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    8801   JP3893200000

MITSUI FUDOSAN CO., LTD.

(8801)
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Mitsui Fudosan : CORPORATE GOVERNANCE REPORT

05/24/2021 | 02:33am EDT

Corporate Governance

CORPORATE GOVERNANCE

Mitsui Fudosan Co., Ltd.

Last Update: May 24, 2021

Mitsui Fudosan Co., Ltd.

Masanobu Komoda, President and Chief Executive Officer (Representative) Inquiries: Corporate Administration Group, General Administration Department +81 3-3246-3055 Securities Code: 8801 https://www.mitsuifudosan.co.jp/english/index.html

The Mitsui Fudosan Co., Ltd., corporate governance system is described below.

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

1. Basic Views

The Mitsui Fudosan Group takes a standpoint of sound, transparent and efficient management in the aim of building optimum corporate governance to earn the trust of all stakeholders.

Mitsui Fudosan has established the Compensation Advisory Committee and Nomination Advisory Committee to enhance transparency regarding compensation for managing directors and nomination of managing directors and corporate auditors. It has also adopted a corporate officer system to enhance the soundness and efficiency of management by separating and strengthening management and executive functions. Mitsui Fudosan also invites and appoints outside directors to strengthen the oversight functions of the managing directors and enhance management transparency.

In addition, corporate auditors conduct audits to evaluate the status of business execution by managing directors while coordinating with the Internal Audit Department, which serves as the Company's internal auditing department, as well as with the certified public accountant.

Moreover, steps have been taken to put in place the Mitsui Fudosan Group Compliance Policies, as well as a structure that will ensure that Group managing directors and employees engage in business activities in an appropriate manner.

Reasons for Non-Compliance with the Principles of the Corporate Governance Code

Mitsui Fudosan complies with all Principles of the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code Updated

[Principle 1.4 Strategic Shareholdings] Strategic shareholding policy

In overall consideration for business strategy and relationships with business partners, to improve the Group's corporate value, Mitsui Fudosan holds shares considered effective for management strategies as shares for purposes other than net investments (strategic shareholdings) from a medium- to long-term perspective.

Furthermore, Mitsui Fudosan continuously reviews shareholding status. Upon confirming the significance of shareholdings based on the quantitative rationality of holdings and relationships with business partners, we have decided to reduce our shareholdings. In fiscal 2020, we sold 3 stock brands worth a total of ¥45.9 billion.

Verification by the Board of Directors

When verifying the rationality of shareholdings, we verify whether or not the benefit, risk, etc., associated with the shareholdings are commensurate with the capital cost. Furthermore, in addition to confirming the significance of shareholdings from the perspectives of transaction performance, stable funding, and creation of business opportunities, we also verify whether or not the holdings contribute to improving the medium- to long-term corporate value of the Group.

At a meeting held on May 14, 2021, the Board of Directors verified appropriateness with regard to the significance of strategic shareholdings based on the quantitative rationality of holding and relationships with business partners for each stock brand.

As a result, for stocks for which the rationality of holding or significance of holding has decreased, we will examine selling by considering factors such as impact on the stock market.

Standard for exercising voting rights

In exercising voting rights, Mitsui Fudosan makes comprehensive decisions based on viewpoints including whether it will lead to improved shareholder returns or enhanced corporate value of the company invested in over the medium- to long-term. In addition, regarding important matters such as those indicated below, Mitsui Fudosan conducts individual examinations based on internal standards and appropriately determines the approval/disapproval of each matter. (Appropriation of surplus, appointment/dismissal of managing directors and corporate auditors, director compensation and retirement benefits, changes to the Articles of Incorporation, etc.)

[Principle 1-7 Related Party Transactions]

Mitsui Fudosan annually confirms whether or not there are (direct or indirect) transactions between Mitsui Fudosan and Company managing directors, corporate auditors or presidents of listed subsidiaries and their close relatives.

In the event of (direct or indirect) transactions between Mitsui Fudosan and managing directors deemed to be competitive or having a conflict of interest, such transactions are approved and monitored by the Board of Directors.

Having determined the importance of a transaction by referring to disclosure requirements stipulated in the application guidelines for corporate accounting standards, applicable related party transactions are listed in the Securities Report.

[Principle 2-6 Role as Asset Owner of Corporate Pensions]

Mitsui Fudosan strives to conduct management enabling maintenance of the health of pension financing into the future to ensure the payment of pension benefits as stipulated in pension regulations. Placing the highest priority on risk, the Company strictly controls risk within an acceptable range while managing pension assets with the aim of ensuring the long-term total returns deemed necessary.

Mitsui Fudosan monitors the pension asset management companies. In addition, the Pension Asset Management Committee was established comprising appropriately qualified Personnel Department and Accounting and Finance Department staff to consider important matters such as basic policies with regard to pension asset management and the formulation/revision of the policy asset mix. This committee meets once every quarter while utilizing outside consulting companies.

[Principle 3.1 Full Disclosure]

(1) Corporate philosophy, business strategies and business plans

Business strategies and plans are disclosed on the Mitsui Fudosan corporate website: URL: https://www.mitsuifudosan.co.jp/english/corporate/about_us/vision2025/index.html

The corporate philosophy (Statement Vision Mission) is posted on the Mitsui Fudosan corporate website: URL: https://www.mitsuifudosan.co.jp/english/corporate/about_us/statement/index.html

(2) Basic views and policies on corporate governance in light of each principle of the Corporate Governance Code

Basic views and policies related to corporate governance are disclosed in this report under Section 1-1: Basic Views, in the Securities Report, and posted on the Mitsui Fudosan corporate website:

URL: https://www.mitsuifudosan.co.jp/english/corporate/about_us/governance/governancesystem/index.html

  1. Policies and procedures for Board of Director determination of managing director and senior management compensation Managing director's compensation consists of basic compensation, bonuses paid as a short-term incentive and restricted stock compensation paid as a medium-term incentive. Compensation for managing directors (outside directors) is solely basic compensation.
    The Company has established a Compensation Advisory Committee, comprised of 4 outside directors who make up the majority and 2 internal directors, with one of these outside directors serving as chairman. Instead of leaving determination to the sole discretion of the President, the Board of Directors consults this committee on senior management and management directors' compensation prior to making these decisions.
  2. Policies and procedures for Board of Director appointment and dismissal of senior management and nomination of managing directors and corporate auditors
    Appointment, dismissal and nomination policy
    The Company, based on the Group's management philosophy, business strategies and others, comprehensively considers the personality, abilities, insights and other factors of each candidate, and appoints senior management and selects persons who are suitable for managing directors and corporate auditor as candidates. The Company appoints its outside directors with the expectation that they will contribute their abundant experience and broad knowledge to the Company's management, and that they will play an appropriate role in strengthening the supervisory function of the Board of Directors and ensuring transparency.
    The Company also appoints its outside auditors with the expectation that they will bring an objective stance to auditing the managing directors in the performance of their duties, based on their expert knowledge and extensive experience.
    The Company is able to dismiss senior management in the event of impropriety or serious violations of laws or the Articles of Incorporation occurring within or outside the execution of duties by senior management.
    Appointment, dismissal and nomination procedures
    The Company has established the Nomination Advisory Committee, comprised of 4 outside directors who make up the majority and 2 internal directors, with one of these outside directors serving as chairman. The Board of Directors consults this committee on the appointment or dismissal of senior management and the nomination of candidates for managing directors prior to making these decisions. Additionally, the nomination of corporate auditors is decided by the Board of Directors with the approval of the Board of Corporate Auditors after consulting with this committee.
  3. In light of (4) above, when the Board of Directors appoints or dismisses senior management and nominates managing directors and corporate auditor candidates, in the event an explanation of individual appointments, dismissals and

nominations are provided at the Ordinary General Shareholder's Meeting, the reason for individual appointments will be included in the convocation notice.

For details, please see our website:

URL: https://www.mitsuifudosan.co.jp/english/corporate/ir/shareholder/meeting/index.html

[Supplementary Principle 4-1-1 Disclosure of Scope of Delegation to Management]

From the viewpoint of separation between execution and supervision, with the exception of matters pertaining to stocks and other items important to company management that must be determined by resolution by the Board of Directors in accordance with laws, regulations and the Articles of Incorporation, executive managing directors and executive officers are entrusted with the authority to make decisions pertaining to the execution of business.

Moreover, determination of importance within this authority shall be conducted after establishing Company rules on decision-making based on the nature and amount of transaction, etc.

[Principle 4-8] Effective Use of Independent Outside Directors

The Mitsui Fudosan Board of Directors consists of 12 members, including four independent outside directors. Although there is no particular limitation on the proportion of independent managing directors as a percentage of all

managing directors, Mitsui Fudosan will continue to consider this structure so that the Board of Directors can satisfactorily fulfill its role and responsibilities.

[Principle 4-9] Standards for Determining Independence

Standards for Determining Independence are published in the 108th Securities Report. For details, please see our website:

URL: https://www.mitsuifudosan.co.jp/corporate/ir/library/fs/pdf/YUHO_1803.pdf (Japanese language only)

[Supplementary Principle 4-11-1 Balance, Diversity and Scale of Board of Directors]

To ensure balance and diversity in the Board of Directors overall and facilitate multifaceted and useful discussions among Board members, Mitsui Fudosan appoints personnel with consideration for the capabilities and experience of each managing director while also maintaining a scale appropriate for the Board of Directors to function effectively and efficiently.

[Supplementary Principle 4-11-2 Disclosure of Officer Concurrent Positions]

Noteworthy concurrent positions, etc., are published in the convocation notice for the Ordinary General Shareholder's Meeting.

URL: https://www.mitsuifudosan.co.jp/english/corporate/ir/shareholder/meeting/index.html

[Supplementary Principle 4-11-3 Board of Director Efficacy Analysis, Evaluation and Disclosure

Each year, the Company analyzes and evaluates the efficacy of the Board of Directors, continually aiming to further enhance its functions. An overview and results of our evaluation of the Board of Directors' efficacy are provided below.

(1) Evaluation method

The Company conducted interviews and free-response questionnaires with all directors and all corporate auditors regarding the Board of Directors' efficacy. The results of these interviews and questionnaires were then analyzed and evaluated at a Board of Directors meeting held on May 21, 2021.

(2) Evaluation items

Board of Directors structure (number of members, ratio of executive to non-executive members, diversity, etc.)

Status of operation of the Board of Directors (number of meetings held, attendance rates, time spent for deliberation, number of items deliberated, provision of information, questions and answers, etc.)

Other (issues raised in the previous evaluation of Board of Directors' efficacy; Compensation Advisory Committee; Nomination Advisory Committee; meetings of outside directors and outside auditors; etc.)

(3) Evaluation results and future responses

Based on the results of interviews, etc., the improvement initiatives listed below are being implemented and it was confirmed that the Board of Directors efficacy was properly maintained to achieve sustained increases in the Group's corporate value. Deliberation/reporting on each project and discussions on management strategy, etc., have been further enhanced by decreasing the number of deliberations on individual projects through revisions, etc., of criteria for deliberation by the Board of Directors. Furthermore, management policies related to ESG/SDGs are now discussed at the Board of Directors. Such measures have improved the efficacy of the Board of Directors.

The supervisory function was further enhanced through periodic reporting to the Board of Directors on the risk management system, and on trends and countermeasures for risk-associated projects.

A meeting of outside directors was held to discuss themes such as our response to COVID-19 and future strategies. Additionally, the Group recognizes the following issues which must be addressed to achieve further improvement.

For necessary agenda items, give consideration to sharing of discussion content on the executive side in order to deepen discussions at the Board of Directors.

Continue to discuss themes such as SDGs and materialities of the Company.

The results of this evaluation will be used to further improve the functioning of the Board of Directors.

[Supplementary Principle 4-14-2 Disclosure of Managing Director and Corporate Auditor Training Policies

To ensure that managing directors and corporate auditors sufficiently fulfil their roles, Mitsui Fudosan conducts an orientation at time of employment and regularly conducts training for managing directors to provide the information required to execute their duties. We also provide opportunities for outside directors to exchange opinions with senior management, allocate support staff for the Board of Directors and Board of Corporate Auditors, provide explanations and materials to outside directors before Board of Director Meetings and cover expenses necessary for managing directors and corporate auditors to fulfill their roles.

[Principle 5-1 Policy for Constructive Dialogue with Shareholders] Basic approach

In an attempt to realize sustainable growth and enhance corporate value over the medium- to long-term, Mitsui Fudosan proactively engages in constructive dialogue with shareholders in an effort to further enhance corporate value. We also make an effort to build long-term relationships of trust through the accurate disclosure of information and constructive dialogue with shareholders and investors.

Constructive dialogue system improvement and engagement policy

The Investor Relations Department is the point of contact with regard to the promotion of constructive dialogues with shareholders, which are supervised by the managing director in charge. Furthermore, in addition to complete information disclosure trusted by shareholders, each relevant department exchanges information appropriately. The details of dialogues with shareholders are provided as feedback to senior management and the Board of Directors as necessary.

2. Capital Structure

Foreign Shareholding Ratio

30% or higher

[Status of Major Shareholders] Updated

Name/Company Name

Shares Owned

Percentage (%)

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

104,401,400

10.85

Custody Bank of Japan, Ltd. (Trust account)

71,065,800

7.39

SSBTC CLIENT OMNIBUS ACCOUNT

21,856,482

2.27

JPMorgan Securities Japan Co., Ltd.

21,297,988

2.21

Custody Bank of Japan, Ltd. (Trust account 7)

19,834,100

2.06

State Street Bank West Client - Treaty 505234

15,669,932

1.63

Custody Bank of Japan, Ltd. (Trust account 5)

13,784,400

1.43

KAJIMA CORPORATION

13,362,746

1.39

Sumitomo Mitsui Banking Corporation

12,982,708

1.35

Custody Bank of Japan, Ltd. (Trust account 6)

12,218,800

1.27

Controlling Shareholder (Except for Parent Company)

―――

Parent Company

None

Supplementary Explanation Updated

The status of major shareholders is as of March 31, 2021.

Calculations of share ownership ratios exclude treasury stock.

A change report provided for public inspection dated April 6, 2018, indicates holdings of the Company's shares as of March 30, 2018, by Mizuho Securities Co., Ltd., and its joint holders. However, as the Company is unable to confirm the substantial number of shares held as of March 31, 2021, these holdings are excluded from the above-mentioned status of major shareholders.

A change report provided for public inspection dated December 21, 2018, indicates holdings of the Company's shares as of December 14, 2018, by Sumitomo Mitsui Trust Bank, Limited and its joint holders. However, as the Company is unable to confirm the substantial number of shares held as of March 31, 2021, these holdings are excluded from the above-mentioned status of major shareholders.

A change report provided for public inspection dated July 21, 2020, indicates holdings of the Company's shares as of July 15, 2020, by Nomura Securities Co., Ltd. and its joint holders. However, as the Company is unable to confirm the substantial number of shares held as of March 31, 2021, these holdings are excluded from the above-mentioned status of major shareholders.

A change report provided for public inspection dated October 21, 2020, indicates holdings of the Company's shares as of October 15, 2020, by BlackRock Japan Co., Ltd. and its joint holders. However, as the Company is unable to confirm the substantial number of shares held as of March 31, 2021, these holdings are excluded from the above-mentioned status of major shareholders.

A change report provided for public inspection dated March 15, 2021, indicates holdings of the Company's shares as of March 8, 2021, by Mitsubishi UFJ Financial Group, Inc., and its joint holders. However, as the Company is unable to confirm the substantial number of shares held as of March 31, 2021, these holdings are excluded from the above-mentioned status of major shareholders.

3. Corporate Attributes

Listed Stock Market and Market Section

First Section, Tokyo Stock Exchange

Fiscal Year-End

March

Type of Business

Real Estate

Number of Employees (consolidated) as of the End of the

1,000 or more

Previous Fiscal Year

Sales (consolidated) as of the End of the Previous Fiscal

¥1 trillion or more

Year

Number of Consolidated Subsidiaries as of the End of

From 100 to less than 300

the Previous Fiscal Year

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

―――

5. Other Special Circumstances that May Have Material Impact on Corporate Governance

―――

II Business Management Organization and Other Corporate Governance Systems Regarding

Decision-Making, Execution of Business and Management Oversight

1. Organizational Composition and Operation

Organization Form

A company with corporate auditors

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

Disclaimer

Mitsui Fudosan Co. Ltd. published this content on 24 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 May 2021 06:32:02 UTC.


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Sales 2022 2 122 B 19 316 M 19 316 M
Net income 2022 164 B 1 490 M 1 490 M
Net Debt 2022 3 521 B 32 052 M 32 052 M
P/E ratio 2022 15,1x
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EV / Sales 2022 2,83x
EV / Sales 2023 2,75x
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Free-Float 93,2%
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Number of Analysts 18
Last Close Price 2 590,00 JPY
Average target price 3 105,56 JPY
Spread / Average Target 19,9%
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Managers and Directors
Masanobu Komoda President & Representative Director
Hiromichi Iwasa Chairman
Masafumi Nogimori Independent Outside Director
Shinichiro Ito Independent Outside Director
Tsunehiro Nakayama Independent Outside Director