President,etc.

Term of office

―

―

―

―

―

―

Total number of consultants and advisers, etc. who areformer Representative Director and President, etc.

―

Other matters
Since its establishment in 2008, the Company has not appointed any consultants, and abolished its consultant
system (Consultant Regulations) on April 1, 2018. For advisors, their purpose and duties, etc. have been
stipulated in internal regulations, but currently we have no advisors.

21

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System)【Corporate Governance System】
The Company clearly separates the roles between “execution” and “oversight” and has selected a company witha nominating committee, etc. as its organizational design in order to enhance the oversight and monitoring
function of the Board of Directors and achieve rapid business execution.
The Company has built a highly objective and transparent oversight system, led by External Directors by having
Independent External Directors comprise a majority of the Board of Directors as well as establishing a statutory
Nominating Committee, Compensation Committee, and Audit Committee, whose majority members areExternal Directors.
The Company has clearly set forth criteria for making proposals to be decided upon by the Board of Directors
in the Articles of Incorporation and the “Regulations of the Board of Directors” and other internal regulations inaddition to those stipulated by laws and regulations. As for other important matters, the Company has delegatedauthority to deliberate and make decisions to Executive Officers in order to enhance the maneuverability ofmanagement.
【Directors and the Board of Directors】(1) Roles of the Board of Directors
In light of the Company’s fiduciary responsibilities and accountability to shareholders, the Board of Directors
will aim to promote the Group’s sustainable growth and the enhancement of corporate value over mid- to longterm by focusing on the establishment of general direction of the Group and the oversight/monitoring of businessexecution.
(2) Composition of the Board of Directors
The Board of Directors shall be comprised of a diverse range of people with broad and highly specialized
knowledge, knowledge in specified business field, and skills based on experience in corporate management, etc.
as well as high ethical standards. For External Directors in particular, the Company will invite people fromdifferent fields and industries, primarily those with sufficient management and executive experience in businessworld, and select people with due consideration to ensure diversity of the Board of Directors.
The Company’s Articles of Incorporation stipulates that the number of Directors shall not exceed 15. The
number of Directors shall be such that the functions of the Board of Directors can be effectively and efficiently
demonstrated. In addition, a majority of the Board of Directors shall be Independent External Directors so thata highly objective and transparent oversight functions are demonstrated.
(3) Analysis and evaluation of the effectiveness of the Board of Directors
The Company will continue to conduct an analysis of the effectiveness of the Board of Directors through selfevaluation questionnaires, interviews, etc. with Directors including External Directors, also taking into accountthe perspectives of third-party agencies. Based on the results of the analysis, the Company will discuss the
improvement of the effectiveness at the Board of Directors and strive to make improvements through theformulation and implementation of action plans.
(4) Meetings, etc. led by External Directors
The Company will hold periodical meetings comprised only of External Directors to exchange information andshare recognition from an objective standpoint. In addition, President and CEO, internal non-executive Directors,
and other officers will participate in such meetings on a regular basis to provide all Directors with opportunities
to exchange information.
(5) Training for Directors
The Company will continuously provide Directors and Executive Officers with training to enable them to acquire
knowledge and improve their skills in accordance with their required roles and responsibilities. To External
Directors in particular, the Company will ensure that they are provided with opportunities to understand thecurrent status of the Company and promote recognition of issues before assumption of office, as well as
opportunities to continuously update and exchange information after assumption of office.
【Nominating Committee】(1) Roles of the Nominating Committee

22

The Nominating Committee will engage in deliberations and make decisions related to the “nomination” ofofficers, under the leadership of External Directors.
(2) Composition of the Nominating Committee
The number of Committee members shall be approximately five, majority of which shall be comprised ofExternal Directors (of which at least one member shall concurrently serve as a member of the Audit Committee).
The Committee members will be selected by the Board of Directors’ resolutions, and chair will be selected fromamong External Directors who are members of the Committee.
(3) Deliberations and details of decisions by the Nominating Committee
In addition to providing quantitative information such as performance indicators, qualitative information suchas personnel evaluations, and objective evaluations by third-party agencies, the Committee will secure contact
between candidates and External Directors such as interviews, make judgment with regard to the reappointmentof the CEO, deliberate on succession plan of the CEO, make decisions on proposals for the appointment anddismissal of Directors to be submitted to the General Meeting of Shareholders, and deliberate on proposals of
the members of the three statutory committees and proposals for executive appointment of Executive Officers,
to be decided by the Board of Directors.
【Compensation Committee】(1) Roles of the Compensation Committee
The Compensation Committee will engage in deliberations and make decisions related to “remuneration” ofofficers, under the leadership of External Directors, based on the remuneration plans that lead to incentives forofficers to enhance corporate value.
(2) Composition of the Compensation Committee
The number of Committee members shall be not less than three persons and not more than five persons, majorityof whom shall be comprised of External Directors. The Committee members will be selected by the Board of
Directors’ resolutions, and chair will be selected from among External Directors who are members of theCommittee.
(3) Deliberations and details of decisions by the Compensation Committee
The Committee will engage in deliberations on issues and policy of officer remuneration plans that lead toincentives for officers to enhance corporate value, and then utilize objective indicators, including quantitative
information such as performance indicators and qualitative information such as personnel evaluation to makejudgment and decisions concerning the appropriateness of individual remuneration proposals.
【Audit Committee】(1) Roles of the Audit Committee
The Audit Committee will audit the execution of duties by Executive Officers and Directors and the status ofinternal control systems, and makes decisions on details of proposals to be submitted to the General Meeting of
Shareholders regarding the appointment and dismissal of the Accounting Auditor, performing the oversightfunction of the Board of Directors through auditing.
In addition, it will build an audit system for the entire Group by coordinating with the accounting auditors, theInternal Audit Division, and Audit & Supervisory Board Members at each Group company.
(2) Composition of the Audit Committee
The number of Committee members shall be approximately five, majority of which shall be comprised ofExternal Directors (of which at least one member shall concurrently serve as a member of the Nominating
Committee) and internal non-executive Directors who are full-time members. In addition, at least one person
who has sufficient knowledge of finance and accounting will be selected. The Committee members will beselected by the Board of Directors’ resolutions, and chair will be selected from among Directors who aremembers of the Committee.
(3) Activities of the Audit Committee
The Committee will set forth audit policies and plans, obtain reports on risk management, reports from theInternal Audit Division, and reports and other information from the accounting auditors, and conducts hearings,
etc. on the status of business execution for the Executive Division.
In addition, in order to improve the quality of audits, the Committee will appropriately coordinate with the23accounting auditors and the Internal Audit Division, including exchanging information on audit results and othermatters.
【Executive Officers and the Board of Executive Officers】(1) Roles of executive officers
Executive Officers will make decisions on and conduct business execution assigned by the Board of Directors,
as an organ in charge of business execution, in accordance with the division of business duties as well as therelevant chain of command defined by the Board of Directors.
(2) Division of business duties
President and CEO will represent the Company as the chief executive officer of the Company’s business andsupervise the Company’s business in accordance with the division of business duties and the relevant chain ofcommand defined by the Board of Directors.
Other Executive Officers will support the President and CEO and serve as Chief Officers responsible formanaging core divisions.
(3) The Board of Executive Officers
The Board of Executive Officers will approve important matters, etc. related to business execution, deliberate
and make decisions on business strategies for the entire Group and Group-wide issues, etc. related to multiple
Group companies.
(4) Composition of the Board of Executive Officers
The Board of Executive Officers will be comprised of all Executive Officers authorized by the Board of
Directors.

3. Reasons for Adopting the Current Corporate Governance System
In combination with measures to build excellent relationships with customers, employees, shareholders, business
partners and local communities – our stakeholders – the Group is overhauling its corporate governance structure,along with management reform. This entails the establishment and strengthening of legal frameworks for thegeneral meeting of shareholders, the Board of Directors and the accounting auditors.
As part of these efforts, for the purpose of further advancing corporate governance, the Company has adopted acompany with a nominating committee, etc. as its organizational design. The Group will work to secure thetransparency of our corporate activities and ensure thorough compliance in our management, while taking
measures to create and deliver value in various forms for all stakeholders associated with the Group. Aiming tobecome a corporate Group that is deeply trusted by all of its various stakeholders, the Group will continue taking
a range of measures including speeding up management decision-making, strengthening management oversightmechanisms and enhancing internal control systems.

24

III Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights
Supplementary explanation
Early sending of Notice ofConvocation of the General
Meeting of Shareholders
Scheduling of general meetingof shareholders avoiding thepeak dayAllowing electronic exercise
of voting rights
Participation in the electronic
voting platform and otherefforts to enhance theenvironment for the exercise
of voting rights byinstitutional investors

Provision of the convocation
notice (summary) in English

The Company usually sends the notice of the convocation of the General
Meeting of Shareholders three weeks before the day of the meeting so thatshareholders have sufficient time for examining the agenda of the meeting.
The information on the notice is disclosed on the Company website andthe Tokyo Stock Exchange’s TDnet approximately one month prior to the
day of the meeting.
Since the Company’s first Ordinary General Meeting of Shareholders in
2009, it has taken into account shareholder convenience and has held suchmeetings on non-peak days.
The Company has adopted these measures since its first Ordinary General
Meeting of Shareholders in 2009.
Since the Company’s first Ordinary General Meeting of Shareholders in
2009, it has participated in the platform for the electronic exercise of voting
rights operated by ICJ, Inc.

Since the Company’s first Ordinary General Meeting of Shareholders in
2009, it has used the platform for the electronic exercise of voting rights
operated by ICJ, Inc. to offer English-language notices of convocation.
Additionally, beginning in 2010, it has published English-language noticesof convocation and other documents on the Tokyo Stock Exchange’s
website. These documents are also published on the Company website.

25

2. IR Activities Updated
Supplementary explanation

Preparation and publication of
disclosure policies

Regular briefings for private
investors

Regular investor briefings foranalysts and institutional
investors

Regular investor briefings forforeign investors

The Company impartially dispatches timely andappropriate information about daily IR and public
relations activities, and creates and adheres to adisclosure policy (IR policy) to gain the trust andempathy of shareholders and investors. Furthermore,this policy is published on the Company website.
https://www.imhds.co.jp/en/ir/policy/ir_policy.html: IR
Policy- Held briefings for private investors (in Tokyo in
June and in Fukuoka and online in November)- Conducted a shareholder questionnaire survey of
the Company’s shareholders on record as of
September 30- Briefing for analysts held 4 times a year after
earnings releases- Individual face-to-face meetings with the CEO for
major shareholders and domestic institutional
investors (held 16 times) and small meetings withanalysts (held twice) along with the mid-year andannual earnings releases- Individual meetings with the manager in charge ofIR along with the earnings releases held 4 times ayear (a total of approximately 100 times)- Sustainability briefing (held once a year, in
December, featuring External Directors as
speakers)- Business briefings introducing strategic progress
held multiple times a year (in relation to Isetan
Mitsukoshi Property Design Ltd. in March, and in
relation to Nihombashi Mitsukoshi Main Store in
October)[Main topics of dialogues]
Business strategies, overview of financial results,
shareholder returns, capital policy, etc.
- Individual face-to-face meetings with the CEO(held in Europe in March, in North America in
September, and in Asia in October)- Participation in overseas conferences hosted by
securities companies (4 times)- Individual meetings with the manager in charge ofIR along with the earnings releases held 4 times ayear (a total of approximately 140 times)[Main topics of dialogues]
Businesses and business strategies, overview offinancial results, shareholder returns, capital policy, etc.

26

Presentation byRepresentatives

Not available

Available

Available

Supplementary explanation
Posting of IR materials on thewebsiteEstablishment of division
and/or manager in charge of IR

Earnings releases, monthly sales reports, news releases,
Integrated Reports, and more are published on thewebsite in Japanese and English.
https://www.imhds.co.jp/en/ir/ir_news/index.htmll
General Affairs Department,
Corporate Communication and IR Division

27

Presentation byRepresentatives

3. Measures to Ensure Due Respect for Stakeholders

Rules based on internal
regulations to ensure due
respect for stakeholders

Implementation ofenvironmental activities andCSR activities, etc.

Development of policies on
information provision to
stakeholders

Other

Supplementary explanation
With regard to Japan’s Corporate Governance Code, in order to build
excellent relationships with customers, employees, shareholders andinvestors, business partners and the local and wider communities—ourstakeholders—the Group examines the status of our corporate governanceand makes necessary improvements.
We have disclosed a “Stakeholder Engagement Policy” which not only setsout how we engage with each of our stakeholders, but also is a source of
information for our employees and promotes daily communication.
Under the Group’s “Basic Policy on Sustainability,” the Company will
fulfill its corporate social responsibility by addressing various social issues
from ESG and SDGs perspectives and contributing to solving them throughits corporate activities, and play its role in realizing both prosperous future
for all the surrounding people and a sustainable society.
We have designated the following three priority efforts (material issues) byidentifying social issues and environmental changes that would influence
the Group’s challenge towards sustainable growth in light of its strategy to
fully leverage its strengths with the department store business at its core.
Priority Effort 1: Connecting people and local communities
Priority Effort 2: Connecting sustainable societies and times
Priority Effort 3: Improving the satisfaction of employees
The Group is advancing various initiatives for contributing to the buildingof a decarbonized society, managing the overall supply chain including
partners, facilitating dialogue to encourage communication, achieving theproper work-life balance of employees, etc., which comprise these priority
efforts. Led by the Sustainability Promotion Department established in
FY2022, we will make internal decisions, including on the current
activities, from the perspectives of risks and opportunities as well as basedon discussions by the Board of Directors.
Having established the Sustainability Promotion Committee chaired by the
CEO under the Board of Executive Officers, the Group is striving toachieve sustainable business management by both solving social issues andimproving corporate value through business under the leadership of senior
management.
Regarding the Group’s corporate activities, the Group discloses
information on its website to all stakeholders out of regard for simultaneityand fairness, as well as business-related information about products,
services, and so on, as well as financial information in a timely andappropriate manner.
Additionally, we disclose an “IR Policy” which sets out our public relations
policies for shareholders and investors in order to build trusting andempathetic relationships.
Isetan Mitsukoshi Group considers people (human capital) as the mostimportant factor in achieving its management plans and achieving
sustainable growth of the business. Thus, we are advancing a variety of
initiatives aimed at improving employee satisfaction (making employees

28Supplementary explanation
satisfied and comfortable with their jobs).
- Diversity in workstyles
We have set up—and promote the use of—various systems that support theachievement of work-life balance that allows a greater freedom ofworkstyles, such as support for balancing work with childcare or nursing
care, encouraging men to utilize the childcare leave system, and support
for employees in dual employment/working part time, etc.
- Strengthening communication
We foster unity and increase motivation by holding regular dialogues anddiscussions in all relationships, that transcend hierarchy and departmental
boundaries.
- Promoting diversity and inclusivity
We are creating an environment in which women in various life stages canplay an active role by not only enhancing our systems and support
measures, but also fostering organizational culture and raising individual
awareness.

29

IV Matters Related to the Internal Control System
1. Basic Approaches to the Internal Control System and the Progress of System Development
Isetan Mitsukoshi Holdings Ltd. (hereinafter the “Company”) develops the system below (hereinafter the“Internal Control System” to ensure the compliance of its business operations as part of its attempts to conduct
healthy and transparent group management and maximize corporate value.
1.

Compliance Systems“Systems to ensure that business duties as executed by Executive Officers and employees of the Company
are in compliance with laws, regulations, and the Articles of Incorporation” (Article 416, Paragraph 1, Item
1-v of the Companies Act and Article 112, Paragraph 2, Item 4 of the Companies Act Enforcement
Regulations)(1) The Board of Directors shall convene on a regular basis pursuant to the Regulations of the Board of
Directors, to resolve mainly on matters required to be deliberated at the Board of Directors by laws andregulations (hereinafter the “Statutory Board Matters”), while overseeing business execution by Executive
Officers and preventing violations of laws, regulations, and the Articles of Incorporation.
(2) The General Affairs Department shall establish sections and individuals with jurisdiction over compliancerelated matters, maintaining and improving systems for compliance with internal control and laws andregulations.
(3) In order to increase the legal compliance, efficiency, and legitimacy of the decision-making and oversightby the Board of Directors, there shall be a majority of Outside Directors among Directors.
(4) An independent, specialized Internal Audit Division shall be created. Internal audits will be in accordancewith the “Regulations of Internal Audits” and be implemented as each division works with the Internal
Audit Division to audit the legal compliance and legitimacy of business affairs.
(5) In the case that the Company or the Group commits an act of wrongdoing, the Company shall confirm thenature of the situation in a timely manner and form the “Isetan Mitsukoshi Group Hotline” as a point ofcontact for internal reports from employees for self-betterment.

2.

Risk Management Systems“Regulations and other systems involving management of risks of loss to the Company” (Article 112,
Paragraph 2, Item 2 of the Companies Act Enforcement Regulations)(1) Risks shall be prevented from occurring by identifying, evaluating, and analyzing risks that may occur inthe course of business operations and using this information to select risks that require prioritized response.
(2) In the case that a risk does occur, company-wide internal management systems that allow for rapid
response shall be organized through methods such as the establishment of a countermeasures headquarters
and the managing of information.
(3) Relevant regulations shall be established with regards to risk recognition, evaluation, and response andbe made well-known and thoroughly understood.
(4) Audits by the Internal Audit Division will attempt to detect risks facing the Company at an early stage
and settle them.
(5) Involvement with anti-social forces shall be eliminated and any unjust demands shall be rejected toprevent related damages.

3.

Internal Control Systems Regarding Financial Reporting“Systems to ensure the appropriateness of financial reporting” (Article 24-4-4 of the Financial Instruments
and Exchange Act)
(1) Company-wide policies and procedures shall be indicated to ensure appropriate financial reporting andconduct that are adequately built and operated.
(2) Appropriate evaluation and response shall be taken regarding the risk of misstatements made on items ofimportance in financial reports, and systems shall be adequately built and operated to reduce such risk.
30

(3) The Company shall build and operate methods to identify, understand, and process truthful and impartial
information that is then communicated to the appropriate parties in a timely manner.
(4) A financial reporting-related monitoring system shall be built and appropriately operated.
(5) A system shall be built to report internal control issues (deficiencies) understood through the course ofmonitoring in a timely and appropriate manner.
(6) Adequate support shall be given to information technologies relating to internal controls involved infinancial reporting.
4. Information Storage Management Systems“Systems regarding the storage and management of information relating to the execution of business duties
of Executive Officers at the Company” (Article 112, Paragraph 2, Item 1 of the Companies Act Enforcement
Regulations)(1) The following documents related to the execution of business duties by Executive Officers shall berecorded, stored, and managed together with related materials for a prescribed period according to the“Document Retention Policies”:(i) Minutes of the general meeting of shareholders(ii) Minutes of the meetings of the Board of Directors(iii) Minutes of the meetings of the Board of Executive Officers(iv) Financial statements(v) Copies of documents submitted to government administrative offices, other public agencies, and markets
for financial instruments(vi) Other documents as determined by the Board of Directors(2) Protection and management systems and other methodologies shall be used to create regulations such as
the “Information Retention Policies” for management information, trade secrets, and personal informationof customers, etc. that should be kept confidential according to laws and regulations including theCompanies Act and the Financial Instruments and Exchange Act, and the compliance of related Directors,
Executive Officers and employees shall result in its safe storage.
5. Systems for the Efficient Execution of Duties“Systems to ensure the efficient performance of Executive Officers’ professional duties at the Company”(Article 112, Paragraph 2, Item 3 of the Companies Act Enforcement Regulations)(1) Division of duties to be executed by Executive Officers as well as the relevant chain of command shallbe decided by the Board of Directors.
(2) The Board of Directors shall resolve primarily on the Statutory Board Matters, delegating decisionmaking authority on other important matters to Executive Officers. Such other important matters shall bedeliberated and decided by resolution at the Board of Executive Officers consisting primarily of Executive
Officers.
(3) The Company shall adopt an executive officer system to streamline the business execution throughclarification of the executive duties of executive officers.
(4) The Company shall adopt a chief officer system, whereby the Chief Officer assigned by the President andCEO (Representative Executive Officer) to be in charge of important areas of operation shall promote
cross-departmental control of issues facing the entire Group.
(5) The Company shall define details of duties, responsibilities and procedures in “Regulations of Duties andAuthority,” “Regulations of the Conduct of the Business,” and “Regulations of Decision Making Process
for the Group” for execution of duties.
6. Group Company Management Systems“Systems to ensure the compliance of the business conducted by the corporate groups consisting of theCompany and its subsidiaries” (Article 112, Paragraph 2, Item 5 of the Companies Act Enforcement
Regulations)
The Company shall develop a system to ensure the compliance of the business conducted by each company
in the Group, as described below.
1. “Systems relating to reports by the Company on items relating to the execution of business duties by the
Directors of the Company’s subsidiaries” (Article 112, Paragraph 2, Item 5-i of the Companies Act
Enforcement Regulations)31With regards to business management, in addition to the introduction of integrated accounting systems andefforts toward uniform management through the widening of target scope, approval and reporting systems
shall be managed and monitored as necessary. Additionally, the “Regulations on Group Company
Management” shall be used as a base for reporting by Group companies to the Company regarding matters ofimportance and for establishing rules regarding discussion in pursuit of improved risk management andefficiency across the entire Group.
2. “Regulations regarding the management or risk of loss to subsidiaries of the Company and other systems”(Article 112, Paragraph 2, Item 5-ii of the Companies Act Enforcement Regulations)(1) Regarding risk management for the Group, needed items shall be established in the “Basic Regulations on
Risk Management,” and a specialized independent division shall be created as the Risk Management
Division. The said division shall work with companies in the Group as it conducts risk management.
(2) In order to realize comprehensive risk management across the entire Group, a Compliance and Risk
Management Promotion Committee shall be created consisting of the Company’s President and CEO(Representative Executive Officer) as the chairman as well as members selected by said chairman.
3. “Systems to ensure the efficient execution of business duties by Directors, etc. of subsidiaries of theCompany” (Article 112, Paragraph 2, Item 5-iii of the Companies Act Enforcement Regulations)(1) The Company shall optimize its business operations by respecting the independence of the Group
companies while also managing their managerial affairs and providing advice and guidance, as well as bydispatching Directors and Audit & Supervisory Board Members as necessary to understand the state of
their management.
(2) The Group companies shall obtain an approval by the President and CEO (Representative Executive
Officer) of the Company or its Board of Directors for important items whose management is deemed tohave major effects.
4. “Systems to ensure the compliance of the execution of duties of Directors and employees of subsidiaries of
the Company with laws, regulations, and Articles of Incorporation” (Article 112, Paragraph 2, Item 5-iv of
the Companies Act Enforcement Regulations)(1) The Internal Audit Division shall conduct internal audits of Company Group companies, auditing the legal
compliance, appropriateness, etc. of executed business duties.
(2) A compliance guidebook and other documents shall be created and thoroughly disseminated throughout
the Group while training regarding appropriateness and legal compliances is held to foster an awarenessof compliance.
(3) An “Isetan Mitsukoshi Group Hotline” shall be established as a point of contact for internal reports
regarding the Group as a whole, and corrective measures and future prevention measures shall be
undertaken from a compliance standpoint with regards to these reports from employees, etc.
7. Items Relating to Audit Staff“Items relating to Directors and employees assigned to assist the Audit Committee in performing its duties,
items relating to the independence of such Directors and employees from Executive Officers, and items
relating to procedures to ensure effectiveness of the Audit Committee’s instructions to such Directors andemployees” (Article 112, Paragraph 1, Items 1 to 3 of the Companies Act Enforcement Regulations)(1) A unit dedicated to assisting the Audit Committee in performing its duties shall be established with staff(hereinafter the “Audit Committee staff”). The Audit Committee may give instructions to the Audit
Committee staff regarding items necessary for auditing duties.
(2) The Audit Committee staff shall report on the matters as required by the Audit Committee, and shall beentitled to gather information necessary for such report.
(3) The Audit Committee staff shall be independent from executive operational systems, be attached to the
Audit Committee, and carry out their duties as instructed by the Audit Committee. Personnel changes,
evaluation, discipline, and other such treatment pertaining to the staff shall require the consent of the Audit
Committee.
(4) The Audit Committee staff shall be seconded to each Group company as part-time Audit & Supervisory
Board Member, with a view to reinforcing the audit framework of the entire Group.
8. Systems Relating to Reports to the Audit Committee
1. “Systems for reports to the Audit Committee of the Company by its Directors (excluding those who are

32

Audit Committee members), Executive Officers and employees as well as systems relating to other reports
to the Audit Committee” (Article 112, Paragraph 1, Item 4-i of the Companies Act Enforcement
Regulations)“Systems for reporting to the Audit Committee of the Company by Directors, Audit & Supervisory Board
Members and employees of the Company’s subsidiaries, or by individuals who have received reports
therefrom” (Article 112, Paragraph 1, Item 4-ii of the Companies Act Enforcement Regulations)(1) Matters to be reported to the Audit Committee at its request by Directors, Executive Officers andemployees, or the matters to be reported to the Audit Committee without delay as circumstance thatwarrants such reporting arises, shall be prescribed in the “Regulations of the Audit Committee” formulatedby the Board of Directors, whereby Directors, Executive Officers and employees shall make such reportas needed. Notwithstanding the foregoing, the Audit Committee may request reports from Directors,
Executive Officers and employees at any time if necessary.
(2) Directors, Audit & Supervisory Board Members, or employees of a subsidiary, or individuals who havereceived reports therefrom may report to the Audit Committee of the Company on important matters that
may affect the business or performance of such subsidiary.
(3) The Isetan Mitsukoshi Group Hotline, an internal hotline system that covers the Group as a whole, shallbe adequately maintained, and its operation status, nature of issues reported through this system, and theresults of the follow-up investigation shall be reported to the Audit Committee on a regular basis.
2. “Systems to ensure that individuals who give applicable reports under item 1. are not subject to unfavorable
treatment because of such reporting” (Article 112, Paragraph 1, Item 5 of the Companies Act Enforcement
Regulations)
It shall be forbidden to treat individuals who give reports to the Audit Committee in an unfavorable manner
because of the applicable reports.
9.

Policy for Processing Auditing Fees
“Items relating to the advance payment of fees resulting from the execution of duties of the Audit Committeeof the Company, fees resulting from the execution of applicable duties including repayment procedures, andpolicies involved in the processing of obligations” (Article 112, Paragraph 1, Item 6 of the Companies Act
Enforcement Regulations)
When Audit Committee members bill for prepayment of fees, etc. for the execution of their duties based on
Article 404, Paragraph 4 of the Companies Act, fees and obligations related to those billings must beprocessed unless it is deemed that they are not necessary for the execution of those Audit Committee members’
duties.

10. Systems Relating to the Ensured Efficacy of Audit Committee Audits“Other systems to ensure the efficient operation of Audit Committee members’ audits” (Article 112
Paragraph 1, Item 7 of the Companies Act Enforcement Regulations)(1) The Audit Committee shall have regular meetings for exchanging opinions individually withRepresentative Executive Officers, the chairman of the Board of Directors, Directors other than those
concurrently serving as the Audit Committee members and the accounting auditors.
(2) In addition to the Board of Directors, Audit Committee members selected by the Audit Committee may
attend important meetings in order to understand the decision-making process for important matters aswell as the state of executed duties.
(3) The Internal Audit Division shall report to the Audit Committee on the internal audit plan, audit results
and the progress of audits across the Group, while coordinating information exchange. The Audit
Committee shall, upon receipt of a report on misconduct of Executive Officers in the course of executing
their duties, or material facts involving their violation of laws and regulations or the Articles ofIncorporation, or otherwise where necessary, may request the Internal Audit Division to conduct
investigation, and give concrete instructions thereon. Personnel affairs and disciplinary actions involving
the general manager of the Internal Audit Division shall require consent of the Audit Committee.

33

2. Basic Views on Eliminating Anti-Social Forces and Current Implementation Status
The Group shall eliminate any relationship with anti-social forces that threaten the order or safety of a healthysociety, and takes a firm stance against such forces as a group. Also, in addition to avoiding any contact with
anti-social forces in advance, the Group shall not submit to any unjust demands made by such forces and will
use legal methods to resolve such issues.
As the Group’s system to eliminate anti-social forces, customer consulting offices in subsidiary stores shall be
used as a primary place of resolution, while the General Administration Departments of subsidiary headquarters
shall be used as supervisory places of resolution. When circumstances dictate, the headquarters’ General
Administration Department shall work together with subsidiaries to resolve issues as an entire group. The police,
The National Center for the Elimination of Boryokudan (Anti-Social Forces), attorneys, and other outside expert
organizations will be used to exchange information and conduct training with to strengthen this policy throughcooperation, and efforts will be made toward internal awareness-raising activities.

34

V

Other

1. Adoption of Anti-Takeover Measures
Adoption of anti-takeover measures

Not adopted

Supplementary explanation
The Company does not implement anti-takeover measures. In the case that an acquisition of a large volume ofshares may be conducted, the Company will take action through appropriate procedures by examining its
necessity and rationale. Also, in the case of a tender offer of the Company’s shares, the Company will express
its position and not take unreasonable measures to prevent shareholders from accepting a tender offer.

2. Other Matters Concerning Corporate Governance System
Overview of the Timely Disclosure System
The Company’s internal system regarding timely disclosure of company information is as follows.
1. Basic View
The Company’s goals are to enhance compliance and ensure trust in company information, etc., which is why inaddition to establishing the Timely Disclosure Regulations, the Insider Trading Prevention Regulations have been
established and thoroughly spread to prevent information leaks relating to disclosure process and preventing insider
trading. Accordingly, information disclosure is conducted as follows.
2. Internal Systems Regarding Timely Disclosure
For “information on determined material facts,” “information on material facts which occurred regardless of theCompany’s intent,” and “information relating to financial statements” relating to the Company and/or subsidiaries,
in addition to the information for which the Company is obligated to conduct timely disclosure according to public
securities exchange regulations, information that do not apply to these regulations but for which the Company deems
it necessary to conduct timely disclosure are handled according to the following internal systems.
(1) Information on determined material facts / information on material facts which occurred regardless of theCompany’s intent⚫
For information that requires timely disclosure or whose necessity of timely disclosure is unclear, a report ismade to the person responsible for the handling of information for timely disclosure, by the General Managerof the division with jurisdiction over the information (hereinafter the “division with jurisdiction”) when theinformation involves the Company, or by the General Manager of the subsidiary’s division with jurisdiction
over the information (hereinafter the “subsidiary division with jurisdiction”) when the information involves theCompany’s subsidiary.
⚫
The person responsible for the handling of information for timely disclosure will disclose information according
to public securities exchange regulations. For information that does not correspond to these regulations, theperson responsible for the handling of information for timely disclosure will, as necessary, report to the Board
of Executive Officers and make disclosure decisions.
⚫
In the case that timely disclosure is deemed appropriate by the Company, the Corporate Finance and IR
Department, the division responsible for disclosure, will discuss the disclosed content with the division withjurisdiction or the subsidiary division with jurisdiction and conduct disclosure in a prescribed method.
35

(2) Information relating to financial statements
The Corporate Finance and IR Department will receive resolutions or approval from Executive Officers and theBoard of Directors, and will disclose the information by the designated methods as the division responsible fordisclosure, with the approval of the person responsible for the handling of information for timely disclosure.

36