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    9787   JP3389700000

AEON DELIGHT CO., LTD.

(9787)
  Report
Delayed Japan Exchange  -  01:00 2022-11-30 am EST
2925.00 JPY   -1.48%
11/15Aeon Delight : 50th Anniversary Site page was released
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Aeon Delight : Corporate Governance Report

12/06/2021 | 02:02am EST

CORPORATE GOVERNANCE

This document describes corporate governance at

AEON DELIGHT CO., LTD ("AEON delight" or "the Company").

AEON DELIGHT CO.,LTD.

Last update December 6, 2021

AEON DELIGHT CO., LTD.

Kazumasa Hamada, President & CEO, Group CEO Contact: Presidentʼs Office, PR & IR Group +81-3-6895-38929787

https://www.aeondelight.co.jp/english

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

Based on our Management Principle, "We pursue the creation of 'environmental value' for our customers and for the local communities," we fulfill our responsibilities to our stakeholders through sustainable growth of the company and by increasing the value of our company, and implement an optimal corporate governance system designed to best meet the needs of society and the business environment.

In AEON delight Corporate Governance Guidelines (hereafter the "the Company's Guidelines"), we have defined our corporate governance system as "a mechanism that helps to bring about sustainable growth of the company by maintaining balance between 'offense' and 'defense' in the four areas as follows":

  1. Means for integrating the business activities of the members (executives and employees) of our enterprise under one policy or vector and then utilizing managerial resources to the maximum degree.
  2. Basic promises that underpin the trusting relationships with stakeholders who support the company
  3. Preparedness for unexpected ordinary or extraordinary events
  4. Rules each enterprise should follow for surviving as a member of society

[Management Principle]

We Pursue the Creation of "Environmental Value" for our Customers and for the Local Communities.

[Code of Conduct]

1 I am always grateful to the many other individuals who provide help and support,and I never forget to act with humility. 1 I always act with integrity and sincerity in every situation.

1 I always work to improve myself so as to offer services that exceed customer expectations.

1 I continually challenge myself, without hesitation, to help AEON delight to create environmental values.

1 I always act as a good corporate citizen in serving local communities.

1 I always seek to improve and maintain a delightful workplace and to respect my fellow employees.

[Basic Policies for Sustainability]

AEON delight's management philosophy is "We Pursue the Creation of 'Environmental Value' for our Customers and for the Local Communities."

Based on this management philosophy, we will contribute to solving social issues and achieving a sustainable society by creating "environmental value" in all aspects of our business together with our many stakeholders.

  • We will strive to create a safe, secure, hygienic, and healthy usage environment in and around our facilities.
  • By providing solutions that meet society's expectations, we will contribute to achieving a decarbonized society,conserving biodiversity, and promoting recycling.
  • We will comply with laws and social norms, build relationships of mutual trust with our business partners,and conduct fair business activities throughout the supply chain.
  • We will respect the human rights of each individual and create a vibrant organizational culture in which diverse human resources can demonstrate their abilities.
  • As a corporate citizen, we will engage in social contribution activities that aim for a better environment and society.

For further details, please refer to the AEON delight website.

[AEON delight Corporate Governance Guidelines] https://www.aeondelight.co.jp/english/ir/management/pdf/guideline.pdf [Corporate Governance] https://www.aeondelight.co.jp/english/ir/management/disclosure.html

- 1 -

[Reasons for Non-ComplianceWith the Principles of the Corporate Governance Code] The following information is based on the Corporate Governance Code as revised in June 2021.

[Principle 3-1-3: Sustainability Initiatives]

In order to fulfill our social responsibilities as a corporate citizen and promote ESG management that aims to solve social issues through business activities, we formulated the Basic Policies for Sustainability in August 2021 based on our Management Principle. Going forward, we will accelerate our efforts to solve social issues and contribute to the creation of a sustainable society through our business activities by building a framework for promoting ESG management centered on these policies, which clearly define our basic approach to sustainability, as well as by further clarifying the social issues to be solved and promoting initiatives to address them.

Regarding TCFD, we have established a project team and are currently conducting climate change scenario analysis, and we will consider disclosure based on TCFD in the future.

[Principle 4-8: Effective use of independent outside directors; Supplementary Principle 4-8-3: Majority independent outside directors]

The Company's Board of Directors is composed of eight directors, of which four are independent outside directors who meet the independence standards of the Tokyo Stock Exchange.

At present, we believe that the composition of the Board of Directors is appropriate for supervising management and conducting effective deliberations. A special committee will be established after the next Ordinary General Meeting of Shareholders to deliberate and review important transactions and actions that may conflict with the interests of the controlling shareholders and minority shareholders.

[Supplementary Principle 4-10-1: Views on independence of committee composition, authority, role, etc.]

Please refer to "Establishment of an optional committee, members of the committee, and attributes of the chairperson of the committee" and "Supplementary Explanation" under the "Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" section of this report.

[Supplementary Principle 4-11-1: Views on balance, diversity, and size of the Board of Directors as a whole] Please refer to Article 13 "Systems for the boards of directors and auditors" and Article 27 "Selection of candidate directors and auditors" of the Company's Guidelines.

We believe that the role, experience, etc. of each director can be understood by the position, career and reason for appointment as stated in the convocation notice and the annual securities report, but will consider disclosing the combination of such skills, etc. in the future.

[Disclosure Based on the Principles of the Corporate Governance Code] [Principle 1-4: Strategically held shares]

Please refer to Article 7 "Strategically held shares" of the Company's Guidelines

In fiscal 2020, we sold five cross shareholdings after reviewing our purpose for holding them.

[Principle 1-7: Related party transactions]

Please refer to Article 9 "Prevention of transactions that go against shareholders' interests" of the Company's Guidelines.

[Supplementary Principle 2-4-1: Ensuring Diversity in Core Personnel Hiring]

Please refer to "Other" under "3. Measures to Ensure Due Respect for Stakeholders" found in the "III. Implementation of Measures for Shareholders and Other Stakeholders" section.

[Principle 2-6: Performance of Function as an Owner of Corporate Pension Asset]

Please refer to Article 35 "Corporate Pension Fund" of the Company's Guidelines.

[Principle 3-1: Full Disclosure]

  1. Management principle and medium-term management plan are disclosed on the AEON delight website and in the financial results briefing materials.
  2. AEON delight guidelines are disclosed on the AEON delight website.
  3. Please refer to "Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" in this report.
  4. Please refer to Article 27 "Selection of candidate directors and auditors" of the Company's Guidelines.
  5. The reasons for the election and dismissal of individual directors shall be disclosed in the reference materials for the general meeting of shareholders.

- 2 -

[Supplementary Principle 3-1-3: Sustainability Initiatives]

< Investment in human capital and intellectual property, etc.>

In the ESG management described above, we identified materiality for issues that need to be addressed as a priority. The five areas of materiality include "safety and security," "labor force shortage," "environment," "technology utilization," and "corporate governance." In the area of "labor force shortage," we are promoting measures to invest in human capital and intellectual property.

We are investing in the development of true "experts" who possess both "technical" and "human" capabilities. With the aim of strengthening our competitiveness, we are working to secure specialized personnel in both business and management departments, such as those with advanced public qualifications and digital marketing skills, while also developing global personnel.

Through a combination of practical training at the AEON delight ACADEMY Nagahama, a specialized training facility owned by the Group, as well as internal recruitment and overseas training programs, we are able to secure personnel through internal training and external recruitment.

< Basic views on respecting human rights>

Based on the Basic Policies on Sustainability and Aeon Basic Policy on Human Rights, we respect human rights by complying with the human rights standards set out in the ILO Declaration on Basic Principles and Rights in Labor of the International Labor Organization (ILO) and by supporting and practicing the United Nations Guiding Principles on Business and Human Rights.

< Promotion of fair business activities>

For our suppliers, we have established a "Supplier Hotline" and conducted supplier questionnaires to ensure fair transactions and foster mutual trust.

We are practicing health management based on the Aeon Health Management Declaration. To realize the health and happiness of our employees and customers, and to contribute to the local community, we are promoting health management as a foundation for our diverse personnel to demonstrate their abilities and continue to perform effectively, based on our belief that people are our greatest asset. By improving our employees' health, both physically and mentally, we will drive interest and knowledge in health to promote health and wellness, improve work productivity by creating a healthy and dynamic workplace, maintain and improve the health of our employees and their families, and enhance employee satisfaction by enriching their families and communities.

[Supplemental Principle 4-1-1: Outline of the Scope of Delegation from the Board of Directors to Executive Officers] Please refer to Article 16 "Business operation systems" and Article 17 "Roles, duties, etc. of the board of directors" of the Company's Guidelines.

[Principle 4-8: Roles and Responsibilities of Independent Outside Directors]

Article 13 of the Company's Guidelines, "Systems for the boards of directors and auditors", stipulates that the Company shall have at least two independent and impartial outside directors, and the Company currently has four independent outside directors.

[Principle 4-9: Independence Standards for Independent Outside Directors]

Please refer to Article 21 "Criteria for judging the independence of external directors" of the Company's Guidelines.

[Supplemental Principle 4-11-2: Concurrent Service by Board Directors and Members of the Audit & Supervisory Board] Please refer to Article 31 "Whether directors and auditors are part-time" of the Company's Guidelines. In addition, the status of concurrent positions held by officers is disclosed in the Annual Securities Report and the Notice of Convocation of the Ordinary General Meeting of Shareholders.

[Supplemental Principle 4-11-3: Ensuring the Effectiveness of the Board of Directors]

The Evaluation Advisory Committee, a voluntary advisory body to the Board of Directors, analyzed and evaluated the progress of improvement measures between January 2021 and February 2021 for the issues identified in the previous year. In addition, based on the results of the analysis and evaluation by the Evaluation Advisory Committee, the Board of Directors evaluated the effectiveness of the Board of Directors at a meeting held on April 27, 2021.

1. Composition of the Board of Directors, 2. Operation of the Board of Directors, 3. Agenda of the Board of Directors,

4. Structure to support the Board of Directors, 5. Roles and responsibilities of the Board of Directors, 6. Managing Directors Committee

- 3 -

We evaluated that the effectiveness of decision-making and supervision of business execution by the Board of Directors is being maintained in line with the Company's basic approach to corporate governance.

The following improvements were recognized: the appointment of one female outside director, which increased the diversity of the Board of Directors; the establishment of a system to organize and deliberate on agenda items for Board of Directors meetings in advance; and the enhancement of efforts to formulate medium-term management plans and medium- to long-term visions. On the other hand, we recognize the need to identify agenda items to be discussed at the Board of Directors meetings and to manage the discussion plan, as well as the need to further improve the quality of the executive function in order to further increase the effectiveness of the Board of Directors as a supervisory function.

[Supplemental Principle 4-14-2:Training Policy for Directors and Auditors]

Please refer to Article 30 "Policy for the training of directors and auditors" of the Company's Guidelines. The Company

conducts the following training and seminars for officers of the Company and its subsidiaries.

-Training for newly appointed officers -Compliance seminars

-Top Seminars(Seminar for executives)

[Principle 5-1:Policy for Constructive dialogue with Shareholders]

The basic policies are listed in Article 10 "Dialogue with Shareholders" of the Company's Guidelines.

In order to promote constructive dialogue with shareholders, the Board of Directors appoints a director or executive officer as the person in charge of handling information and designates the President's Office, PR & IR Group as the department in charge of investor relations.The person in charge of information handling ensures organic collaboration, including ensuring that information is shared among departments that assist in the dialogue.Financial results briefings are held twice a year for investors, and video and audio of the briefings are distributed via the internet. In addition, telephone interviews and investor relations meetings are conducted as needed.Regular feedback is provided to directors based on the advice of external consultants.In order to prevent unauthorized disclosure of insider information during dialogue, information management is thoroughly implemented in accordance with the "Regulations on Insider Trading Prevention and Insider Information Management" and the "Regulations on Information Disclosure Management".

2. Capital Structure

Foreign Shareholding Ratio

Above 10% and below 20%

[Status of Major Shareholders]

Shareholders

Number of Shares Owned

Percentage(%)

AEON CO., LTD.

27,613,050

55.27

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

2,841,300

5.69

Custody Bank of Japan, Ltd.Trust account

1,469,800

2.94

AEON delight Business Partner Stock Ownership

1,149,300

2.30

Association

SSBTC CLIENT OMNIBUS ACCOUNT

896,679

1.79

NORTHERN TRUST CO. (AVFC)RE FIDELITY

714,500

1.43

FUNDS

The Nomura Trust and Banking Co., Ltd.(Trust account)

647,900

1.30

AEON delight Employee Stockholding Association

502,090

1.00

THE BANK OF NEW YORK MELLON 140044

487,603

0.98

Custody Bank of Japan, Ltd.Trust account 5)

377,600

0.76

Controlling Shareholder (Except for

―――

Parent Company)

Parent Company

Aeon Co., Ltd. (Listing: TSE, Code: 8267)

Supplementary Explanation

The major shareholder data above is current as of August 31, 2021. Separate from the number of shares listed above, the Company holds 4,160,597 shares of treasury stock (7.68% of the total number of shares issued). In addition, percentages have been rounded to the third decimal place.

- 4 -

3. Corporate Overview

Listed Stock Market and Market

Tokyo Stock Exchange, First Section

Section

Fiscal Year End

February

Type of Business

Services

Number of Employees

More than 1,000 people

(Consolidated) as of the End of the

Previous Fiscal Year

Sales (Consolidated) as of the End of

Between ¥100 billion and ¥1 trillion

the Previous Fiscal Year

Number of Consolidated Subsidiaries

Between 10 and 50

as of the End of the Previous Fiscal

Year

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

AEON delight belongs to a corporate group consisting of Aeon Co., Ltd. (pure holding company; "Aeon Co. Ltd.") and Aeon Co., Ltd. consolidated subsidiaries and equity-method affiliates.

The Company makes its own independent management decisions related to daily business operations, and confers with or reports to Aeon Co. Ltd. concerning key management issues. The growth of Aeon Co., Ltd. and its group companies leads to more business opportunities for the Company.

Therefore, the Company believes that collaboration and maximization of synergies with Aeon Group companies will contribute to the expansion of minority shareholders' interests.

In accordance with Article 9 "Prevention of transactions that go against shareholders' interests" of the Company's Guidelines, the Company ensures the economic rationality of the terms and conditions of transactions with Aeon Co., Ltd. and its group companies from the perspective of protecting minority shareholders, and concludes particularly important contracts through resolutions at meetings of the Board of Directors attended by outside directors and outside corporate auditors who are designated as independent officers and corporate auditors as stipulated by the Tokyo Stock Exchange, Inc.

5. Other Special Circumstances which may have Material Impact on Corporate Governance

The Company's parent company is Aeon Co., Ltd. and Aeon Co., Ltd. holds 27,613,000 shares (55.27% of voting rights) of the Company's stock.

The Board of Directors of the Company consists of eight directors, including four outside directors, and is in a position to make independent management decisions.

In addition, the Company has appointed two outside corporate auditors, one of whom is appointed as an independent officer along with four outside directors, to ensure greater independence in management decisions, and to make its own decisions regarding management decisions in terms of business operations and fund procurement.

In addition, the Company has accepted one officer who serves concurrently as an officer of Aeon Co., Ltd. but this does not prevent the Company from making its own management decisions, and the Company believes that a certain degree of independence from the parent company has been secured.

Aeon Co., Ltd.'s "Policies on Governance of Listed Subsidiaries" is as follows.

Based on its basic principles of "Pursuing peace, respecting humanity, and contributing to local communities, always with the customer's point view as its core," Aeon believes that the enterprise value of the entire Group can be enhanced by emphasizing the autonomy and originality of the management of Group companies and practicing group management based on a decentralized system, and has practiced this philosophy since its founding.

Against this backdrop, as a parent company, the Company was one of the first to transition to a company with a nominating committee in 2003 in order to increase the transparency of Group governance and the speed of management. In 2008, the Company transitioned to a pure holding company in order to strengthen management from the perspective of the entire Group without being biased toward any particular business, and has been implementing management measures to increase synergy across the entire Group.

Among the Group companies, those that are expected to achieve sustainable growth through self-directed management that reflects business and regional characteristics and improve management quality as a result of the discipline imposed by the capital markets are made into listed subsidiaries.

In addition, from the perspective of protecting minority shareholders of listed subsidiaries, the Company requests the appointment of independent outside directors and the establishment of an advisory committee of independent officers.

As described above, the Company believes that collaboration and maximization of synergies with Aeon Group companies will benefit minority shareholders.

- 5 -

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

AEON DELIGHT Co. Ltd. published this content on 06 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 December 2021 07:01:02 UTC.


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