‘This document has been translated from the Japanese original (as submitted to the Tokyo Stock Exchange) for reference \npurpose only. In the event of any discrepancy between this translated document and the Japanese original, the original \nshall prevail. Shinsei Bank, Limited assumes no responsibility for this translation or for direct, indirect or any other forms \nof damages arising from the translation. \n\nShinsei Bank, Limited \nCorporate Governance Report \n\nLast Update: December 29, 2021 \nShinsei Bank, Limited \nPresident and CEO Hideyuki Kudo \nContact: 03-6880-7000 \nGroup Investor Relations & Corporate Communications Division \nSecurities Code: 8303 \nhttps://www.shinseibank.com \n\nThe corporate governance of Shinsei Bank, Limited (the “Bank”) is described below. \n\nI. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and\n\nOther Basic Information\n\n1. Basic Views\n\nThe Bank recognizes that enhancing corporate governance is one of the highest priorities to achieve \nour management principles, and has established a corporate governance framework as a \n“Company with an Audit & Supervisory Board”. This model aims to ensure appropriate managerial \ndecision-making and business implementation in order to establish a corporate governance \nframework with sufficient organizational checking functions. We aim to achieve this through the \nfollowing two key actions: \n\n1) Setting the broad direction of corporate strategy and establishing an environment where\nappropriate risk-taking by the senior management is supported through decision-making by\nBoard of Directors, the highest managerial decision-making body, on important corporate\nbusiness execution matters, such as basic management policies including mid-term\nmanagement plans and annual plans; and\n2) Assigning Audit & Supervisory Board Members and an Audit & Supervisory Board those are\nindependent of the Board of Directors auditing duties that include auditing of the Board of\nDirectors.\n\nThe Bank approves of the “Corporate Governance Code” applicable to listed companies in Japan \nwhich came into effect in June 2015, in that we seek to adequately practice the Code for effective \ncorporate governance in pursuit of sustainable growth and increasing corporate value over the mid- \nto long-term, and thereby contribute to the development and success of stakeholders and the \nJapanese economy as a whole. The Bank intends to enhance corporate governance in line with the \nbasic policies outlined below for the respective general principles. \n\nBasic guidelines on corporate governance \n\n(1) The Bank fully recognizes that without an appropriate cooperation with stakeholders including\nshareholders and investors, it would be difficult to achieve sustainable growth and shareholders\nare the primary starting point for corporate governance discipline. The Bank takes appropriate\nmeasures to fully secure shareholder rights and develop an environment in which shareholders\ncan exercise their rights appropriately and effectively. In addition, the Bank enhances to secure\neffective equal treatment of shareholders.\n\n- 1 -\n\n\x0c \n\n(2) The Bank fully recognizes that our sustainable growth and the creation of mid- to long-term \ncorporate value are brought about a result of the provision of resources and contributions made \nby a range of shareholders, including employees, customers and local communities. As such, \nthe Bank endeavors to appropriately cooperate with these stakeholders. \n \n\n(3) The Bank seeks actively disclose various information regarding its management in order to \nincrease in transparency of management, to obtain accurate understanding on our management \nstatus and policies from customers, investors and stakeholders, and to widely receive an \nappropriate evaluation from society. The Bank aims to provide voluntary, timely and continuous \ndisclosure in fair and effective manner in terms of information not only those in compliance with \nthe relevant laws and regulations but also additional information that does not fall under the \nTimely Disclosure Rules in order to meet needs from customers, stakeholders and investors. \nThe Bank endeavors to engage in constructive dialogue with shareholders even outside the \ngeneral shareholder meeting and to work for developing a balanced understanding of the \npositions of shareholders and other stakeholders and acting accordingly. \n\n \n\n \n\n[Reasons for Not Implementing the Respective Principles of the Corporate Governance Code] \n\n \nWe implement each of the Principles of the Corporate Governance Code. \n \n\n \n[Disclosure Based on the Principles of the Corporate Governance Code] ［UPDATED］ \n\n \nPlease refer to the “Policies for Initiatives Concerning the ‘Corporate Governance Code’” for \ninitiatives and policies for each principle of the Code; \nPolicies for Initiatives Concerning the “Corporate Governance Code” \nhttps://www.shinseibank.com/corporate/en/policy/governance/pdf/governance_code_e.pdf \n\n \n(Principle 1.4 Cross-Shareholdings) \n(1) Policy for reducing cross-shareholdings \nThe Bank deems investment shares with the objective other than purely financial as cross-\nshareholdings, which in principle excludes shares that are strategically held due to a new business \nor a new business partnership. Under such policy, for listed shares considered necessary to be \nacquired or held in view of the respective business status including the need to maintain or \nstrengthen business relations, the Bank verifies the appropriateness of acquiring and holding the \nshares according to predefined procedures, and discloses in the securities report the individual \nname, number, the amount booked on the balance sheet, and the objective of the shares as specific \ninvestment shares. \n \nA new cross-shareholding is approved at the Group Executive Committee if it is for a new business \nor business partnership and by a panel consisting of the Head of Executive Officer in charge of \ntransaction, Head of Credit Risk Management, and Chief Officer of Group Planning and Finance if \nit is for other purposes. A cross-shareholding related to an important new business or business \npartnership is approved at the Board. \n \n(2) Verification of the significance and economic rationale of cross-shareholdings \nThe cross-shares held are regulatory reported to the internal committee responsible for risk \njudgment of the transactions to verify medium- to long-term economic rationale and future outlook \nbased on the expected return and risks are to discuss the significance and policy of the cross-\nshareholding. The results of the discussions are regularly reported to the Board. Based on reports \nfrom the executive side, the Board verifies the appropriateness of cross-shareholding of individual \nstocks from perspectives including whether the cross-shareholding is in line with the Bank’s strategy \nand whether the benefit gained from the holding should be prioritized even considering risks of the \nholding, and requests the executive side to take appropriate actions when necessary. Specifically, \nfor all listed stocks it holds, the Bank defines its policy including decreasing the cross-shareholding \n\n \n\n- 2 – \n\n\x0cand confirms the implementation status of the policy annually after the business section in charge \nof the transaction, risk management section, and planning and finance section examine the purpose \nof cross-shareholding, finance and risk statuses, statuses of transactions with the counterparty and \nearnings from the transactions, unrealized gains and losses, and other indirect advantages that can \nbe gained by conducting comprehensive transactions with the counterparty. \n \n(3) Criteria for exercising voting rights \nIn exercising voting rights as to cross-shareholdings, the Bank judges as basic criteria whether to \nexercise the rights or not through internal procedures, whether the cross-share contributes to the \nimprovement of long-term share value, whether the exercising incurs a disadvantage, whether the \nexercising damages the significance of the cross-shareholding when it is due to a new business or \na new business partnership, and whether the cross-shareholding has been fully explained as \nneeded. \n \n \n(Principle 1.7 Related Party Transactions) \nConcerning transactions with related parties including Directors, the Bank Group has an established \nprocess to consider the transaction according to the Bank Rules, mainly in light of the conflicts of \ninterest with the Bank and the fairness of the transaction, and if needed, obtain the approval of the \nBoard of Directors upon deliberating the conflicts of interest and the fairness of the transaction at \nthe Special Transaction Review Committee where Audit & Supervisory Board Members (Full-time) \nare present. The Bank implements regulation as Bank Rules pertaining to the transaction with major \nshareholders of the Bank, in order to ensure independence required by the Bank Law in the \nrelationship with major shareholders, based on the Bank Rules, the Bank has also established \nprocess to seek the judgment of the Board when a transaction that may cause conflict of interest is \nto be conducted. For transactions with related parties including Directors and with major \nshareholders of the Bank approved by the Board, the Bank will organize a system to secure the \nprofits of the stakeholders based on objective judgment, including reports of important facts \nconcerning the transactions to the Board following the initiation of the transactions, regular \nmonitoring of the transactions by the Special Transaction Review Committee, and ensuring an \nappropriate monitoring framework by seeking the Board’s judgment when necessary. \n \n(Supplementary Principle 2.4.1） \n■ The Bank Group believes that securing diverse viewpoints and values and having them co-exist \norganically through sound conflict and fusion, i.e., realizing diversity and inclusion, will create new \nvalue, ensure sustainable growth and management principles of the Group and become the source \nof the Group’s competitiveness. \n・ With healthy management and wellbeing as bases, the Group is working on nurturing \norganizational culture and on creating a work environment where each employee views differences \nin attributes such as gender, age and nationality, disability, sexual orientation, and gender identity \nand differences in career, strengths and characteristics positively and plays an active part in the \norganization. \n・ For promoting diversity and inclusion, we established the Diversity Promotion Department in the \nGroup Human Resources Division and the Group Committee to Promote the Active Participation of \nWomen chaired by the heads of business sections to enhance the effectiveness of the Group’s \ninitiatives for promoting women’s taking active roles. Since FY2020 we have also included diversity \npromotion in the performance targets for managers to promote initiatives in line with each section. \nFurthermore, the President agreed with the declaration on action by a “Group of Male Leaders who \nwill Create a Society in which Women Shine” and “Women\’s Empowerment Principles” (“WEPs”) to \ndemonstrate our stance. \n・ The Group focuses on the diversity of its core human resources engaging in important decision \nmaking. For promoting active participation of women, we have set and publish targets for the ratio \nof female managers (section managers and above) for each group and each company. For foreign \nnationals and mid-career hires we have not set specific targets since mid-career hires exceed 50% \nof total employees and represent 60% of managers, and both foreign nationals and mid-career hires \nplay an active part in the Group as core human resources with no difference as new-graduates. In \nhiring new-graduates, we have established an overseas student course so that foreign nationals \n\n \n\n- 3 – \n\n\x0cwhose mother language is not Japanese are not disadvantaged. In addition to hiring mid-careers, \nwe are also actively rehiring human resources who have gained experience in different culture after \nleaving the Group, and have improved their knowledge and skills, and deepened new knowledge. \nWe have also established an alumni association to maintain connection with retired employees. \n・ We are organizing a next-generation human resource development program to develop diverse \nhuman resources that will assume next-generation management. We also accept employees’ \nengaging in side business to encourage our diverse human resources to develop their skills, expand \noutside networks, broaden their view and expand their experience. \n・ We are promoting development of structures for providing diverse workstyles to employees \nincluding working from home so that personnel with diverse backgrounds can work without time and \nphysical 11 constraints regardless of their life state or life events. \n・ The status of ensuring the diversity of the Group through these initiatives, including the ratio of \nfemale managers, the number and the ratio of mid-career hires and the number of re-employed \nemployees is regularly updated on our website and in the Integrated Report etc. \n \n(Principle 2.6 Roles of Corporate Pension Funds as Asset Owners) \nThe Bank has adopted a defined benefit corporate pension plan, and conducts asset management \naiming to secure needed total profits for a long period of time in order to ensure future pension \npayment to plan-holders and pensioners. In order to achieve this, the Bank responds as follows \nbased on the Ministry of Health, Labor and Welfare’s “Guidelines for the Roles and Responsibilities \nof Asset Managers Related to Defined Benefit Corporate Pension” so that the Bank can \ndemonstrate its functions expected as the asset owner. \nThe Bank has established the Pension Asset Investment and Management Committee consisting \nof experts of financial market trends, risk management, and pension plans to establish and review \nthe basic policy and guidelines for asset management and allocation of policy assets. \nThe Pension Asset Investment and Management Committee selects asset managers and funds \nbased on our asset management target and policy asset allocation. We have selected asset \nmanagers that have declared acceptance of the Stewardship Code and conducts quantitative and \nqualitative evaluation of these asset managers on a quarterly basis. In considering its basic policy, \netc. for asset management, the Bank has created a structure for responding in a continuous and \nappropriate manner from the expertise, credibility, and conflict of interest perspectives by using \nasset management consultants and pension (asset management) master trustees/trust banks. \nManagement and performance status of pension assets are periodically reported to the \nManagement Development Committee, which reviews important matters relating to human \nresources and labor issues. \n \n(Principle 3.1 Full Disclosure) \nThe Bank Group proactively provides the information listed below in order to enhance transparency \nand fairness in decision-making and ensure effective corporate governance. In doing so, we seek \nto make the provided information carry high added value for the user. \n \n(1) Management principles and management plan \nThe Bank Group presents the objectives of the Group and defines our management principles which \nare positioned as the pillars of our future business operations, as well as establishing management \nstrategies which stipulate pursuing growth through value co-creation and enhancing and leveraging \norganizational capabilities as basic policies. The Bank’s progress in the implementation will be \nregularly disclosed in the Integrated Report, etc. \n \n(2) Basic views and guidelines on corporate governance \nThe Bank’s basic views and guidelines based on the five principles of the Corporate Governance \nCode are stated under “1. Basic views on corporate governance” and “Basic guidelines on corporate \ngovernance.” \n \n(3) Board of Directors’ policies and procedures in determining the remuneration of the senior \nmanagement and Directors \nThe remuneration of the Directors is deliberated at the Nomination and Compensation Committee \n\n \n\n- 4 – \n\n\x0cand determined by the Board on the premise of the contents of the Revitalization Plan and within \nthe total remuneration determined at the general meeting of shareholders. The remuneration of the \nDirectors is determined based on the policy on the ratios and the amount of each type of \nremuneration, which is determined by the Board of Directors taking into consideration the \nrecommendation of the Nomination and Compensation Committee. \n. \nThe remuneration of Executive Officers and Group Headquarters Officers including Executive \nDirectors is decided based on the following policy. \n\uf09f Appropriate incentives are provided in order to advance the Group’s business and realize the \n\nmid-to long-term Group management principles. \n\n\uf09f Reflecting the roles and responsibilities of each director and executive officer, directors and \nexecutive officers share common shareholder value by holding the Company’s shares over the \nlong term. \nThe scheme will curb excessive risk-taking and contribute to ongoing sound management as \na financial institution. \nFocusing on share price, the Plan incorporates a compensation system that provides \nincentive to further increase corporate value. \n\n\uf09f \n\n\uf09f \n\n \n(4) Board of Directors’ policies and procedures in the appointment/dismissal of the senior \nmanagement and the nomination of candidates for Directors and Audit & Supervisory Board \nMembers \nThe Bank’s Board makes final decisions on the appointment/dismissal of the senior management \nand the nomination of the candidates for Directors and the Audit & Supervisory Board Members \nbased on the Bank Rules. Details are as follows. \nExecutive Officers and Group Headquarters Officers: the Bank adopts the procedure with a high \nlevel of transparency to decide them from among candidates based on their evaluations and \nperformance. \n\nCandidates for Director: the appointment of Director is deliberated by the Nomination and \nCompensation Committee and determined by the Board of Directors meeting with a consideration \nof the Bank’s size, a balance among knowledge, experience, skills and diversity. \n\nCandidates for the Audit & Supervisory Board member: they are decided with the consent of the \nAudit & Supervisory Board, considering the candidates’ knowledge and experience in order to \naccurately, fairly and effectively ensure audit business execution by the Bank’s Directors. \n \n(5) Explanations with respect to the individual appointments/dismissals and nominations based on \n(4) above \nThe Bank explains, in the reference documents of the Annual General Meeting of Shareholders, the \nindividual appointments and nominations of the Executive Directors and nominations of candidates \nfor Directors and Audit & Supervisory Board Members. The appointment/dismissal of representative \ndirectors has been disclosed pursuant to the timely disclosure system governed by the Stock \nExchange. \n \n(Supplementary Principle 3.1.3) \n \nInformation on the Bank Group\’s sustainability policies and initiatives are disclosed on ” Principle \n2.3 Sustainability Issues, Including Social and Environmental Matters,” as well as the following \nwebsites and integrated reports. The Group promotes constructive dialogue (engagement) with \ninvestors and other stakeholders with making active use of this information. \nSustainability Site: https://www.shinseibank.com/corporate/en/policy/esg/ \nIntegrated Report: https://www.shinseibank.com/corporate/en/ir/arir/ \n \nIn line with the framework of TCFD (Task Force on Climate-related Financial Disclosures) \nrecommendations endorsed in January 2020, The Group analyzes the risks and the impacts on \nearnings associated with climate change. These are disclosed on the Bank\’s website and the \nIntegrated Report. \n\n \n\n- 5 – \n\n\x0c \nThe Group regards human resources as the source of sustainable growth in the corporate value. \nAccordingly, to engage in human capital is our vital strategy in the sustainability management. In \naddition, one of the basic strategies of our Medium-Term Strategies is to execute strategies by \nstrengthening and leveraging organizational capabilities that are the source of corporate growth. To \nfoster an organizational culture and nurture human resources to improve the competitiveness of the \nGroup, we have been expanding a variety of training programs, including common training such as \ndiversity and inclusion, compliance, human rights and harassment training, and specialist training \nwhich is selectively attended according to the department to which they belong and their duties, as \nwell as the development of team management skills and the development of leaders for managerial \nand managerial position candidates, in line with the careers of employees. These specific initiatives \nare disclosed on the Bank\’s website and the Integrated Report. \n \n(Supplementary Principle 4.1.1) \nThe Bank’s Board of Directors is constituted of two Executive Directors responsible for business \noperations and five Outside Directors responsible for supervising the operations and makes \nappropriate decisions while ensuring the objectivity and transparency of the management. Ordinary \nbusiness operations excluding matters that are stipulated by laws and ordinances as decisions of \nthe Board of Directors are delegated to the President & CEO. The Bank has also built a structure \nwhere, under the direction of the President & CEO, Executive Officers as well as Chief Officers and \nSenior Officers in the Group Headquarters appointed by the Board oversee sections in charge as \ndirectors in charge to realize flexible business execution. The specific scope of delegation is \nstipulated in the Rules of the Board of Directors and other Bank Rules. \n \n(Principle 4.9 Independence Standards and Qualification for Independent Directors) The Bank \njudges the independence of the Directors considering the independence standards presented by \nthe Tokyo Stock Exchange. Outside Directors are eventually selected by the Board of Directors, \nthrough sufficient discussions at the Nomination and Compensation Committee, from candidates \nwho have a track record in the areas they experience, with a consideration of a balance among \nknowledge, experience and skills, diversity and appropriate size, from the perspective of \nincorporating diversified viewpoints in the Board. \n \n(Supplementary Principle 4.10.1) \nOf seven Directors, the majority, i.e., five, are Independent Outside Directors, which enables the \nBoard to have objective and transparent discussions on the appointment of Directors and senior \nmanagement and the determination of compensation for them. The Nomination and Compensation \nCommittee including the chairperson is fully constituted of Outside Directors. The Committee \ndiscusses resolution matters of the meeting of general shareholders related to selection or dismissal \nof Directors, matters related to selection or dismissal of the President and matters related to \ncompensation for Directors and replies to the Board. \n \n(Supplementary Principle 4.11.1) \nThe selection of Director candidates is eventually decided by the Board of Directors meeting after \nthorough discussion with a consideration of a balance among knowledge, experience and skills, \ndiversity and appropriate size after sufficient discussion at the Nomination and Compensation \nCommittee. Inclusion of those who have a management experience at other companies is also \nconsidered when discussing candidates for Outside Directors. Furthermore, a skill matrix of \nDirectors is created and posted on the notices of meetings of general shareholders to visualize skills \nneeded for the Board to realize the Bank Group’s management strategies, and a skill matrix of \nOutside Directors and Audit & Supervisory Board Members is disclosed in the Integrated Report. \n Notice of GMS: https://sp.shinseibank.com/corporate/en/stock/shareholdersmtg/ \n Integrated Report: https://www.shinseibank.com/corporate/en/ir/arir/ \n \n(Supplementary Principle 4.11.2) \nThe status of the Directors and Audit & Supervisory Board Members also serving at other companies \nhas been appropriately disclosed in the business reports. The Bank considers that the status is \nreasonable in terms of the time and effort needed for the Board or the Audit & Supervisory Board. \n\n \n\n- 6 – \n\n\x0c \n(Supplementary Principle 4.11.3) \nThe Bank periodically conducts the evaluations/analysis of the effectiveness of the Board as a whole \nin order to improve the functionality of the Board. The Bank conducted self-evaluation as follows in \nfiscal year 2020: \n(1) Purpose: Enhance the Board of Directors’ function by evaluating whether the Board has fulfilled \nits roles and responsibilities and by running the PDCA cycle \n(2) Targets for the analysis and evaluation: Board of Directors’ activities and operational and support \nsystems for conducting the activities in an efficient and effective manner \n(3) Evaluators: All participants of the Board of Directors (11 members including Directors, Audit & \nSupervisory Board Members, and others). The evaluation includes questions targeting Audit & \nSupervisory Board Members only same as last year. \n(4) Analysis and evaluation items: Discussions at the Board of Directors meetings, Operation of \nBoard of Directors meetings by the executive team, Composition and diversity, Provision of \ninformation to the Board of Directors from the executive team, Discussions at Strategy Sessions, \nOperation of the Strategy Sessions by the executive team, Communication, Nomination and \nCompensation Committee, Necessity of third party assessment on the effectiveness of the Board \nof Directors, and Evaluation from Audit & Supervisory Board Member, etc. \n(5) Method for analysis and evaluation: Questionnaire survey by the secretariat of the Board of \nDirectors Meetings based on the direction of the Chairman of the Meetings (with multiple responses \nand open-ended responses) \n(6) Feedback of the survey results: Selected responses and open-ended responses were reported \nto the Board. The survey results are as follows. \n1) Discussions at the Board of Directors meetings \nContinuing for last year, it was recognized to a degree that discussions about medium-to long-term \nvision and business models for increasing corporate value and sustainable growth are made in a \nconstructive manner, and that these have contributed to increasing corporate value and sustainable \ngrowth. \n2) Discussions and effectiveness at Strategy Sessions \nDiscussions at this year’s Strategy Sessions covered strategies principally on the three areas of \nhuman resources, productivity improvements and business. It was recognized to a degree that \nthese themes were appropriate and focused on managerial issues and business models for \nsustainable growth. As the Sessions have been evaluated as being effective in examining the \nmedium- to long-term business strategies of the Shinsei Bank Group, we will continue to configure \nappropriate themes in the future and will endeavor to make these Sessions forums of useful \ndiscussion. \n3) Composition and diversity of the Board of Directors meetings \nRegarding the diversity of the Board, including the gender and international background of its \nmembers, although diversity was recognized as being “appropriate” or “generally appropriate,” the \nevaluation has confirmed that examination needs to be continued from a viewpoint of diversity in a \nbroad sense, including skills and experience. \n4) Operation of the Board of Directors meetings and Strategy Sessions, the executive team \nFocus continued to be placed on improving the efficiency of the meetings through means such as \nselecting agenda items that do not require explanations and accepting questions about the materials \nbefore the meetings. As a result, it was recognized in this year’s questionnaire results as well that \nthe meetings had covered important agenda items and were operated in a balanced manner as \nexemplified by the sufficient time allocated to important reviews of agenda. \n5) Provision of information to the Board of Directors from the executive team \nIt was confirmed through last year’s questionnaire that there was room for further improvement with \nrespect to the composition and volume of materials and explanations of agenda by the executive \nteam. As such, following initiatives taken with those areas especially borne in mind, it was conformed \nthat there were visible improvements in all of those areas. Additionally, as a result of also making a \npoint of sharing information through Board of Directors meetings, Strategy Sessions and other \nforums, it was recognized that necessary information was shared. In addition, this year, two lectures \nwere held with two external guest lecturers. Through this and other such forums, we intend to work \ntoward continue endeavoring towards providing information that the Board of Directors finds highly \nsatisfactory and useful. \n\n \n\n- 7 – \n\n\x0c6) Communication\nWe have confirmed that the environment surrounding the sharing of information, etc. among Outside\nDirectors and Outside Audit & Supervisory Board Members is generally favorable. We have also\nconfirmed the effectiveness of Executive Sessions which are comprised only of Outside Directors\nand Outside Audit & Supervisory Board Members. Meanwhile, while the supply of information to the\nBoard of Directors regarding main stakeholders (shareholders, employees, etc.) was recognized as\nbeing generally adequate, we intend to work towards enhancing the content of that information,\namong other endeavors.\n7) Nomination and Compensation Committee\nThe Nomination and Compensation Committee held five meetings by the end of January 2021. We\nhave confirmed that the composition of Committee members and the frequency of the Committee\nmeetings are appropriate and that the meetings were generally beneficial for discussing nomination\nand compensation related matters. We also held interviews with executive members separate of\nthe Committee, which were highly recognized as providing good opportunities to become familiar\nwith human resources. It is ideal to continue these interviews in the future as well.\n8) Third-party evaluation on the effectiveness of Board of Directors\nResponses on third-party evaluations of effectiveness generally consisted of “Considered in\nmedium to long term” and “No need.” We were able to reconfirm that current effectiveness\nevaluations are functioning. Note that we recognized that this item is one that we will continue to\nexamine, though it is not one what we strongly feel necessitates implementation right away.\n9) Evaluation from Audit & Supervisory Board Members\nWe have confirmed that Audit & Supervisory Board Members acknowledge that Directors are\nperforming their expected responsibilities appropriately as a whole.\n\nBased on the survey results, the overall evaluation was not very different from last year, but it was \nsuccessfully confirmed that scores in general were on the high side and that the degree of \nsatisfaction for items that were cited as requiring review and improvement in the prior evaluation \nalso increased. We therefore have concluded that efficient meeting operation led to securing time \nfor important discussions. We have also received suggestions and opinions on meetings and their \noperation and intend to examine and will address those areas while simultaneously verifying the \nintentions of the Board of Directors and examine and respond to challenges in order to enhance the \neffectiveness and functions of the Board. \n\n(Supplementary Principle 4.14.2) \nThe Directors and Audit & Supervisory Board Members in the Bank have sufficient expertise. \nFurthermore, the Bank provides and arranges opportunities as well as provides financial support, \nto Directors and Audit & Supervisory Board Members to acquire knowledge, etc. necessary for the \nperformance of their duties. \n\n(Principle 5.1 Policy for Constructive Dialogue with Shareholders)The Bank endeavors to \nproactively create opportunities to have dialogues with market players including investors, analysts, \nand the Bank’s shareholders concerning matters that contribute to sustainable growth and \nincreased corporate value over the mid- to long-term. The Group Investor Relations & Corporate \nCommunications Division is enhancing an organizational structure to lay the groundwork through \nrepeated pre-meetings with as many market players as possible to help them gain a better \nunderstanding of the Bank’s management policies and financial status, for achieving more \nopportunities for dialogues between the senior management and market players concerning \nincreased corporate value over the mid- to long-term. \nThe Bank holds the “IR/SR Policy” which demonstrates the Bank’s intention of utilizing Investor \nRelations (IR)/Shareholders Relations (SR) as an important management tool for sustainable \ncorporate value improvement in a mid-long term perspective and constructively engaging with \nmarket players. \n\nAlso please refer to “IR Activities” of this report for more details, including the structural development \nfor the promotion of dialogue as well as other efforts and measures. \n\n- 8 -\n\n\x0c2. Capital Structure \n\nForeign Shareholding Ratio ［UPDATED］ \n\nMore than 10% – Less than 20% \n\n[Status of Major Shareholders] ［UPDATED］ \n\nName / Company Name \n\nNumber of Shares \nOwned \n\nPercentage (%) \n\nSBI Regional Bank Holdings, Co., Ltd. \nSBI Holdings, Inc. \nDeposit Insurance Corporation of Japan \nTHE RESOLUTION AND COLLECTION CORPORATION \nTHE MASTER TRUST BANK OF JAPAN, LTD (TRUST ACCOUNT) \nCustody Bank of Japan, Ltd. (Trust Account) \nSTATE STREET BANK AND TRUST COMPANY 505103 \nBNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1 \nGOVERNMENT OF NORWAY \nCHARLES SCHWAB FBO CUSTOMER \n\n56,922,299 \n42,737,700 \n26,912,888 \n20,000,000 \n15,792,600 \n3,939,100 \n1,877,678 \n1,376,700 \n1,316,001 \n1,254,897 \n\n27.28 \n20.48 \n12.89 \n9.58 \n7.56 \n1.88 \n0.89 \n0.65 \n0.63 \n0.60 \n\nControlling Shareholder (except for Parent Company) \n\n－ \n\nParent Company ［UPDATED］ \n\nSupplementary Explanation ［UPDATED］ \n\nSBI HOLDINGS \nTokyo Stock Exchange \nFirst Section 8473 \n\n \n\n2021. \n\n1. The above is listed by the substantial holdings as far as the Bank knows, as of December 21, \n\n2. Shareholding percentages have been calculated by deducting treasury shares (50,393,609) \n\nfrom denominator and rounding down to the second decimal place. \n \n\n \n3. Corporate Attributes \n\nListed Stock Market and Market Section \n\nFiscal Year-End \n\nType of Business \n\nTokyo Stock Exchange \nFirst Section \n\nMarch \n\nBanks \n\nNumber of Employees (consolidated) as of the End of the \nPrevious Fiscal Year \n\nMore than 1000 \n\nSales (consolidated) as of the End of the Previous Fiscal Year From ¥100 billion to less than ¥1 trillion \n\nNumber of Consolidated Subsidiaries as of the End of the \nPrevious Fiscal Year \n\nFrom 100 to less than 300 \n\n- 9 – \n\n \n\n \n\n \n\n \n\n \n \n \n \n \n \n \n\n \n\n\x0c4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling\n\nShareholder ［UPDATED］\n\nIndependent Outside Directors represent the majority of the Bank’s Board of Directors. The Board \ndiscusses and deliberates important transactions and actions that may cause conflict of interest \nbetween major shareholders and minority shareholders \nfor pre-screening and post-\ntransaction/action monitoring. \n\n5. Other Special Circumstances which may have Material Impact on Corporate Governance\n\nAs a bank licensed to operate in Japan, the Bank assumes the responsibility of ensuring that the \nentire Bank Group, including all subsidiaries, practices appropriate compliance and risk \nmanagement in accordance with all related laws and guidelines. Close cooperation and coordination \nbetween the parent company and its subsidiaries is essential to ensuring that the Bank fulfills this \nresponsibility. \nRegarding the management of insider information and information security, the entire Bank Group \nis keenly aware of the need to ensure that legal violations do not occur, and toward that end we \nhave established appropriate procedures and communication systems. \n\nRegarding transactions involving directors and related parties, please refer to the Principle 1.7 \nRelated Party Transactions in the “Disclosure Based on the Principles of the Corporate Governance \nCode” section. \n\nII. Business Management Organization and Other Corporate Governance Systems\nregarding Decision-making, Execution of Business, and Oversight in Management\n\nCompany with an Audit & Supervisory Board \n(kansayakukai-setchi-gaisha) \n\n1. Organizational Composition and Operation\n\nOrganization Form \n\n[Directors] \n\nMaximum Number of Directors Stipulated in \nArticles of Incorporation \nTerm of Office Stipulated in Articles of \nIncorporation \n\nChairperson of the Board \n\nNumber of Directors \n\nEstablishment of Outside Directors \n\nEstablished \n\nNumber of Outside Directors \n\nNumber of Independent Directors \n\n20 \n\nOne year \n\nPresident \n\nSeven \n\nFive \n\nFive \n\n- 10 -\n\n\x0cOutside Directors’ Relationship with the Company (1) \n\n \n\nName \n\nErnest M. Higa \n\nJun Makihara \n\nRie Murayama \n\nHiroko Sasaki \n\nRyuichi Tomimura \n\nAttribute \n\nFrom another \ncompany \nFrom another \ncompany \nFrom another \ncompany \nFrom another \ncompany \nFrom another \ncompany \n\nRelationship with the Company* \na \n\nb \n\nd \n\nc \n\ne \n\nf \n\ng \n\nh \n\ni \n\nj \n\nk \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n ○ \n\n \n\n \n\n \n\n \n\n \n\n \n\n ○ \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n* Categories for “Relationship with the Company” \n* \n\n”○” when the director presently falls or has recently fallen under the category; \n“△” when the director fell under the category in the past \n“●” when a close relative of the director presently falls or has recently fallen under the category; \n“▲”when a close relative of the director fell under the category in the past \n\n* \n\n \na. Executive of the Company or its subsidiaries \nb. Non-executive director or executive of a parent company of the Company \nc. Executive of a fellow subsidiary company of the Company \nd. A party whose major client or supplier is the Company or an executive thereof \ne. Major client or supplier of the listed company or an executive thereof \nf. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other \nproperty from the Company besides compensation as a director/Audit & Supervisory Board (kansayaku) \ng. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a \n\nh. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) \n\nlegal entity) \n\n(the director himself/herself only) \n\ni. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board \n\n(kansayaku) are mutually appointed (the director himself/herself only) \n\nj. Executive of a company or organization that receives a donation from the Company (the director \n\nhimself/herself only) \n\nk. Others \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n\n- 11 – \n\n\x0cOutside Directors’ Relationship with the Company (2) \n\n \n\nName \n\nDesignation as \nIndependent \nDirector \n○ \n\nTransactions \n\nSupplementary Explanation of \nthe Relationship \nMr. Ernest M. Higa is a holder of \na Shinsei Bank PowerFlex \ncomprehensive retail account for \nof \nindividuals. \nPowerFlex accounts of individual \nindependent directors are the \nsame as normal transactions on \nthe \nordinary \nindividual customers and have \nno bearing on \nthe Bank\’s \nindependence. We therefore do \nnot include here a summary of \nthe transactions of Mr. Higa\’s \naccount. \n \n\naccounts \n\nof \n\nErnest M. Higa \n\nJun Makihara \n\n○ \n\n－ \n\n○ \n\n \n\nRie Murayama \n\nReasons of Appointment \n\nand \n\nIn order to reflect in the Bank’s \nmanagement his experience \nand deep insight of business for \nconsumers. \n \nIn addition to the independence \nfrom \ninternal management \nassured by his position as an \nOutside Director, Mr. Higa is not \nlikely to generate any conflict of \nordinary \ninterests \nwith \nshareholders. Therefore, \nthe \nthe \nto \nBank has submitted \nTokyo Stock Exchange, Inc. an \n“independent \ndirector \nstatement” \n(dokuritsu-yakuin \ntodokede-sho) that Mr. Higa is \nan independent director. \n \nIn order to reflect in the Bank’s \nmanagement his extensive \nknowledge of finance and his \ndomestic \ninternational \nexperience. \n \nIn addition to the independence \nfrom \ninternal management \nassured by his position as an \nOutside Director, Mr. Makihara \nis not likely to generate any \nconflict of interests with ordinary \nthe \nshareholders. Therefore, \nthe \nto \nBank has submitted \nTokyo Stock Exchange, Inc. an \n“independent \ndirector \n(dokuritsu-yakuin \nstatement” \ntodokede-sho) \nMr. \nMakihara is an independent \ndirector. \n \nIn order to reflect in the Bank’s \nmanagement her wide range of \nexpertise \nthe \nbased \nextensive experience at an \ninvestment bank. \n \nIn addition to the independence \nfrom \ninternal management \nassured by her position as an \nMs. \nOutside \nto \nMurayama \nof \ngenerate \n\nDirector, \nis not \nany \n\nlikely \nconflict \n\nthat \n\non \n\n \n\n- 12 – \n\n\x0cthat \n\nwith \n\nwith \n\nlikely \nconflict \n\nDirector, \nis not \nany \n\nordinary \ninterests \nthe \nshareholders. Therefore, \nBank has submitted \nthe \nto \nTokyo Stock Exchange, Inc. an \ndirector \n“independent \n(dokuritsu-yakuin \nstatement” \ntodokede-sho) \nMs. \nMurayama is an independent \ndirector. \n \nIn order to reflect in the Bank’s \nmanagement her expertise in \nfinancial area and her \nthe \nexperience as a management \nconsultant \nuniversity \nand \nprofessor. \n \nIn addition to the independence \nfrom \ninternal management \nassured by her position as an \nMs. \nOutside \nto \nKawamoto \ngenerate \nof \nordinary \ninterests \nshareholders. Therefore, \nthe \nthe \nto \nBank has submitted \nTokyo Stock Exchange, Inc. an \n“independent \ndirector \n(dokuritsu-yakuin \nstatement” \nMs. \ntodokede-sho) \nKawamoto is an independent \ndirector. \n \nIn order to reflect in the Bank’s \nmanagement his extensive \nexperience and wide range of \nknowledge \nincluding \ninformation systems as a \nmanagement executive and a \nconsultant. \n \nIn addition to the independence \nfrom \ninternal management \nassured by his position as an \nOutside Director, Mr. Tomimura \nis not likely to generate any \nconflict of interests with ordinary \nthe \nshareholders. Therefore, \nBank has submitted \nthe \nto \nTokyo Stock Exchange, Inc. an \ndirector \n“independent \n(dokuritsu-yakuin \nstatement” \ntodokede-sho) \nMr. \nTomimura is an independent \ndirector. \n \n\nthat \n\nthat \n\n○ \n\n \n\nHiroko Sasaki \n\n○ \n\nTransactions \n\nMr. Ryuichi Tomimura is a holder \nof a Shinsei Bank PowerFlex \ncomprehensive retail account for \nindividuals. \nof \nPowerFlex accounts of individual \nindependent directors are the \nsame as normal transactions on \nthe \nordinary \nindividual customers and have \nno bearing on \nthe Bank\’s \nindependence. We therefore do \nnot include here a summary of \nof Mr. \nthe \nTomimura\’s account. \n\ntransactions \n\naccounts \n\nof \n\nRyuichi \nTomimura \n\n \n\n \n\n- 13 – \n\n\x0c \n\n \n\n \n\n \n\n \n\n \n \n\n \n\n \n\nVoluntary Establishment of Committee(s) \nCorresponding to Nomination Committee or \nRemuneration Committee \n\nEstablished \n\nVoluntary Establishment of Committee(s), Members and Chairman \n\n \n\nCorresponding to \nNomination \nCommittee \nCorresponding to \nRemuneration \nCommittee \n\nName \nof the Committee \nNomination and \nCompensation \nCommittee \nNomination and \nCompensation \nCommittee \n\nSupplementary Explanation \n\nTotal number \nof members \n\nFull-Time \nmembers \n\nInternal \nDirectors \n\nOutside \nDirectors \n\nFive \n\nFive \n\nFive \n\nFive \n\n- \n\n- \n\nFive \n\nFive \n\nChairman \n\nOutside \nDirectors \n\nOutside \nDirectors \n\n \nThe Bank established the Nomination and Compensation Committee, an optional body, for further \nenhancing the objectivity and transparency of the Board of Directors’ functions of appointing \ncandidates for directors and making decisions on directors’ remuneration. \n \nThe majority of the Bank’s Board of Directors is presently composed of outside directors (four of the \nsix directors are outside directors), ensuring objective and transparent discussions for appointment \nof candidates for directors and decisions on the directors’ remuneration system and their specific \nremuneration levels. In order to reinforce this function, the Bank’s outside directors hold regular \nmeetings, the “Executive Session”, to share their expertise and information on business \nmanagement. \nHowever, given the trend among Japanese companies to shift to a “Company with a Nominating \nCommittee, etc.” or establish an optional nominating committee or a compensation committee from \nthe perspective of “governance” in the ESG management philosophy, the Bank has concluded that \nin order to improve the Bank’s accountability towards its stakeholders, including shareholders, it is \nnecessary to further enhance objectivity and transparency of the Board of Directors’ functions \nrelated to appointment of candidates for directors and decisions on directors’ remuneration. To this \nend, the Bank established an optional advisory committee, composed of outside directors only. \n \nBased on a request from the Board of Directors, the Nomination and Compensation Committee is \nto discuss and respond to the Board concerning agenda items for the general meeting of \nshareholders related to the election/dismissal of Directors, matters related to the election/dismissal \nof the President and CEO, and matters related to remuneration of Directors. \n \nIn order to fulfill its accountability towards stakeholders, The Bank will make efforts to continually \nstrengthen its corporate governance framework by enhancing objectivity and transparency of the \ndecision-making process. \n \n\n[Audit & Supervisory Board Members [Kansayaku]] \nEstablishment of Audit & Supervisory Board \n(Kansayaku Board) \nMaximum Number of Audit & Supervisory \nBoard (Kansayaku) Stipulated in Articles of \nIncorporation \nNumber of Audit & Supervisory Board \n(Kansayaku)Member \n\nFive \n\nThree \n\nEstablished \n\n- 14 – \n\n\x0cCooperation among Audit & Supervisory Board Members (Kansayaku), Accounting Auditors and Internal \nAudit Departments \n\n \nThe Audit & Supervisory Board Members invite the accounting auditors to participate in board \nmeetings. The accounting auditors then explain the status of verification of compliance with internal \ncontrols at the Bank and Group companies and the contents of accounting audit reports and \nexchange opinions with the Board Members. To ensure their independence and the appropriateness \nof audit methods, the Board Members also listen to presentations on audit plans and the internal \nmanagement system of accounting auditors. \n \nThe Audit & Supervisory Board Members receive regular status reports from each department \nparticipating in the internal control system, including the Group Internal Audit Division, which is \nresponsible for internal audits, the Risk Management Group, and the Credit Assessment Division. \nThe Group Internal Audit Division, in addition to receiving the approval of the Audit & Supervisory \nBoard for its internal audit plans, must provide directly to the Board the same reports it provides to \nthe President. In addition to regular internal audits, the Audit & Supervisory Board may request the \nGroup Internal Audit Division to perform individual audits. The Board conducts efficient audits \nthrough these efforts. \n \n\nAppointment of Outside Audit & Supervisory \nBoard Member (Kansayaku) \nNumber of Outside Audit & Supervisory Board \nMember (Kansayaku) \nNumber of Independent Audit & Supervisory \nBoard Member (Kansayaku) \n\nTwo \n\nTwo \n\nAppointed \n\nOutside Audit & Supervisory Board Members’ (Kansayaku’s) Relationship with the Company (1) \n\nName \n\nAttribute \n\nIkuko Akamatsu \n\nCPA \n\nShiho Konno \n\nLawyer \n\nRelationship with the Company* \nd \na \n\nb \n\ng \n\ne \n\nc \n\nf \n\nh \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nk \nj \ni \n ○ \n\n \n\n \n\n \n\nl m \n\n \n\n \n\n \n\n \n\n* Categories for “Relationship with the Company” \n* \n\n”○” when the director presently falls or has recently fallen under the category; \n“△” when the director fell under the category in the past \n“●” when a close relative of the director presently falls or has recently fallen under the category; \n“▲”when a close relative of the director fell under the category in the past \n\n* \n\n \na. Executive of the Company or its subsidiary \nb. Non-executive director or accounting advisor of the Company or its subsidiaries \nc. Non-executive director or executive of a parent company of the Company \nd. Kansayaku of a parent company of the Company \ne. Executive of a fellow subsidiary company of the Company \nf. A party whose major client or supplier is the Company or an executive thereof \ng. Major client or supplier of the Company or an executive thereof \nh. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other \nproperty from the Company besides compensation as an Audit & Supervisory Board Member (kansayaku) \ni. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a \n\nlegal entity) \n\nj. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) \n\n(the Audit & Supervisory Board Member (kansayaku) himself/herself only) \n\n- 15 – \n\n \n\n \n \n\n \n \n\n \n\n \n\n\x0ck. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board \nMember (kansayaku) are mutually appointed (the Audit & Supervisory Board Member (kansayaku) \nhimself/herself only) \n\nl. Executive of a company or organization that receives a donation from the Company (the Audit & \n\nSupervisory Board Member (kansayaku) himself/herself only) \n\nOutside Audit & Supervisory Board Members’ (Kansayaku’s) Relationship with the Company (2) \n\nm. Others \n\n \n \n\n \n\nName \n\nDesignation \nas \nIndependent \nDirector \n○ \n\nSupplementary Explanation of \nthe Relationship \n\nTransactions \n\nMs. Ikuko Akamatsu is a holder of \na Shinsei Bank PowerFlex \ncomprehensive retail account for \nindividuals. \nof \nPowerFlex accounts of individual \nindependent directors are \nthe \nsame as normal transactions on \nthe \nordinary \nindividual customers and have no \nbearing \nBank\’s \nindependence. We therefore do \nnot include here a summary of the \ntransactions of Ms. Akamatsu\’s \naccount. \n\naccounts \n\nthe \n\non \n\nof \n\nReasons of Appointment \n\non \n\nher \n\nexpertise \n\nIn order to reflect in the Bank’s audit \noperations \nin \ncompliance and governance, etc. \nand extensive experience as a \nthe \nbased \nconsultant \naforementioned expertise, as well \nas her professional knowledge and \nexperience as a certified public \naccountant and a certified fraud \nexaminer. \n \nIn addition to the independence \nfrom internal management assured \nby her position as an Audit & \nSupervisory Board Member, Ms. \nAkamatsu is not likely to generate \ninterests with \nany conflict of \nordinary shareholders. Therefore, \nthe Bank has submitted to the \nTokyo Stock Exchange, Inc. an \n“independent director statement” \ntodokede-sho) \n(dokuritsu-yakuin \nan \nis \nthat Ms. Akamatsu \nindependent director. \n \nIn order to reflect in the Bank’s audit \noperations her expertise and \nextensive experience as a lawyer. \n \nIn addition to the independence \nfrom internal management assured \nby her position as an Audit & \nSupervisory Board Member, Ms. \nKonno is not likely to generate any \nconflict of interests with ordinary \nshareholders. Therefore, the Bank \nhas submitted to the Tokyo Stock \nExchange, Inc. an “independent \n(dokuritsu-\nstatement” \ndirector \nyakuin \nthat Ms. \ntodokede-sho) \nKonno is an independent director. \n \n\nIkuko Akamatsu \n\n○ \n\n \n \n\nShiho Konno \n\n \n \n\n \n\n- 16 – \n\n\x0c[Independent Directors] \n\nNumber of Independent Directors \n\nSeven \n\nMatters relating to Independent Directors \n\n－ \n\n[Incentives] \n\nIncentive Policies for Directors \n\nStock Options/ Restricted Stock Compensation \n\nSupplementary Explanation \n\n \nRemuneration of Directors, in addition to fixed compensation, now includes a stock option plan and \na restricted stock compensation plan. \n \n\nRecipients of Stock Options \n\nInside Directors \n\nSupplementary Explanation \n\n \nEligible recipients are full time Directors (excluding Outside Directors). \n \n\n \n[Director Remuneration] \n\nDisclosure \nRemuneration \n\nSupplementary Explanation \n\nof \n\nIndividual \n\nDirectors’ \n\nNo Individual Disclosure \n\n \nInformation about the amounts of compensation paid to Directors is disclosed in the Business \nReport (Corporate/IR – Annual General Meeting of Shareholders) and the securities reports posted \non the Bank’s website. The securities report for fiscal year 2019 (ended March 31, 2020) discloses \nDirectors’ compensation as follows. \nDirectors’ compensation: 112 million yen (paid to 2 Directors in total, excluding Outside Directors.) \nAudit & Supervisory Board Members’ compensation: 20 million yen (paid to one Audit & Supervisory \nBoard Member, excluding Outside Audit & Supervisory Board Members) \nOutside Directors’ and Outside Audit & Supervisory Board Members’ compensation: 82 million yen \n(paid to 7 Outside Directors and Outside Audit & Supervisory Board Members in total.) \n \nNotes: \n1. Figures have been truncated to the unit stated in all amounts shown above. \n2. 2 Directors also work as Executive Officer. \n3. The 15th General Meeting of Shareholders held on June 17, 2015 adopted a resolution to set \nceilings for the total amount of compensation, etc. paid to Directors at 180 million yen a year \n(including 60 million yen for outside Directors) and the 10th General Meeting of Shareholders \nheld on June 23, 2010 adopted a resolution to set ceilings for the total amount of compensation, \netc. paid to Audit & Supervisory Board members at 60 million yen a year. However, these \namounts do not include salaries payable to Directors as the Bank’s employees when they also \nwork as the Bank’s employees. \n\n- 17 – \n\n \n \n\n \n\n \n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n\x0c \n\n \n \n\n \n\n \n\n4. The Bank resolved at its Board of Directors meeting, held on May 12, 2015 to abolish of the \nretirement allowance plan for Officers and the introduction of equity remuneration type stock \noptions to the Full-Time Directors was resolved at the 15th General Meeting of Shareholders \nheld on June 17, 2015. Separately from the maximum remuneration stated above, the 15th \nGeneral Meeting of Shareholders held on June 17, 2015 adopted a resolution to set ceilings \nfor allotment the Subscription Warrants not exceeding 50 million yen annually to the Full-Time \nDirectors as equity remuneration type stock options. \n\n5. At the 18th General Meeting of Shareholders held on June 20, 2018, the Bank resolved to \nimplement a restricted stock compensation plan targeting the Bank’s full-time Directors. The \namount of remuneration has been resolved at 20 million yen or less per year, which is within \nthe scope of the existing limit of compensation for Directors stated above in Note 3. \n\n6. Directors’ compensation (paid to 2 Directors, excluding Outside Directors) includes 27 million \nyen of Equity remuneration type stock options and 19 million yen of restricted stock \ncompensation. \n\n7. Compensation amounts for directors are predicated on the content of the Bank’s current Plan \nfor Restoring Sound Management and are determined by the Board of Directors taking into \nconsideration the recommendations of the Nomination and Compensation Committee who \ndeliberate on compensation amounts within the scope of compensation amounts determined \nat a general meeting of shareholders. The bank has introduced mid- to long-term incentive \ncompensation in order to enable directors to share with shareholders in the risks and benefits \nassociated with stock price fluctuations and to increase their motivation in their duties to \ncontribute to increasing the stock price and enhancing corporate value over the mid- to long-\nterm. The Bank does not pay director bonuses to Directors in order to reduce the incentive for \nexcessive risk-taking. \n\nPolicy on Determining Remuneration Amounts \nand Calculation Methods \n\nEstablished \n\nDisclosure of Policy on Determining Remuneration Amounts and Calculation Methods \n\n \nBoard of Directors’ policies and procedures in determining the remuneration of the senior \nmanagement and Directors \nManagement remuneration is appropriately managed with the recognition that the Bank is in the \nposition of having received the injection of public funds and currently executing the Revitalization \nPlan, on the grounds of an appropriate evaluation of the Management’s duties and contribution to \nperformance based on results-oriented principles, and with reference to the Bank’s performance \nand market standards. The remuneration of the Directors is determined by the Board taking into \nconsideration the recommendations of the Nomination and Compensation Committee (a voluntary \nestablishment of Committee) which is consist of Outside Directors on the premise of the contents \nof the Revitalization Plan and within the total remuneration determined at the general shareholder \nmeeting. The remuneration of the Directors is determined based on the policy on the ratios and the \namount of each type of remuneration, which is determined by the Board of Directors taking into \nconsideration the recommendation of the Nomination and Compensation Committee. \nThe base remuneration shall be the fixed remuneration corresponding to their full-time or part-time \nstatus, positions and responsibilities, to be determined after deliberation by the Nomination and \nCompensation Committee on the appropriate level of remuneration as a public fund injection bank \nwith reference to the level of other companies in the same industry. \nThe amount of the Equity Remuneration Type Stock Options for full-time directors shall be \ndetermined at a Board of Directors meeting, after deliberation by the Nomination and Compensation \nCommittee, by calculation using a formula that takes into account the Bank\’s stock price fluctuation \nrate, the performance of the Bank\’s stock price in comparison with the stock price of the banking \nindustry and the Bank\’s net asset fluctuation rate during the previous fiscal year (i.e., Monthly base \nremuneration × 4 × √(Bank\’s stock price fluctuation × Performance ratio of the Bank\’s stock price \nfluctuation to TOPIX × Bank\’s net asset fluctuation rate) ), provided, however, that the amount of \n\n \n\n- 18 – \n\n\x0cthe Equity Remuneration Type Stock Options shall be within a range of 1 to 12 times of monthly \nbase remuneration, in order for directors to share the risks and benefits of stock price fluctuations \nwith shareholders and to increase their motivation to contribute to medium- to long-term increases \nin corporate value and stock prices, based on internal rules determined by the Board of Directors, \nand it is provided that upon the occurrence of a certain event to a director, all stock options granted \nto such director shall be waived. \nA restricted stock compensation plan has been introduced for full-time directors (meaning directors \nexcluding outside directors) and outside directors with the objective of providing them with \nincentives to continuously improve our corporate value and further promoting value sharing with \nshareholders and, after deliberation by the Nomination and Compensation Committee, the amount \nto be granted to each full-time and part-time director is determined corresponding to his/her \npositions and job responsibilities and common shares are granted to each director at a certain \npercentage of the total amount of remuneration for such director that is authorized by the General \nMeeting of Shareholders. It is provided that upon the occurrence of a certain event to a director, all \nshares granted to such director shall be acquired by the bank without consideration. \nThe ratio of the base remuneration to the total remuneration for full-time directors (meaning \ndirectors other than outside directors) and outside directors shall be determined specifically at a \nBoard of Directors meeting, after deliberation by the Nomination and Compensation Committee, \ngenerally on the basis that the base remuneration shall be 60% of the total remuneration, the \nrestricted stock compensation shall be 15-20% of the total remuneration and the Equity \nRemuneration Type Stock Options shall be 20-25% of the total remuneration with regard to full-time \ndirectors, and the base remuneration shall be 80% of the total remuneration and the restricted stock \ncompensation shall be 20% of the total remuneration with regard to outside directors. \nThe Bank does not delegate the determination of the amount of remuneration. The Bank does not \npay director bonuses to Directors in order to reduce the incentive for excessive risk-taking. \n \n\n \n\n \n\n \n\n \n\n[Supporting System for Outside Directors and/or Audit & Supervisory Board Members (Kansayaku)] \n\n \nThe Office in charge of the Board of Directors provides information needed by Outside Directors to \nproperly and efficiently fulfill their duties. Prior to meetings of the Board, the Office distributes draft \nproposals and other documents to each Board member at a timing that allows sufficient time for \nreview prior to the meeting, thus securing a support system for Directors that ensures they have the \ninformation necessary to make appropriate decisions at Board of Directors meetings. \n \nSimilarly, assistants are assigned to provide support required by the Audit & Supervisory Board \nMembers to conduct audits. \n \n\n \n2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and \nRemuneration Decisions (Overview of Current Corporate Governance System) ［UPDATED］ \n\n \nThe Board of Directors \nSince its inception as the Bank in 2000, the management of the Bank has consistently engaged in \nmanagement which emphasizes the supervisory functions of outside Directors in order to achieve \ntransparency and objectivity management as it seeks to achieve sustainable growth and enhance \nthe Bank’s corporate value over the mid to long term. In accordance with its corporate governance \nframework as a “Company with an Audit & Supervisory Board,” the Bank has a Board of Directors \nstructure in which outside Directors outnumber internal Directors, with two Directors responsible for \ndaily business execution and five outside Directors (male: three, female: two). The current outside \nDirectors are a well-balanced group of executives that bring to the Bank their extensive experience \nand expertise in a range of fields strongly related to the Bank’s business, including domestic and \noverseas financial businesses, consumer-related businesses, real estate business, business for the \n\n- 19 – \n\n\x0celderly, venture management, management consult’
