June 7, 2024
To whom it may concern
Custody Bank of Japan, Ltd.

Direction of Improvement Measures Based on Recommendations fromthe Third-Party Committee for Governance Review

Custody Bank of Japan, Ltd. (hereinafter referred to as “Company” or “we”) examined improvement measures
based on the investigation and review report from the Third-Party Committee for Governance Review (the “ThirdParty Committee”) 1 announced on April 19, 2024, and today formulated the direction of our improvement
measures for enhancing our governance system and reforming our corporate culture, as shown in the Appendix.
We have taken the results of the investigation and review conducted by the Third-Party Committee seriously
and will enhance our governance system to ensure appropriate business operations and execution. From now on,
we will work to reform our corporate culture and enhance our human resources strategies by, for example,revitalizing internal communication, and strengthen internal management such as outsourcing management.
On May 31, 2024, in line with the direction of these improvement measures, we passed a resolution at theBoard of Directors meeting to transition from being a "Company with an Audit and Supervisory Board" to a"Company with an Audit and Supervisory Committee," subject to a resolution at the Annual General Meeting of
Shareholders scheduled to be held on June 26, 2024.
Furthermore, based on the fact that misconduct by our former director was identified in the investigation thatwas conducted by the Investigation Committee2 led by outside attorneys and was announced on June 9, 2023, weplan to file a civil lawsuit against the former director for the expenses incurred during this investigation.
In addition, we have taken measures to defend against the lawsuits that the former director has filed against theCompany for damages based on defamation, in which we are seeking dismissal of the claim.
We sincerely apologize for the inconvenience and concern caused to our customers and stakeholders. We will
strive to restore trust in the Company by implementing the measures described in the Appendix.

Note: This document is an English language translation of a document originally prepared in the Japaneselanguage. If there is any discrepancy between the content of this translation and the content of the original
Japanese document, the content of the original Japanese document will prevail.

1

On October 12, 2023, based on misconduct by the former director, we established the Third-Party Committee to investigate and review

issues in the overall governance of the Company in an objective and rigorous manner and to make recommendations for improvement
measures. The Third-Party Committee consists solely of outside experts who have no interest with the Company.
2

In January 2023, we established the Investigation Committee led by outside attorneys to investigate and clarify allegations of misconduct

by the former director.

Appendix

Problem recognition and direction of improvement measures As a result of the verification conducted by the Third-Party Committee for Governance Review, governance issues such as insufficient mutual checks andsupervision among officers, corporate culture and HR issues such as insufficient internal communication, and internal management issues such as
inadequacies in outsourcing management rules were identified.
 CBJ has taken the Committee’s findings seriously and will enhance its governance system to ensure appropriate business operations and execution,
reform corporate culture and strengthen HR strategies, and reinforce internal management mechanisms and operations.
 Through these efforts, CBJ will strive to restore trust in itself and contribute to the sound economic and social development of Japan by playing a role inthe development of asset management businesses and formation of the assets of Japanese people as Japan's No. 1 custody bank specializing inasset administration.

Current State
CBJ provides a wide range of services to meet
the advanced and diversified needs of its
customers. However, improvement measures
are necessary for the following issues.
Issues Identified
Governance Issues
Insufficient mutual checks and supervision
among officers (composition of directors andcorporate auditors, appointment processes
that include communication withshareholders, etc.)

Corporate Culture and HR Issues
 Lack of internal communication and interdepartmental cooperation
 Inadequate harmonization among employees fromformer banks
 Insufficient efforts in employee engagement
 Insufficient HR management mechanisms (e.g.,promotion of permanent employees to seniorpositions)Internal Management Issues
 Inadequate outsourcing management mechanisms
 Weak management mechanisms and systems forbudgets
 Weak management of business entertainment andgifts
 Problems with the depth of and resources forinternal audits

Ideal State
Direction of Improvement Measures
Proceed with the following improvement measures backed byin-depth dialogue with and cooperation from shareholders

Enhancing CBJ’s Governance System
Build a system to strengthen mutual checks andsupervisory functions among officers
Transition to being a
Company with an Auditand Supervisory
Committee

Review the composition ofofficers and the processes forappointing officers

Ensuring appropriate business
operations and execution

Reforming CBJ’s Corporate Culture andStrengthening its HR Strategies
Establish a Corporate Culture Reform Committee
chaired by the president to revitalizeinternal communication and other areas
Proactively promotepermanent CBJemployees

Develop a mid- to long-term HRstrategies supported by dialogue
with shareholders

Reinforcing Internal Management
Mechanisms and Operations
Review the rules and operations
for outsourcing management,
business entertainment and gifts,etc.

Reinforcemonitoring by, forexample, 2nd and3rd lines of defense

The Reliable Bank
Corporate Philosophy
As Japan‘s No. 1 custody bankspecializing in asset administration,
CBJ will play a role in thedevelopment of asset managementbusinesses and formation of theassets of Japanese people andcontribute to the sound economic
and social development of JapanVision Providing high-quality and stable
services and securing the trust ofsociety by acting as financial
infrastructure Best partner that responds tochanges in business environments
and meets diverse customer needs
 A company that takes professional
pride in its asset administration withactive employees

Development of a system based on the direction of improvement measures

Appendix[Enhancing the Governance System] CBJ will implement the following measures to strengthen mutual checks and supervision among officers and to promote active discussions toward CBJ's vision.
1. Restructure the members of the Board of Directors to center on non-executive directors to strengthen its oversight on business execution. CBJ will also improve theeffectiveness of the Board and deepen discussions on matters such as its mid- to long-term management strategies.
2. Move to a Company with an Audit and Supervisory Committee, strengthen organizational audits, and enhance the audit and supervisory functions for representative
directors and other executive officers.
3. Establish a voluntary Nomination and Remuneration Committee that has current officers and employees of shareholders participate to ensure diversity and balance inthe background of directors.
[Corporate Culture Reform] CBJ will establish the 4. Corporate Culture Reform Committee under the direct supervision of the president for employees to exchange opinions with management and other
employees in order to reform the awareness of management, revitalize internal communication, and promote harmonization among employees from former banks.

Shareholders’ Meeting

Supervision

2

Audit and Supervisory
Committee

Audit andsupervision

1

Audit and Supervisory
Committee OfficeExecutionInstructions*
andreporting

Board of Directors

Nomination and Remuneration
Committee (voluntary)

BOD Office

Supervision

President

Instructions*and reporting

Internal Audit Dept.

34AuditBusiness Execution Departments

Executive Management
Committee
Corporate Culture
Reform Committee*When the Audit and Supervisory Committee and the President have different instructions, the instructions from the Audit and Supervisory Committee shall be given priority.
1

Board of Directors(Restructures the composition of officers / Strengthens Supervisory Functions / Improves Effectiveness)

 Restructures the composition of officers to center on current officers and employees of shareholders andoutside non-executive directors
 Ensures that fulfilling discussions are held on strategic and important measures through improved
materials and meeting management and implements effectiveness evaluations
 Creates the Board of Directors Office as the secretariat of the Board of Directors

3

Nomination and Remuneration Committee (voluntary)(Reviews Appointment Process for Officers)
Strengthens the evaluation and appointment process for officers
Has current officers and employees of shareholders also participate as non-executivedirectors
Clarifies the skills matrix, etc. and conducts ongoing discussions with shareholders

2Audit and Supervisory Committee(Strengthens Audit and Supervisory Functions) Clarifies the authority of the Audit and Supervisory Committee to direct the Internal Audit Department
and strengthens organizational audits Strengthens the check function by allowing Audit and Supervisory Committee members to have voting
rights in the Board of Directors
 Creates the Audit and Supervisory Committee Office as the secretariat of the Audit and Supervisory
Committee

Corporate Culture Reform Committee(Promotes Corporate Culture Reforms on a Company-wide Basis)
Has officers take initiative and deliver messages on reform

4

Revitalizes internal communication and fosters a sense of unity by promoting harmonization
among employees from former banks
Understands needs through employee participation and raising awareness of reform
through appropriate feedback