As of July 3, 2023

Basic approach to corporate governance

To remain a company that customers and stakeholders trust, we are working to strengthen and enhance corporate governance by increasing the transparency and soundness of business management and by ensuring legal compliance and appropriate timely information disclosure.
Based on the above basic approach, we have outlined the following policies through which we will work to fulfill the principles of the corporate governance code as we aim to achieve sustainable growth and increase our medium to long term corporate value.

1. We shall respect shareholders’ rights and ensure equality.
2. We shall take into consideration the interests of shareholders and other stakeholders and cooperate with them appropriately.
3. We shall disclose corporate information appropriately and ensure transparency.
4. We shall ensure that the Board of Directors performs its roles and duties appropriately and ensure advanced oversight and decision making.
5. We shall have constructive dialogue with shareholders with a view to sustaining our growth and enhancing corporate value over the medium to long term.

Corporate Governance Structure

• Directors（excluding Audit & Supervisory Committee Members) : 8 members
• Directors(Audit & Supervisory Committee Members) : 3 members

Summary of Hankyu Hanshin Holdings and its Group corporate governance structure

Hankyu Hanshin Holdings, Inc. (our Company), is a pure holding company, and the conduct of operations is basically the responsibility of Group member companies. Our Company’s principal role is monitoring and supervision of the entire Group—meaning that these functions are separate from the conduct of Group businesses.

Under this structure, our Company possesses the authority to approve matters related to Company and Group management policies and business strategies as well as the medium-term management plan and annual management plan for each core business. As necessary, we also have operating companies submit progress reports on business execution. When the Group company will engage in activities that are critical to Group management (for example, investments above a certain level of capital), we may require the company obtain approval from, or report to, Hankyu Hanshin Holdings in advance. This structure enables the monitoring and supervision of each Group company and helps improve Group overall governance.

Board of Directors, which is comprised of internal directors and outside directors, holds meetings during which we approve and receive reports on the abovementioned matters. Furthermore, we also have established a Group Management Committee, which serves as a preliminary entity for deliberating matters prior to presenting them to the Board of Directors and whose membership is made up of the representatives of core businesses throughout the Group.

To ensure transparency in the appointment and dismissal of our Company's directors, and to promote collaboration between outside directors, we have established a Corporate Governance Committee included the Representative Director & chairman (in the event of absence or an accident, the Representative Director & president) and outside directors, who maintain a position of independence from the Company, and the Committee is chaired by an outside director. Furthermore, we also have established a Compensation Committee whose membership is comprised the Representative Director & Chairman (in the event of absence or an accident, the Representative Director & President) and outside directors who are independent of. The Compensation Committee is overseen by the Board of Directors and is responsible for ensuring objective and transparent procedures during the determination of specific compensation amounts for directors (excluding directors who are Audit & Supervisory Committee members).

Furthermore, as part of efforts to strengthen Group core competence, all administration concerning capital procurement for the Group has been consolidated into our Company, in principle, and we promote the creation of frameworks for ensuring the allocation of necessary capital within the scope of management plans we have approved. Through this structure, we are working to strengthen Group governance related to capital.

Company management decision-making and business management organizations related to business execution and supervision

Board of Directors and Directors

The Board of Directors possesses the authority to approve matters related to Company and Group management policies and business strategies as well as the management plans for each core business. The Board of Directors monitors and supervises Group companies and works to improve Group overall governance by having operating companies submit reports as necessary on important investments and other business execution.

To strengthen monitoring and supervisory functions and to improve the quality of decision-making, we have formed a Board of Directors consisting of 11 directors, of whom five members, including three women, are appointed as independent outside directors. Furthermore, of the 11 directors, three members are directors serving as Audit & Supervisory Committee members and who comprise the Audit & Supervisory Committee.

Compensation for directors (excluding directors who are Audit & Supervisory Committee members) is based on a compensation structure that further motivates directors towards increasing corporate value and performance, and that provides incentives towards increasing shareholder value. This compensation structure is comprised of cash compensation paid based on position and a performance-linked stock compensation trust that issues stock compensation to the Representative Directors.

(Notes)

1. Stipulated number of directors
   The Company Articles of Incorporation stipulate that the Company shall appoint four or more directors and three or more directors who are Audit & Supervisory Committee members.
2. Requirements for the nomination of directors
   The Company Articles of Incorporate stipulate that resolutions on the appointment of directors shall be divided into categories of directors who are Audit & Supervisory Committee members and other directors. Furthermore, votes shall require attendance by shareholders possessing one-third or more of exercisable shareholder voting rights, an affirmative vote shall require a majority vote among said voting rights, and votes shall not be via cumulative vote.

Group Management Committee

The Group Management Committee is comprised of Company full-time directors (excluding directors who are Audit & Supervisory Committee members), executive officers, and the representatives of core Group businesses. In addition to agendas to be presented to the Board of Directors, this Committee deliberates and approves important matters related to Group management, including Group corporate strategy, management planning, and important Group investments.

Corporate Governance Committee and Compensation Committee

Corporate Governance Committee members include the Representative Director & chairman (in the event of absence or an accident, the Representative Director & president) and outside directors, who maintain a position of independence from the Company, and the Committee is chaired by an outside director. This Committee reports with respect to a consultation of selecting director candidates and dismissing directors (excluding Audit & Supervisory Committee members), and serves as a forum to provide information in such areas as the Group’s finances to outside directors. Compensation Committee members include the Representative Director & chairman (in the event of absence or an accident, the Representative Director & president) and outside directors, who maintain a position of independence from the Company, and the Committee is chaired by an outside director. This committee reports with respect to a consultation of concerning compensation systems and compensation levels.

Audit & Supervisory Committee Members and the Audit & Supervisory Committee

The Audit & Supervisory Committee is comprised of three Audit & Supervisory Committee members, of whom two are outside directors who maintain a position of independence from the Company and have advanced expertise in their respective fields to further elevate the appropriateness of decision-making related to business execution. Furthermore, we have created an environment for audits and supervision by the Audit & Supervisory Committee by having the full time Audit & Supervisory Committee member attend Group Management Committee and other Group meetings.

Tax Policy

The Hankyu Hanshin Holdings Group has established the following tax policy to improve the transparency and soundness of its business management.

Hankyu Hanshin Holdings Group Supply Chain Policy

The Hankyu Hanshin Holdings Group has established the “Hankyu Hanshin Holdings Group Supply Chain Policy” to promote sustainability across the supply chain, which means building trust and strong partnerships with our suppliers. For details, please refer to the following.

Hankyu Hanshin Holdings Group Supply Chain Policy

We ask that our suppliers understand the contents of this policy and put it into practice.

※We may ask suppliers to complete questionnaires or other surveys regarding the status of their human rights, labor, environmental, and other initiatives, and we would appreciate your cooperation in this regard.