Basic Views on Corporate Governance

  1. Basic Views

    In order to fulfill its responsibility to its stakeholders including shareholders/investors, customers, Group employees, business partners and local communities surrounding Tokyu Fudosan Holdings Group (the “Group”) and future society, Tokyu Fudosan Holdings Corporation (the “Company”) strives to ensure its sustainable growth and increase corporate value over the medium and long term by engaging in social issues through its business. To that end, the Company will work to ensure soundness and transparency of management and build a corporate governance system that contributes to expediting decision making.

  2. Corporate Governance Guidelines

    The purpose of these Guidelines is to serve as guidelines for realization of an optimum corporate governance system, based on society and global management environment, by the Company and its Group.

Organizational Composition

Composition, etc. of the Board of Directors

The Board of Directors in principle meets once every month and whenever needed in order to discuss and make decisions regarding material matters affecting the management the Group. Additionally, the Group Executive Committee meets once every month to deliberate, discuss and report on important proposals and plans pertaining to the Group’s management policy, management strategy, and group management.

Maximum Number of Directors Stipulated in Articles of Incorporation 20
Term of Office Stipulated in Articles of Incorporation 1 year
Number of Directors 15
Among Directors, Number of Outside Directors (Independent Officers) 6 (6)
Among Directors, Number of Female Directors 2
Frequency of Board of Directors Meetings Once a month in principle
Board of Directors Meeting Average Attendance 99%(based on attendance during fiscal year ended March 31, 2021)

Composition, etc. of the Audit & Supervisory Board

Maximum Number of Audit & Supervisory Board Members Stipulated in Articles of Incorporation 5
Number of Audit & Supervisory Board Members 4
Among Audit & Supervisory Board Members, Number of Outside Audit & Supervisory Board Members (Independent Officers) 2 (2)

Relationships with Outside Officers

An overview of the Company’s relationship with Outside Officers is as follows.

Title and Name Title and Name of Other Major Company Where Outside Officer Concurrently Serves
(As of June 25, 2021)
Relationships with the Company and Appointment
Director
Makoto Kaiami
Outside Audit & Supervisory Board Member,
SEIREN CO., LTD.

Outside Director,
JAPAN POST HOLDINGS Co., Ltd.
The Company has appointed Mr. Kaiami as an Outside Director in the hope that he will utilize his knowledge in corporate legal affairs, compliance and risk management gained as a judge and attorney at law for the management of the Company. Neither legal advisory contract nor special interests exist between Mr. Kaiami and the Company.
As an Outside Director, Mr. Kaiami plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Director
Saeko Arai
Representative,
Acuray, Inc.

Outside Member, Board of Directors,
Sumitomo Dainippon Pharma Co., Ltd.
The Company has appointed Ms. Arai as an Outside Director in the hope that she will utilize her broad knowledge in finance and accounting as a certified public accountant as well as her experience in corporate management as a CFO of a company and its overseas subsidiary for the management of the Company. No special interests exist between Ms. Arai and the Company.
As an Outside Director, Ms. Arai plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Director
Michiaki Ogasawara
Chairperson of the Board, Foundation for Multimedia Communications

Outside Director,
Daiwa Securities Group Inc.

Outside Director,
KOEI TECMO HOLDINGS CO., LTD.
The Company has appointed Mr. Ogasawara as an Outside Director in the hope that he will utilize his knowledge in legal affairs, compliance, risk management, IT and digital transformation gained through public administration for the management of the Company. No special interests exist between Mr. Ogasawara and the Company.
As an Outside Director, Mr. Ogasawara plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Director
Satoshi Miura
Outside Director,
Nippon Life Insurance Company

Outside Director(Audit & Supervisory Board member),
Hirogin Holdings, Inc.
Mr. Miura has assumed key positions at NTT group, a telecommunications operator that serves public interest, and possesses extensive experience and broad insight in management of holding companies from a long-term and sustainable perspective, overseas businesses, human resources development, labor affairs, IT and digital transformation. The Company has appointed him as an Outside Director in the hope that he will utilize his knowledge for the management of the Company. No special interests exist between Mr. Miura and the Company.
As an Outside Director, Mr. Miura plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Director
Tsuguhiko Hoshino
The Company has appointed Mr. Hoshino as an Outside Director in the hope that he will utilize his knowledge in accounting, finance, legal affairs, compliance and risk management gained in the course of his duties at the Ministry of Finance and National Tax Agency as well as through the establishment of the Financial Services Agency and so forth that he addressed while in office for the management of the Company. No special interests exist between Mr. Hoshino and the Company.
As an Outside Director, Mr. Hoshino plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Director
Yumiko Jozuka
The Company has appointed Ms. Jozuka as an Outside Director in the hope that she will utilize her knowledge in legal affairs, compliance, risk management, human resources development, labor affairs, ESG and sustainability gained in the course of her duties at the Health, Labour and Welfare Ministry as well as through her efforts to promote the work style reform and women’s participation and advancement in the workplace that she addressed while in office for the management of the Company. No special interests exist between Ms. Jozuka and the Company.
As an Outside Director, Ms. Jozuka plays a role in strengthening the function of supervising the Board of Directors, etc., from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Audit & Supervisory Board Member
Katsunori Takechi
Representative TAKECHI & PARTNERS The Company has appointed Mr. Takechi as an Outside Audit & Supervisory Board Member in the hope that he will utilize his specialized insight as an attorney at law and extensive experience regarding corporate legal affairs for the surveillance system of the Company. Additionally, there are no advisory agreements between Mr. Takechi and the Company.
Mr. Takechi is engaged in the tax accountancy business as a certified tax accountant under Article 51 of the Certified Public Tax Accountant Act, and has considerable knowledge regarding finance and accounting.
As an Outside Audit & Supervisory Board Member, Mr. Takechi plays a role in the function of monitoring the management, etc. from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.
Audit & Supervisory Board Member
Takahiro Nakazawa
Head of Nakazawa Certified Public Accountant Office

Outside Audit & Supervisory Board Member,
Kao Corporation
The Company has appointed Mr. Nakazawa as an Outside Audit & Supervisory Board Member in the hope that he will utilize his expert insight gained through many years of experience in auditing and advisory services at leading audit corporations for the surveillance system of the Company. Additionally, there are no advisory agreements between Mr. Nakazawa and the Company.
Mr. Nakazawa has considerate knowledge regarding finance and accounting as a certified public accountant.
As an Outside Audit & Supervisory Board Member, Mr. Nakazawa plays a role in the function of monitoring the management, etc. from an objective standpoint, and it is not expected that any conflict of interest with general shareholders will arise in the future.

Discussion with an Outside Director

Supporting System for Outside Officers

Outside Directors and Outside Audit & Supervisory Board Members are given clear explanations of management strategy and business activities upon assuming their positions in order to promote their understanding of the Group. Moreover, the Office of Corporate Auditors, which is an organization independent from the business executives, provides support to the Outside Audit & Supervisory Board Members to help them smoothly fulfill their auditing duties. And, in addition to being given appropriate information from the Board of Directors Administrative Bureau (Group General Administration Department) and other departments, the Outside Directors are given information as the situation dictates.

Disclosure Based on the Principles of the Japan’s Corporate Governance Code

The status and policy of the Company’s measures concerning the main principles of the Corporate Governance Code are as follows.

<Subject Code>
The following description is based on the Code revised in June 2021.

[Principle 1.4 Policy for Cross-Shareholdings]

ⅰ: Policy regarding shares as cross-shareholdings

The Company will hold cross shareholdings in cases where it judges that they will contribute to maintaining and increasing the Group’s corporate value from a perspective of importance to the medium- and long-term business strategy, reinforcing relationships with business partners, and maintaining a stable fund procurement environment.

Furthermore, in addition to verifying the appropriateness of each individual shareholding in light of the purpose of said holding, the Company will regularly conduct quantitative verification of matters such as the benefits, risks and capital cost of the holding, and present the results to the Board of Directors as reporting matters.

Stocks whose holding is deemed to have little meaning or effect will be sold as appropriate, giving due regard to share prices, market trends, and other information for consideration.

ⅱ: Policy regarding exercise of voting rights

The Company shall exercise its voting rights related to cross-held shares on all proposals for voting after individually judging factors such as whether the proposal will contribute to increasing the Group’s shareholder value, and whether it is appropriate in light of the purpose of shareholding of the Company.

About shareholding

[Principle 1.7 Related Party Transactions]

All transactions with related parties, including officers and major shareholders, are carried out after the required decision has been made through a process of deliberation from specialist perspectives such as finance, accounting, taxation, and law, following the Company’s internal regulations in accordance with the scale and importance of the transaction. Transactions with a conflict of interest for Directors must be approved by the Board of Directors based on laws and regulations, and the Board of Directors Regulations (excluding, however, cases where the transaction is an ordinary transaction as a general consumer, including purchasing over-the-counter goods, where the interests of the Company or the common interests of its shareholders are not harmed). When such a transaction has occurred, details are disclosed in the Annual Securities Report in accordance with laws and regulations.

[Supplementary Principle 2.3.1]

With the recognition that dealing with the issues surrounding sustainability including social and environmental issues is an important part of risk management, the Company has established the “Sustainability Committee,” which is under the direct authority of the President and Representative Director, and worked actively and proactively on those issues. The activities of the Sustainability Committee include developing initiative policies on various issues, managing progress, sharing information and reviewing effectiveness of management processes as necessary. The Committee reports regularly on the details of its activities to the Board of Directors.

In the “GROUP VISION 2030,” the Company identified the Group’s materialities in relation to issues surrounding sustainability, and examined opportunities and risks across its business activities. Details are disclosed on the Company’s website and in the Integrated Report.

[Supplementary Principle 2.4.1]

The Group established the theme “create an organizational climate under which diverse human capital is enlivened” as materiality in its long-term vision “GROUP VISION 2030” announced in May 2021. In order to realize the vision, target indicators for fiscal 2030 including “ratio of employees who undergo physical examinations: 100%,” “ensuring of diversity in the core human capital (ratio of female managers): 20% or more,” “ratio of childcare leave taken by male employees: 100%” and “deepening understanding of LGBT (percentage of employees who took an e-learning course): 100%” are set. The status of progress against those targets will be disclosed in the Integrated Report, etc. from time to time.

As for the status of appointing mid-career employees as managers, mid-career employees account for approximately 40% of managers of key Group companies, and the Company believes a diversity of human capital is already ensured. It is the Company’s policy to continue to appoint mid-career employees as managers to the same extent as currently.

Meanwhile, the Company has neither set a target for nor disclosed information about appointment of foreign employees as managers because many of the Group’s key offices are currently located in Japan and the absolute number of foreign employees is small although it operates its businesses in several overseas countries such as the United States and Indonesia.

With the aim of being a corporate group which continues to create innovation by addressing an organizational climate under which diverse human capital can exercise their abilities, we will work to further deepen the human capital strategy for ensuring diversity.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

The Company accepts employees only from Group companies, and these employees are subject to the retirement benefit plans of the Company they originally joined. Additionally, the retirement benefit plans of each Group company consist primarily of defined contribution pension plans and lump-sum payments. Therefore, the corporate pension funds have limitations as asset owners.

With defined contribution pension plans, the Company confirms operations through selection of fund managers and investment products as well as provision of educational opportunities for employees regarding asset management and explanations at the time of joining the Company. Furthermore, the corporate pension funds conduct proper operation as asset owners by entrusting management to institutions that comply with the stewardship code, while appointing highly experienced managers to be in charge of the operation.

[Principle 3.1 Full Disclosure]

ⅰ: Management philosophy, management strategy, and management plan

The Group has formulated and announced in May 2021 its long-term vision “GROUP VISION 2030” with fiscal 2030 as the target year.

In the “GROUP VISION 2030,” three principles that the Group has cherished to date, namely, its founding spirit “Challenge-oriented DNA,” the ideal vision “Create value for the future,” and its pledge to society, that is, enhancing corporate value by increasing the levels of satisfaction of all of its stakeholders, were reorganized as the group philosophy. In addition, we newly positioned “future society” as one of the stakeholders surrounding the Group, in addition to customers and local communities, thereby explicitly expressed our commitment to aiming for sustainable growth together with the society.

To realize our ideal vision, the Group extracted themes to work on for value creation (materialities). We will promote a long-term management policy comprising the Group policy, the business policy and priority strategies which were developed based on materialities. Details can be found on the Company’s website under the “Message from the President.”

For details on GROUP VISION 2030: Please refer to the following for the Long-Term Vision "GROUP VISION 2030" with the target year of 2030 disclosed in May 2021, please visit the following URL.

In addition, the Company issues “Integrated Reports” in an effort to facilitate the understanding by stakeholders of the overall picture of the Group’s progress and creation of value in its business activities.

ⅱ: Basic views on corporate governance

Please refer to “I. Basic Views” of this report.

ⅲ: Policies and procedures in determining the remuneration of the senior management and Directors

Remuneration, etc. for Directors and Audit & Supervisory Board Members in the Current Fiscal Year

1) Matters relating to Policy for Determining Remuneration, etc. for Individual Directors

The Company decides its policy for determining remuneration, etc. for individual Directors (hereinafter, “the Policy”) at a meeting of the Board of Directors after the deliberation at the Nomination and Remuneration Committee, a voluntary advisory committee to the Board of Directors. The outline of the Policy is as follows.

We have two basic policies in the determination of remuneration. The first is to maintain a level that is able to acquire and retain talented human resources and incentivize them to perform their duties, and the second is to have in place a system and structure that encourage their sense of contribution to increasing corporate value and shareholder value over the medium and long term.

Levels for remuneration for individual executive Directors are determined based on fixed differences in positions and on the basis of the level of remuneration for the President and Representative Director, with reference to the objective data of remuneration surveys by external research organizations. The level of remuneration for the President and Representative Director (monetary compensation plus stock-based compensation), which serves as the basis, is set around 0.1% of the operating profit for the previous consolidated fiscal year, in principle, which is adjusted by factoring in extraordinary income and losses and levels of remuneration at industry peers, among other factors.

The system of remuneration consists of monthly remuneration, bonuses and stock-based compensation. Monthly remuneration (basic remuneration paid monthly) is a consideration for the day-to-day execution of internal operations, whereas bonuses (performance-based remuneration) comprehensively take into consideration the business results in a single fiscal year and the achievement level of management plans, as well as ESG initiatives. Stock-based compensation (non-monetary compensation, etc.) is designed to have executive Directors share the benefits and risks of stock price fluctuations with shareholders and increase the contribution to the improvement of medium- and long-term earnings performance and corporate value. The composition ratio of monthly remuneration, bonuses and stock-based compensation is set around 6 : 3 : 1. The amount of monthly remuneration is calculated and paid based on this proportion. Bonuses are paid once a year, of which amounts fluctuate between the range of 60% to 140% according to the five-grade evaluation of individual performance. Stock-based compensation is paid at the time of retirement based on the number of points determined and awarded according to positions under the trust-type stock compensation system.

Remuneration for non-executive Directors consists solely of basic remuneration (fixed remuneration) paid monthly, in light of their role of supervising the management of the Company from an independent, objective standpoint. The level of remuneration is set at a level required for inviting human resources sought by the Company, with reference to the objective data of remuneration surveys conducted by external research organizations.

2) Matters relating to Resolution at General Meeting of Shareholders pertaining to Remuneration, etc. for Directors and Audit & Supervisory Board Members

The annual amount of monetary remuneration for Directors was resolved not to exceed ¥600 million (however, not including the employee salaries paid to Directors concurrently serving as employees) at the 1st Ordinary General Meeting of Shareholders held on June 26, 2014. The number of Directors at the closing of said Ordinary General Meeting of Shareholders was nine.

The annual amount of monetary remuneration for Audit & Supervisory Board Members was resolved not to exceed ¥120 million at the 1st Ordinary General Meeting of Shareholders held on June 26, 2014. The number of Audit & Supervisory Board Members at the closing of said Ordinary General Meeting of Shareholders was four.

For the stock-based compensation for Directors, a stock granting trust has been set up for Directors excluding Outside Directors, and Operating Officers with whom the Company has concluded mandate contracts, with a maximum of 170,000 shares granted per year, pursuant to a resolution at the 4th Ordinary General Meeting of Shareholders held on June 28, 2017. The number of Directors who were eligible for the system at the closing of said Ordinary General Meeting of Shareholders was seven.

In addition, the partial amendment and continuation of the stock-based compensation system was resolved at the 8th Ordinary General Meeting of Shareholders held on June 25, 2021. Upon continuation of the stock-based compensation system, a maximum of 130,000 points (1 point equates to 1 share) shall be granted each year to Directors (excluding Outside Directors and non-executive Directors) and Operating Officers with whom the Company has concluded mandate contracts (Operating Officers designated by the Company’s Board of Directors), and the Company’s shares shall, in principle, be granted at the time of retirement. The number of Directors who were eligible for the system at the closing of said Ordinary General Meeting of Shareholders was eight.

(Total Amount of Remuneration, etc. by Category of Officers, Total Amount of Remuneration, etc. by Type, and Number of Officers Receiving Payment)

Category of officers Total amount of remuneration, etc. (million yen) Total amount of remuneration, etc. by type (million yen) Number of officers receiving payment (persons)
Basic remuneration Bonuses Stock-based compensation
Directors
(excluding Outside Directors)
253 168 67 16 10
Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)
57 57 - - 2
Outside officers 52 52 - - 6

(Note 1) Stock-based compensation falls under the category of non-monetary compensation, etc.

(Note 2) The number of persons and amounts of remuneration shown above includes one Director who resigned at the closing of 7th Ordinary General Meeting of Shareholders held on June 25, 2020.

(Note 3) Stock-based compensation for fiscal 2020 shall be based on the system resolved at the 4th Ordinary General Meeting of Shareholders, which was held on June 28, 2017.

ⅳ: Policies and procedures in the appointment or dismissal of the senior management and the nomination of candidates for Directors and Audit & Supervisory Board Members

In selecting candidates for Directors, the Board of Directors presupposes that the candidates have appropriate character and knowledge for a Director, as well as no health issues that would impede them from executing their duties, and works to ensure that its structure has the skill sets necessary to promote the Company’s long-term vision while giving consideration to diversity including in terms of gender and internationality. The Company has a skill matrix in place from the perspective of ensuring that the Board of Directors as a whole has a good balance of knowledge, experience and skills and is well diversified.

As candidates for Directors from within the Company, personnel who have insight and judgment about managing the Company to achieve the long-term vision are nominated.

As candidates for Outside Directors, personnel who have rich experience in their respective fields, including management, legal affairs, financial affairs and accounting, while having sensible and objective viewpoints, and are capable of proposing and discussing issues concerning growth strategies and enhancement of corporate governance from an independent point of view are nominated. In selecting candidates for Outside Directors, it is presupposed that candidates will not concurrently serve as Director, Audit & Supervisory Board Member, or Officer at more than 5 listed companies other than the Company.

In addition, appointment of senior management team members and nomination of candidates for Director are decided every year by meetings of the Board of Directors after consulting with the Nomination and Remuneration Committee, which is a voluntary advisory committee chaired by an Independent Outside Director.

The necessary response with regard to the dismissal of the senior management shall be deliberated and decided by the Board of Directors after consulting with the Nomination and Remuneration Committee in the event of any fraudulent or unjust behavior by the senior management, such as violating the details stipulated in internal regulations, or in the event that it is deemed that the person’s qualifications as senior management are markedly lacking.

As for candidates for Audit & Supervisory Board Members, the Audit & Supervisory Board receives proposals of personnel who have appropriate character for an Audit & Supervisory Board Member, as well as having no health issues that would impede them and the insight required for auditing duties, and after the proposal is consented by the Audit & Supervisory Board, the candidates are nominated by the Board of Directors.

ⅴ: Explanations with respect to the individual appointments, dismissals, and nominations

For the reasons for the nomination of Directors and Audit & Supervisory Board Members, please refer to the “Notice of Convocation of the 8th Ordinary General Meeting of Shareholders.”

Furthermore, it is the Company’s policy to provide necessary explanations with respect to the dismissal of Directors and Audit & Supervisory Board Members.

[Supplementary Principle 3.1.3]

The Company discloses its sustainability initiatives on its website and in the Integrated Report as necessary.

In relation to the impact of climate change on financials, the Company implements initiatives using the TCFD’s framework.

  • •Support for TCFD recommendations

    The Company believes that climate change creates new business opportunities as well as risks. Also, in light of the importance of climate-related financial disclosures, the Company announced its support for the TCFD recommendations in March 2019. The Company also participates in the TCFD Consortium, an organization in Japan that discusses TCFD initiatives. Utilizing the TCFD recommendations, the Company is implementing measures in the frameworks of governance, strategies, risk management and indicators and targets.

  • •Scenario analysis

    To further promote environmental management for tackling climate change, the Company increased scenarios and made re-verification in fiscal 2020. The Company analyzes the risks and opportunities in its businesses under the 1.5℃, 3℃ and 4℃ scenarios, with 2030 and 2050 set as target years and with an expanded scope of businesses, including the urban development business, resort business, residential business and renewable energy business.

[Supplementary Principle 4.1.1]

The Board of Directors develops internal rules such as the Board of Directors Regulations and the Duty Authority Regulations in addition to the matters stipulated in laws and regulations and the Articles of Incorporation. Based on these, the Board of Directors conducts decision-making on important matters related to the Group’s management, such as the management policies, business plans, and large-scale investment plans.

Authority for execution of business and decisions on such execution for matters other than the important matters listed above is delegated to Group Executive Committee and other subordinate meeting bodies, and officers and so forth in charge of the business operations, while the Board of Directors monitors the status of performance of duties of the meeting bodies and officers and so forth.

In addition, both financial and non-financial information which helps the Board of Directors make a broad management decision or provide supervision is presented to the Board of Directors as reporting matters as necessary.

[Principle 4.8 Effective Use of Independent Outside Directors]

For the Company’s corporate governance, Independent Outside Directors are to have rich experience in management and a high level of discernment and character and related matters, as well as understanding the Group’s wide-ranging business domain and the value they create, and to provide advice from a broad, high-level perspective. At the same time, they are to appropriately supervise business execution by the management team from a position that is independent from them. The Company believes this as their important roles and duties.

To enable appropriate and flexible decision-making on business activities and supervision of execution, the Company considers it advantageous for the Board of Directors to be composed of Directors from inside the Company, who have specialist capabilities and insight about business fields, management plans, ESG and sustainability, personnel, finance and accounting, and so forth, and Independent Outside Directors, who are able to proactively offer opinions on growth strategies and enhancement of governance and raise concern, from the perspectives of diverse stakeholders and society. The Company considers that a ratio of Independent Outside Directors of one third or more is appropriate, and under the current system the ratio is 40%.

[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]

The Company deems Outside Directors to be independent when, in addition to meeting the independence standards for independent officers stipulated by the Tokyo Stock Exchange, none of the following have applied for any of the previous three fiscal years.

1) An executive of a business partner to which the Company’s net sales account for 2% or more of the Company’s consolidated net sales
2) An executive of a business partner whose net sales to the Company account for 2% or more of the business partner’s net sales
3) An executive of a lender from which the Company borrows funds that account for 2% or more of the Company’s consolidated total assets
4) An executive of a major shareholder or investor of the Company with an investment ratio of 10% or more
5) A consultant, accounting professional, or legal professional who receives remuneration of more than ¥10 million a year from the Company besides officer remuneration
6) A spouse or relative within two degrees of kinship of the Director, etc. of the Company or a consolidated subsidiary

[Supplementary Principle 4.10.1]

The Nomination and Remuneration Committee has been established as an advisory committee to the Board of Directors with the aim to enhance the objectivity and transparency of procedures concerning the nomination of Directors and decision on remuneration thereof. The chairperson is Mr. Makoto Kaiami, an Independent Outside Director. “Matters related to the nomination of candidates for Director and Operating Officers,” “matters related to the remuneration, etc. of Directors and Operating Officers,” etc. are decided by the Board of Directors after consultation with the Nomination and Remuneration Committee. The Nomination and Remuneration Committee is comprised of the following five members, three of whom are Outside Directors. The Company’s internal regulations stipulate that the Chairperson shall be an Independent Outside Director and that the majority of members shall be Independent Outside Directors.

  • Independent Outside Director: Makoto Kaiami
  • Independent Outside Director: Satoshi Miura
  • Independent Outside Director: Tsuguhiko Hoshino
  • Chairman and Representative Director: Kiyoshi Kanazashi
  • President and Representative Director: Hironori Nishikawa

The number of meetings held in fiscal 2020 was 2, and attendance by members was 100%.

[Supplementary Principle 4.11.1]

When deciding on candidates for Directors, the Company considers the balance of personnel able to exercise strengths in management in each of the fields within the Group’s wide-ranging business domain and personnel suited for corporate management and so forth, and seeks to secure a balance and diversity of the overall knowledge, experience, and capabilities of the Board of Directors.

Skills matrix of directors

Director Expertise and experience Committee membership
Name Inside / Outside Gender Corporate manage-
ment
ESG / sustaina- Accounting / finance Legal affairs / compliance / risk management Overseas business Personnel / labor IT / DX Nomination and Compensation Advisory Committee Risk Management Committee Sustainability Committee
Kiyoshi Kanazashi Inside Male
Yuji Ohkuma Inside Male
Hironori Nishikawa Inside Male ◎Chair ◎Chair
Hitoshi Uemura Inside Male
Katsuhide Saiga Inside Male
Masashi Okada Inside Male
Shohei Kimura Inside Male
Yoichi Ota Inside Male
Hirofumi Nomoto Inside Male
Makoto Kaiami Outside
(independent)
Male ◎Chair
Saeko Arai Outside
(independent)
Female
Michiaki Ogasawara Outside
(independent)
Male
Satoshi Miura Outside
(independent)
Male
Tsuguhiko Hoshino Outside
(independent)
Male
Yumiko Jozuka Outside
(independent)
Female

The Company has appointed 15 Directors from the perspectives of the Group’s wide-ranging business domain and increasing the ratio of Independent Outside Directors.

Selection of senior management team members and selection of candidates for Director are decided every year by meetings of the Board of Directors after consulting with the Nomination and Remuneration Committee chaired by an Independent Outside Director.

[Supplementary Principle 4.11.2]

In appointing Outside Directors, it is presupposed that candidates will not concurrently serve as Director, Audit & Supervisory Board Member, or Operating Officer at more than 5 listed companies other than the Company. The notice of convocation of the Ordinary General Meeting of Shareholders for each year lists the status of any significant concurrent positions outside the Company of officers. The notices of convocation of the Ordinary General Meeting of Shareholders can be viewed on the Company’s website.

Relevant information on meeting of shareholders (English):

[Supplementary Principle 4.11.3]

In order to ensure the soundness and transparency of management, the Board of Directors of the Company is working on continuous improvements by evaluating its effectiveness every year based on the opinions, etc. of individual Directors and Audit & Supervisory Board Members, and sharing matters required to further improve effectiveness at meetings of the Board of Directors. In fiscal 2020, we conducted a questionnaire survey of Directors and Audit & Supervisory Board Members for which we utilized an external consultant to design an objective questionnaire and tabulate the results, and obtained third-party evaluations conducted by attorneys at law with no advisory contract with the Company. As a result, we obtained the evaluation that “effectiveness is secured and vigorous efforts are being made toward even better governance.” The Company will continue working to further enhance the effectiveness of the Board of Directors.

[Supplementary Principle 4.14.2]

To promote understanding of the roles and responsibilities required of the Directors and the Audit & Supervisory Board Members, the Company provides opportunities such as external training and seminars so they may acquire necessary knowledge on the Company’s business, finances, organization, compliance, and other matters as well as necessary knowledge related to education that they should receive as Directors and Audit & Supervisory Board Members. Moreover, Outside Directors and Audit & Supervisory Board Members are given clear explanations of the management strategy and business activities as appropriate at the time of and after their appointment in order to promote their understanding of the Group. In addition, once a year, we hold in-house training for officers to improve their insight that will contribute to future management, including laws and regulations and ESG-related matters. In fiscal 2020, we conducted training themed on governance and compliance at enterprises.

[Principle 5.1 Policy for Dialogue with Shareholders]

The Company proactively conducts IR activities to promote constructive dialogue with its shareholders. Please refer to the Company’s IR Policy for details including its initiatives and policies.

For further reference, the Company’s website also has information on the Group’s disclosure items and so forth based on the respective principles of the Japan’s Corporate Governance Code.

The Company is working on constructive dialogue with shareholders and investors in order to contribute to sustainable growth and the increase of corporate value over the medium and long term. In addition to individual interviews, the Company is proactively working on dialogue by the President, officers in charge and divisions in charge, including through regular investor briefings for analysts and institutional investors as well as regular investor briefings for individual investors. The Company periodically reports the opinions of shareholders and investors obtained through this dialogue to the Board of Directors, and uses them to improve management.

[Supplementary Principle 5.1.1]

The Company works on the dialogue with shareholders by establishing the IR Office in charge of IR activities within Corporate Communication Department.

In light of supplying accurate information about the Group’s broad business wingspan and having a dialogue in accordance with the insider trading restrictions, fair disclosure rules, etc., it is the Company’s policy that interviews are conducted by the senior management.

Interviews by Outside Directors or Audit & Supervisory Board Members are subject to future consideration.

Basic Views on Internal Control System and Progress of System Development

The Group has taken active steps to put in place and implement internal control systems for all members of the Group, including the Board of Directors and other organizations, managements and employees, with the aims of thoroughly implementing compliance-based management, ensuring proper business operations, achieving management priorities such as earnings targets by raising the levels of efficiency and effectiveness, as well as practicing appropriate disclosure of information; all of which will contribute to the sustainable development of the Group and the consistent improvement of its corporate value.

In addition, Audit & Supervisory Board Members are monitoring and validating the progress and operation of its internal control system development.

Schematic Diagram of Corporate Governance System

The Company has adopted a form of a Company with Statutory Auditors as the Corporate Governance System and an overview of this is shown below.

Schematic Diagram of Corporate Governance System

Management Monitoring Function

1. Adoption of Audit & Supervisory Board Member System The Company adopts the Audit & Supervisory Board Member System. In addition to attending important meetings such as those of the Board of Directors to receive reports on business from Directors, etc., the Audit & Supervisory Board Members peruse documentation on important decisions and listen to reports and so forth from the Internal Audit Department and subsidiaries, etc., and Accounting Auditor in order to carry out auditing of the status of business execution at the Company and its subsidiaries, etc. The Audit & Supervisory Board Members form fair audit opinions by accurately grasping information based on on-site visits for auditing and other activities conducted by mainly the full-time Audit & Supervisory Board Members and effectively carry out auditing of the Directors’ performance of duties as an independent body with mandate from the shareholders by utilizing the mobility and flexibility of the Audit & Supervisory Board Member System.
2.Introduction of Executive Officer System In addition to mandatory functions such as the General Meeting of Shareholders, the Board of Directors, and the Board of Corporate Auditors, the Company will introduce the “Executive Officer System” as a measure to strengthen corporate governance. In the Company’s efforts to strengthen governance functions, while the Directors will undertake the functions of management decision-making and business execution monitoring, the Executive Officers will undertake the role of business execution.
3.Execution of Internal Audits The Company has established the Internal Audit Department to review and evaluate the administrative and operational management system and the status of business execution in terms of their legality and rationality from a fair and objective standpoint, and carry out internal auditing of the Company and its subsidiaries, etc.
4. Securing Independence of Accounting Auditor The Company appoints Ernst & Young ShinNihon LLC as its Accounting Auditor.
The independence of the Accounting Auditor is secured, as senior partners of the firm are not permitted to re-engage in the audits of a client after five consecutive fiscal years of engagement, and likewise other partners are not permitted to re-engage in the audits of a client for five consecutive fiscal years after seven consecutive fiscal years of engagement.

Risk management

Risk management policy

The Company has defined seven individual risks (investment risks, financial and capital risks, personnel and labor risks, legal and compliance risks, IT strategy risks/ digital strategy risks, information security risks, and crisis management risks) as events that could interfere with the achievement of management targets of the Group companies. We recognize climate change risk as a new risk with high significance.

To manage these risks appropriately, we have established the Basic Risk Management Policy. We have developed and operate a risk management system based on this policy. In addition, with respect to the six themes to work on (materialities) set out under the long-term vision, we have identified and manage opportunities, risks, and relevant material risks.

Basic risk management policy
The Company makes every effort to clearly identify all major risks as they apply to the Group as a whole and takes systematic and continuous steps to implement all necessary measures on a priority basis in order to comprehensively manage all risks that have the potential to hinder the Group from achieving its objectives or to create a loss.
Highly significant risks Other risks
Investment risks
Financial and capital risks
Personnel and labor risks
Climate change risks
Legal and compliance risk
IT strategy risks/ digital strategy risks
Information security risks
Crisis management response

Risk management structure

Risk management is conducted via the Group Executive Committee and the Board of Directors.
Risk management by Group companies is managed comprehensively by the Risk Management Committee. A department overseeing individual risks internally is responsible for ascertaining, evaluating, and analyzing the Group's risk management structure and systems as well as the status of operations.
In addition, the Company takes steps to confirm the efficacy of its risk management systems as well as its risk management operations through internal audits. Audits of major risks are systematically undertaken in accordance with their priority. Where there is an urgent risk of a major loss, the Company provides information and makes decisions based on its Emergency Response Provisions, so as to minimize damage.

Reinforcing information security

The Group has established a fundamental policy on information management and the Fundamental Rules on Information Management, which clarify responsibility for information management and specify basic requirements and principles of information management, among other roles. In addition, the Group Information Security Committee has established and operates PDCA cycles including receipt of activity reports from each Group company.

Compliance

Based on the understanding that the practice of risk management through compliance-based management is the foundation of its operations, the Group raises awareness of all officers and employees so that they will not only comply with laws and regulations but also make decisions and take actions in accordance with the Tokyu Fudosan Holdings Group Code of Conduct.
In addition, the Tokyu Fudosan Holdings Group Compliance Manual has been created as a practical manual, and all officers and employees are thoroughly informed about compliance through periodic training.
Compliance helplines were established at the Company and individual Group companies for consultations and whistleblowing relating to violation of laws, regulations, and other rules. These helplines can be used by all Group employees (including contract employees, temporary employees, and part-time workers).
In addition, we have established an internal whistleblowing office that allows anonymous reports to be made and an external whistleblowing office, where cases are handled by a lawyer who is not our corporate lawyer. The aim of these offices is to discover and rectify violations at the earliest possible time.

Protection of shareholders

There were no major shareholders with shareholdings of 30% or more in the Company. View the following link for more information about the status of shareholders.

Shareholding

(1) Investment shares: Segmentation standards and policy

Tokyu Fudosan Holdings Corporation and Tokyu Fudosan Holdings Group hold investment shares purely for investment and for non-investment purposes (cross-shareholding). The Group Corporate Governance Guidelines specify that investment shares held for purposes other than investment are held when they are judged to contribute to enhancing the corporate value of the Group from the perspectives of importance to the medium and long-term business strategy, reinforcing relationships with business partners, and maintaining a stable fund procurement environment.

(2) Shareholding policy, holding rationale verification method, and determining investment appropriateness. Details of determining by the bord of directors, etc. regarding the appropriateness of holding individual issues.

In addition to verifying the appropriateness of holding shares in individual companies in light of the purpose for holding, the Company also regularly performs quantitative verification of the benefits, risks, capital cost, and other rationales for shareholding, and reports the results of such verification to the Board of Directors. The Company also exercises voting rights on all resolutions. We exercise these rights after determining whether each resolution will contribute to enhancing shareholder value for the Tokyu Fudosan Holdings Group and whether the resolution is appropriate in light of the Company’s purpose for holding the shares.

(3) Company shareholdings

A. Number of stocks held for non-investment purposes and balance sheet amount

No. of Stocks
(Issuing companies)
Balance Sheet Amount (Million yen)
Shares in unlisted companies - -
Shares in companies other than unlisted companies 10 3,093

<Stocks with an increase in shares held in the current fiscal year> N/A

<Stocks with a decrease in shares held in the current fiscal year> N/A

B. Number of specified equity securities (listed shares) and deemed holdings of equity securities (controlled but not held) held for non-investment purposes, out of all shares held for non-investment purposes (cross-shareholdings), and information on balance sheet amount, etc.

<Specified equity securities (listed shares) >

Stock Current Fiscal Year Previous Fiscal Year Holding purpose, quantitative benefits of holding, and reason for the increase in shares Shareholding in the Company
No. of Shares No. of Shares
Balance Sheet Amount (Million yen) Balance Sheet Amount (Million yen)
Sumitomo Mitsui Trust Holdings, Inc. 315,649 315,649 Sumitomo Mitsui Trust Holdings, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
1,218 986
Mitsubishi UFJ Financial Group, Inc. 1,980,870 1,980,870 Mitsubishi UFJ Financial Group, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
1,172 798
The Chiba Bank, Ltd. 332,300 332,300 The Chiba Bank, Ltd. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
240 157
Dai-ichi Life Holdings, Inc. 99,100 99,100 Dai-ichi Life Holdings, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
188 128
Concordia Financial Group, Ltd. 167,920 167,920 Concordia Financial Group, Ltd. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
75 52
gooddays holdings, Inc. 60,000 60,000 A consolidated subsidiary in rental housing management business engages in transactions with gooddays holdings, Inc. and holds shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
68 47
Mizuho Financial Group, Inc. 41,458 414,580 Mizuho Financial Group, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. The decrease in the number of shares held resulted from a reverse stock split. We have not sold or otherwise disposed of shares. Yes
66 51
The Hachijuni Bank, Ltd. 132,650 132,650 The Hachijuni Bank, Ltd. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
53 51
Sumitomo Mitsui Financial Group, Inc. 1,800 1,800 Sumitomo Mitsui Financial Group, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. No
7 4
Resona Holdings, Inc. 6,000 6,000 Resona Holdings, Inc. is a main related party of Tokyu Fudosan Holdings Corporation and its consolidated subsidiaries for financial transactions and gathering business information, etc. We hold shares in this company to maintain a good relationship and strengthen it. In addition to verifying the appropriateness of holding the shares in light of the holding purpose, we perform quantitative verification of the benefits, risks, capital cost, and other rationales for holding the shares. Yes
2 1

Notes:
1. The balance sheet amounts for The Chiba Bank, Ltd. and the seven stocks below it account for less than 1/100th of the amount of capital. All stocks are listed.

2. “Shareholding in the Company” includes cases in which a main subsidiary of the issuing company listed above holds shares in Tokyu Fudosan Holdings Corporation.

3. The quantitative benefits of holding shares are not listed because we cannot disclose the details of transactions with each main financial institution.

C. Investment shares held purely for investment

Segment Current Fiscal Year Previous Fiscal Year
No. of Stocks (Issuing companies) Total Balance Sheet Amount (Million yen) No. of Stocks (Issuing companies) Total Balance Sheet Amount (Million yen)
Shares in unlisted companies 3 1,994
Shares in companies other than unlisted companies
Segment Current Fiscal Year
Total Dividend Income (Million yen) Total Gain on Sales (Million yen) Total Impairment Loss (Million yen)
Shares in unlisted companies (Notes)
Shares in companies other than unlisted companies

Notes:
1. All the three stocks decreased from the previous fiscal year are not due to the sale of the stocks.
2. Since unlisted stocks do not have market prices and it is extremely difficult to ascertain the market values, "Total Impairment Loss" is not stated.

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