Corporate Governance

Based on its management policy of maintaining a sound and proactive
enterprising spirit, YMFG aims for management transparency and fair,swift and bold decision-making that will lead to sustainable growth andincreases in corporate value over the medium to long term. To this end andrecognizing that creating an effective corporate governance system is an
important management priority, on an ongoing basis we are pursuing theinitiatives described below to enhance our corporate governance.
i. We strive to ensure the rights of shareholders and create an environmentthat facilitates the appropriate exercise of shareholders’ rights andsubstantive shareholder equality.
ii. We cooperate closely with our principal stakeholders, including
customers, the local community, shareholders and employees.
iii. We diligently disclose important management-related information to ourprincipal stakeholders.
iv. We endeavor to ensure the effectiveness of the business execution
supervisory and auditing function through the establishment of various
institutions, including the Board of Directors.
v. We create systems to promote constructive dialogue in order to build
long-term relationships with shareholders.

The Board of Directors, consisting of 10 directors (including threeoutside directors), makes decisions about important matters related tothe Group’s management and supervises the directors. The Nomination
Committee discusses matters related to the appointment and dismissalof directors, and the Compensation Committee discusses matters related
to the compensation of the directors. Both guarantee the objectivity andtransparency of decision-making processes.
YMFG has adopted an audit and supervisory committee system. The
Audit and Supervisory Committee comprises three directors, of whom twoare outside directors. The committee audit the execution of operations bydirectors, configure, audit and verify the operation of internal control systems
at YMFG and its subsidiaries, and prepare audit reports. By having the Audit
and Supervisory Committee, which chiefly comprises outside directors, exercise
its voting rights at Board of Directors meetings, we endeavor to reinforce its
auditing and supervisory function with respect to the Board of Directors andenhance the transparency and speed of the decision-making process.
The Group Executive Management Meeting, the Group Asset and Liability
Management Committee, the Group Compliance Committee and the Group
Risk Management Committee discuss important management issues.

YMFG Corporate Governance Structure (As of July 1, 2017)
YMFG (Company with an Audit and Supervisory Committee)
General Meeting of Stockholders
Appointment/Dismissal

Board of Directors

Audit and Supervisory Committee
3 Members(including 2 outside directors)
Cooperation
ReportAuditors and Supervisory
Committee OfficeAppointment/Dismissal

Cooperation

10 Directors

Audit(Legality and adequacy)(including 3 outside directors)

Appointment/Dismissal

ReportAccounting Auditor

Appointment
Accounting Audit

Appointment/Dismissal
Supervision

CommandAudit and Inspection Dept.

Compensation
Committee

Reports andRecommendation

Internal Audit

Group Executive Management Meeting(Deliberative body)

Nomination
Committee(Voluntary advisory body)BusinessExecution
Structure

President
Designated Board Members(Executive directors)

ReportOperational Headquarters/General Headquarters
Group ALM Committee
Group Compliance Committee

CommandGroup Risk Management Committee
Provide plans/Report etc.

Provide plans/
Report etc.

Policy Indication/
Plan Approval

Policy Indication/Plan Approval

Operation Departments

Yamaguchi Bank

Momiji Bank

Kitakyushu Bank

YM Securities YM Lease, YM Consulting, Kitakyushu Economics Institute, Yamagin Card, Izutsuya Withcard, YM Guarantee, Sanyu, YMFG Zone

Company with an audit and supervisory committee

Planning, YM Asset Management, Momiji Estate, YM Life Planning, Hoken Hiroba, YM Saison, Yamaguchi Capital, Momiji CardYMFG Board of Directors and Corporate Auditors (As of July 1, 2017)
President

Director

Senior Managing Director

Director

Susumu Fukuda

Hirohide Umemoto

Mitsuru KatoManaging Director

Director

Director
Audit and Supervisory Committee Member

Hiroaki Tamura*Takeshi Yoshimura

Koji Oda

Managing Director

Mitsuhiro Fujita

Ichinari Koda

Director
Audit and Supervisory Committee Member

Kazuo Tsukuda*

DirectorAudit and Supervisory Committee Member

Michiaki Kunimasa** Hiroaki Tamura, Kazuo Tsukuda and Michiaki Kunimasa are outside directors under Article 15 of Section 2 of the Companies Act.
YMFG Annual Report 201714