Last Update: December 24, 2021 Company Name: MIRAIT Holdings Corporation Representative: Toshiki Nakayama, President and CEO Exchange Code: 1417 Stock Exchange Listing: TSE 1st Section Phone: +81-3-6807-3124 The status of Company’s corporate governance is as follows. I. Basic Approach to Corporate Governance 1. Basic Approach Corporate Governance Report The Company recognizes the importance of management as a company with social responsibilities, implements organizational structures and mechanisms for ensuring transparency and fairness in decision making, and positions the creation of relationships of trust with all stakeholders including shareholders to be one of the most important issues in management. For this reason, the Company aims to enhance corporate value and achieve sustained growth through the implementation and constant improvement of the following Corporate Governance Code. [Reason for not Implementing the Principles of the Corporate Governance Code] The Company has implemented all the principles of the Corporate Governance Code revised in June 2021. (Including principles for the prime market that will be applicable from April 2022 onward) [Disclosure Based on the Principles of the Corporate Governance Code] ◆ Establishing an environment for electronic exercise of voting rights [Supplementary Principle 1-2-4] The Company has been adopting the electronic voting platform for institutional investors operated by ICJ, Inc. since the 1st Ordinary General Meeting of Shareholders held on June 28, 2011. The Company is in the process translating the convocation notice into English, and is enhancing efforts to facilitate the exercise of voting rights by overseas investors. ◆ Strategic shareholdings (Principle 1-4) 1. Standard of and Approach to Classification of Shares for Investment If the purpose of investment is: (1) maintaining or strengthening business relationships with the Company in which shares are held; (2) maintaining or strengthening cooperative relationships for the promotion of alliance operations; or (3) coordination for efficient construction work, etc., the Group classifies such investments as strategic shareholdings. Investments made for other purposes are classified as pure investments. etc. 2. Method of examining the policy on cross-shareholdings and the rationality of shareholdings, and details of examination on whether the holding of specific shares is appropriate by the Board of Directors, etc. (1) Policy on holding shares The Group holds shares when it is thought that holding the shares of a business partner will lead to the improvement of the Group’s corporate value or the interests of shareholders. The Company checks the objectives of shareholding and the state of trading, and gradually reduces shares for which the meaning of shareholding is found to have diminished through quantitative and qualitative verification, by their sale, etc. (2) Method of examining the rationality of shareholdings The Group performs quantitative and qualitative examination of the medium- to long-term economic rationality and future outlook of strategic shareholdings based on factors such as the risks and returns. (3) Details of examination on whether the holding of specific shares is appropriate by the Board of Directors, The strategic shareholdings held by the Group are subject to investigation of the purpose of holding the shares and the status of transactions. Once every year, the Board of Directors performs quantitative and qualitative examination of each issue regarding whether the risks and returns are commensurate with the capital cost, the purpose of holding the shares and future business trends, etc. to determine whether holding the shares is appropriate. Shares which are thought to have “little meaning to be held” as a result of a review are sold as needed while considering factors such as the share price. Furthermore, the strategic shareholdings of the Group as a whole and the condition of the reduction thereof are managed through annual reviews. In FY2020, 18 stocks were sold in accordance with the above policy. 3. When exercising voting rights for shares it holds, the Company checks each proposal and makes comprehensive decisions based on whether they contribute to the enhancement of the Group’s medium- to long-term corporate value through dialogue with the company (department) in control of transactions with the business partner and verification of the Company’s Strategy Division. ◆ Responses to intentions to sell cross-shareholdings (Supplementary Principle 1-4-1) When a company that holds the Company’s shares indicates that it intends to sell its shares, the Company does not hinder the sale. ◆ Transactions with cross-shareholders (Supplementary Principle 1-4-2) The Company does not engage in transactions with cross-shareholders which are not economically rational. ◆ Related party transactions (Principle 1-7) The Company requires that competing transactions and transactions in conflict of interest by directors are deliberated and resolved by the Board of Directors, and reports on the status of transactions are periodically made to the Board of Directors. Board members are required to submit a “Confirmation of Related Parties” to ascertain whether there are any transactions with related parties such as the board members themselves, their close relatives, organizations they represent and organizations in which they hold a majority of voting rights. The Board of Directors receives reports on transactions with major shareholders periodically and as required, and provides supervision to ensure the common interests of shareholders are not harmed. ◆ Ensuring internal diversity including promotion of activities of women [Supplementary Principle 2-4-1] In order for the Company to fulfill the social responsibilities as a company and attain sustainable growth and development, the Company considers that it is important to recruit diverse human resources, including mid-carriers with various work histories, regardless of gender or nationality. In order to utilize diverse perspectives and senses of value in corporate management, the Company has set up a specialized organization to promote diversity, and is boosting efforts such as establishing a work environment to maximize the characteristics and abilities of each worker and training of the management staff. In particular, the Company recognizes that promoting activities of women is indispensable, and in order to increase the ratio of female employees in the Group, the Company has set up a goal that the ratio of females among new graduates hired by operating companies shall be 30%, and the ratio of females in managerial positions shall be increased (an increase of 30% compared with April 2020), and is involved in boosting an action plan to enhance promotion of women to managerial positions, as well as in enhancing an institutional support such as a telecommuting system and a childcare leave system that meets at least the legal requirements. The Company strives to expand the range of occupations in which diverse human resources can be successful. ◆ Exhibiting functions as a corporate pension asset owner (Principle 2-6) With regard to the corporate pension plan, in addition to the defined benefit pension (contract-type) corporate pension plans in MIRAIT Corporation and MIRAIT Technologies Corporation, the “MIRAIT Group Defined Benefit Corporate Pension Plan” (MIRAIT Group DB) was implemented in October 2020 and is being managed as a federated defined benefit pension plan in order to integrally manage for the Group the defined benefit corporate pension plans of SOLCOM Co., Ltd. and Sikokutsuken Corporation, which were two of the three companies that underwent management integration in FY2018. (Note) TTK Co., Ltd. has implemented a defined contribution corporate pension plan, and does not have a defined benefit corporate pension plan. With regard to its operation, a governance system has been established by establishing the the Pension Committee made up of the members such as officers in charge of personnel affairs and finance at MIRAIT Holdings Corporation in addition to the officers or general managers in charge of personnel and general affairs and finance in operating companies and employee representatives. The Pension Committee conducts asset and liability management (ALM), has established the appropriate composition of strategic assets in the “Basic Policy on Management of Pension Assets” based on basic approach of long-term investment with acceptable risk, and conducts monitoring of the state of management each quarter while obtaining information as appropriate from the master trustee company as an external expert to ensure appropriate management of pension assets. Furthermore, appropriate personnel have been assigned in MIRAIT Holdings Corporation to serve as the personnel responsible for pensions, and efforts are being made to develop personnel by providing opportunities to learn and appropriately update specialized knowledge by dispatching them to external seminars on corporate pensions and through workshops conducted by external experts. As reducing retirement benefit obligations will reduce the impact of managing a corporate pension on the company’s finances, new defined contribution pension plans have been introduced in SOLCOM CO., Ltd. and Sikokutsuken Corporation to coincide with the implementation of the defined benefit system in the MIRAIT Group, and have been added to the same MIRAIT Group Defined Contribution Pension Plan as the existing defined contribution pension plans of MIRAIT Corporation and MIRAIT Technologies Corporation and are managed on the same platform. ◆ Company objectives, business strategies and business plans (Principle 3-1-1) The Company has established its management philosophy as follows, and aims to be a leading Japanese corporation as a “Comprehensive Engineering & Services Company.” [Management philosophy] 1. Strive to be a leading Japanese corporation that realizes the highest levels of customer satisfaction and trust as a “Comprehensive Engineering & Services Company” that continually creates new value centered on the field of information and telecommunications. 2. Contribute to the realization of an enriched and comfortable society by placing value on safety and quality and offering the highest level of services. 3. Continue to be an enterprise that coexists and mutually prospers with people and society as a company that fulfils its corporate social responsibility and always respects human beings. [Management plan] In order to respond to changes in the business environment, achieve the enhancement of corporate value as a “Comprehensive Engineering & Service Company” and achieve sustained growth, the Group believes it is necessary to improve efficiency of management and further increase the productivity of existing businesses, while expanding and strengthening the competitiveness of new businesses (“frontier domains”) in the medium to long term. To achieve this, the Group has established its 4th three-year medium-term management plan starting in FY2019. [Overview of New Mid-term Plan] 1. Key Initiatives (1) Generating new business opportunities management integration areas and technologies – Support regional development by leveraging the expanded regional coverage achieved through – Facing the challenge of new business opportunities transcending the conventional framework of business (2) Acceleration of transformation of business structure – Acceleration of transformation from carrier business to solution business – Promotion of transformation of quality in solution business (emphasis on profit) (3) Improvement of productivity and streamlining of business operation costs – Ensuring operation of construction work through stronger ties with partner companies – Sharing of systems and consolidation of common operations (4) Strengthening of human resources – Improvement of productivity and securing of human resources through work style reforms – Strengthening and utilization of human resources supporting expansion into new business domains and transformation of business (5) Promotion of ESG management and improvement of safety and quality – Accurately perceiving business in terms of both risk and opportunity from the perspective of strengthening ESG – Establishment of the MIRAIT Group brand responding to customers’ needs for peace of mind and reliability in “improvement of safety and quality” (6) Capital policy – Maintaining a sound financial standing – Management conscious of capital cost – Shareholder returns to be considered with the objective of achieving ROE of more than 8%. 2. Targeted Management Benchmarks The Group has established net sales, operating income, operating margin and ROE (return on equity) as objective benchmarks (KPIs) for determining the level of achievement of management targets in its 4th three- year medium-term management plan. The targets for FY2021 are net sales of 450 billion yen, operating income of 27.0 billion yen, operating margin of 6.0% and ROE of 8% or higher. However, all numerical targets were achieved ahead of schedule in FY2020, which is the second year of the plan, and targets for FY2021 were set to steadily exceed performance of the previous year, at net sales of 470 billion yen, operating income of 30.5 billion yen and operating margin of 6.5%. The reason these KPIs have been adopted is because of the recognition that they are important indicators for all stakeholders including shareholders to understand the Group’s management policies and management strategies, in addition to enabling the evaluation of their progress and feasibility. Operating income and ROE have also been adopted as indicators for the calculation of points granted in the Board Benefit Trust performance-linked stock compensation scheme it has implemented to raise awareness of the contributions to performance of Group companies and enhancement of corporate value. (Note) These figures for these KPIS are based on reasonable judgments according to circumstances, etc. that can be forecast as of the date of the submission of this report, and do not constitute a guarantee of their achievement. ◆ Basic views and guidelines on corporate governance (Principle 3-1-2) The Company recognizes that the realization of effective corporate governance is essential for the creation of relationships of trust with stakeholders. To this end, the Company will increase the effectiveness of corporate governance by: 1. Ensuring the rights and equality, etc. of shareholders; 2. Appropriately collaborating with stakeholders other than shareholders; 3. Ensuring appropriate disclosure and transparency; 4. Performance of responsibilities of the Board of Directors, etc.; and 5. Dialogue with shareholders. Furthermore, the Charter of Corporate Ethics has been established as the basic policy of corporate ethics and a specific code of conduct, and is published on the Company’s website (https://www.mirait.co.jp/en) ◆ Board policies and procedures in determining the remuneration of the senior management and directors (Principle 3-1-3) These are stated in “II. Status of Corporate Management Organizations and Other Corporate Governance Systems Related to Management Decisions, Execution and Supervision 1. Matters Pertaining to Organization Composition and Organization Management, etc. [Directors’ Remuneration]”. ◆ Policies and procedures in the appointment of directors and corporate auditors, and explanations of nominations (Principles 3-1-4 and 3-1-5) When nominating candidates for director and corporate auditor, the Company selects a wide variety of candidates from inside and outside the Company, consults with the Nomination and Compensation Committee chaired by an independent outside director and decides in the Board of Directors the candidates who have excellent character and knowledge along with a high level of management capability based on the committee’s responses. In particular, independent outside directors are nominated based on their ability to fulfill their roles and responsibilities from an expert and objective perspective, such as having abundant experience and knowledge in their respective fields, and providing advice and supervision from the perspective of medium- to long-term enhancement of corporate value. Moreover, independent outside corporate auditors are nominated based on their ability to increase transparency of the Board of Directors and enhance corporate value by appropriately monitoring the state of compliance with laws, regulations and the Articles of Incorporation regarding management decisions and execution of operations by directors with abundant experience and knowledge in their respective fields. The reasons for the election of the individual directors and corporate auditors are described below in the “Notice of the General Meeting of Shareholders.” ◆ Promotion of disclosure in English [Supplementary Principle 3-1-2] The Company has translated into English: the financial statements, convocation notices (abstract translations), integrated reports, corporate governance reports, IR materials, video distribution of financial results briefings, timely disclosure materials and the like. The Company strives to provide important information in English to overseas institutional investors and shareholders in a timely manner. The Company strives to provide a wider range of information disclosure of materials translated into English, by utilizing TD-net and the Company’s website (https://www.mirait.co.jp/en). Additionally, the Company carries out overseas IRs in North America, Europe, and Asia more than once a year. ◆ Enhancement of sustainability information disclosure [Supplementary Principle 3-1-3] The MIRAIT Group has been building communication and electrical infrastructure foundations such as 5G facility establishment, EV station construction, and renewable energy business, by taking advantage of on-site and technical forces that the Company has cultivated so far. The Company strives to solve customer, social, and environmental issues through the operations of the Group. The Group has established the “ESG Management Promotion Committee” with an aim to improve the corporate value toward contribution to SDGs and sustainable growth and has been formulating strategies and solving challenges related to ESG management in general. Full discussion has been made at the committee, in consideration of customer and employee questionnaires, opinions from stakeholders, important social issues extracted from international guidelines regarding social responsibilities, and so on. The materiality has been found after deliberation by the management meeting and the Board of Directors. The Group is a company that is based around working staff, and exists by virtue of daily work of employees and collaborators of the Company. As well as boosting “safety management” to protect the safety of employees and collaborators and “health management” to protect their physical and mental health. Through efforts to nurture human resources by way of “smart work and work style reform while coexisting with coronavirus” and a new in-house university “Mirai College” to be established in the Company, the human-centered management will be carried forward. Please visit the Company’s website for the above specific efforts. (Integrated report: https://www.mirait.co.jp/en/) In October 2021, the Group expressed approval for the TCFD proposal and has started to examine collection of environmental data of the entire value chain. In the future, the Company will reflect possible risks and opportunities of climate changes for the Company’s business on the corporate management strategy, disclose proper non-financial indicators, strive toward decarbonization, and contribute to the society as a whole, including solution to environmental problems in general, through the Company’s business. The Company will continuously enhance information disclosure in accordance with a variety of guidance of TCFD, and will post any information on the Company’s website as required. ◆ Overview of scope of the matters delegated to the management (Supplementary Principle 4-1-1) The Company has established a Board of Directors as an organ for making decisions and supervising management, a Group Presidents’ Council and an Executive Committee as a system for executing business. The Board of Directors makes decisions on group management policies and other important matters, in addition to matters specified by laws, regulations and the articles of incorporation, while also overseeing the execution of duties of directors by receiving periodic reports from directors on the status of the execution of their duties. The Group Presidents’ Council and the Executive Committee are chaired by the president, and made up of full-time directors and others nominated by the president. In addition to playing a role as an organ for deliberating important matters concerning the management strategies and execution of business of the Company and group, it summarizes and discusses topics in advance to ensure active discussion in meetings of the Board of Directors. Corporate auditors also attend as observers to swiftly detecting and addressing issues and problems. Executive officers are responsible for the execution of business in the divisions they oversee. ◆ Proactive engagement by the Chief Executive Officer, etc. in the establishment and implementation of the successor plan and planned development of successor candidates (Supplementary Principle 4-1-3) The planning and development of successors to management executives such as the Chief Executive Officer are carried out appropriately based on the Company’s management philosophy and management strategy. The Nomination and Compensation Committee chaired by an independent outside director is consulted on the election of the Chief Executive Officer, and the Board of Directors passes a resolution on this based on the committee’s responses. ◆ Establishing risk management system [Supplementary principle 4-3-4] The Board of Directors Rules stipulates on internal audits that the Board of Directors resolves the annual business audit plan and the scope of internal control of J-SOX, and reports the results of business audits and the effectiveness evaluation of internal control. Further, by holding the Compliance Committee and Risk Management Committee chaired by the President and CEO twice a year, the Company has provided a system to manage and share risks for the entire MIRAIT Holdings Group, including each operating company. The Company considers that the helpline plays an important role in nurturing a sound corporate culture and obtaining social trust as a company. Major companies are striving to improve the helpline to enhance the function to detect a fraud. Three contacts have been set up, that is, the “Compliance Comment Box” for consultations on compliance cases, the “Ask Anything Consultation Room” for accepting any consultation, and the external consultation desk carried out by lawyer’s offices, so as to allow a person asking for advice to make a choice in accordance with his/her wishes. The Company is operating to satisfy the purpose of the Whistleblower Protection Act, including reception of anonymous consultations and protection of consulters. The Board of Directors is regularly held once a month in principle. Matters stipulated by laws and regulations or the Articles of Incorporation as well as important management issues are resolved and reported in accordance with relevant laws and regulations, the business decision rules, and the duty of care of a good manager. Even under the influence of the new coronavirus, the WEB conference system is used to hold the meeting remotely from the viewpoint of risk management. Assuming a situation that require urgent action, the Company has clarified the rules by maintaining the provisions of the Board of Directors Rules. ◆ Roles and responsibilities of corporate auditors and board of corporate auditors [Principle 4-4] The board of corporate auditors is composed of four corporate auditors (including two external corporate auditors), and each corporate auditor plays the role of auditing, and carries out responsibilities to audit the execution of duties of directors from an independent and objective position, taking into account fiduciary duty to shareholders, and actively and proactively exercises their authority, and gives proper opinions to the Board of Directors and the Management. Each corporate auditor regularly exchanging opinions and information with the president and CEO, accounting auditor, and internal control department, and holds a meeting with directors of major subsidiaries and corporate auditors and the like as required, thereby effectively carrying out audits of a corporate auditor. ◆ Effective Use of Independent Outside Directors (Principle 4-8) The Company has elected several independent outside directors since it was established in 2010 with the expectation that they will provide advice on promotion of sustained growth of the Company and enhance corporate value in the medium- to long-term, in addition to presenting opinions based on comments from stakeholders such as shareholders in meetings of the Board of Directors. Currently, there are three independent outside directors out of 11 directors in the Company as of the end of the 2021 Ordinary General Meeting of Shareholders. Opinions from those independent outside directors from an objective and independent position can be reflected in the corporate management. The independent outside directors have a good rate of attendance to meetings of the Board of Directors, and they make active comments on management policies and management improvements in addition to supervising management based on their respective knowledge, adequately fulfilling the roles expected of them by the Company. The Company is scheduled to absorb and merge the affiliated companies MIRAIT Corporation and MIRAIT Technologies Corporation with the Company as the surviving entity in July 2022. The new integrated company will be a company with an audit and supervisory committee. The Company will increase the number of independent outside directors and appoint independent outside directors that account for at least one-third of all the directors. ◆ Independence standards and qualifications of independent outside directors (Principle 4-9) See “1. Matters Pertaining to Organization Composition and Organization Management, etc. [Independent Directors]” in “II. Status of Corporate Management Organizations and Other Corporate Governance Systems Related to Management Decisions, Execution and Supervision” for information on independence standards in the Company. ◆ Establishment and utilization of Nomination and Compensation Committee [Supplementary Principle 4-10-1] Among 11 directors of the Company, three are independent outside directors (including one female), which members do not reach the majority of the board of directors, but the composition of the directors considers the knowledge, experience, abilities, diversity and skills of independent outside directors. Each independent outside director has a high level of expertise and experience, and the Company had secured a system for strengthening the supervisory function and advice, such as opinions based on their carriers, from the viewpoint of improving the medium-to-long-term corporate value. The Nomination and Compensation Committee has been set up as an independent optional organization, chaired by an independent outside director and consisting of four members, that is, three independent outside directors and the president and CEO. The majority of the committee members are independent outside directors, so that the committee is fully independent. The committee receives inquiries as to matters related to proposals of the general meeting of shareholders for the appointment and dismissal of directors, matters related to the executive compensation system, and the like. The committee submits a report for discussions of the proposal at the Board of Directors, which resolves the above matters based on the report. ◆ Prerequisites for ensuring the effectiveness of the Board of Directors and the board of corporate auditors [Principle 4-11] The Board of Directors is composed of 11 directors (10 males and one female) and four corporate auditors (three males and one female) including three outside directors at the Ordinary General Meeting of Shareholders at the end of 2021. (Please refer to Supplementary Principle 4-11-1 for the concept of the composition of the Board of Directors.) The Company has appointed persons who have appropriate experience and ability and necessary knowledge of finance, accounting and legal affairs as corporate auditors. In particular, the Company has appointed two people who have sufficient knowledge of finance and accounting. The Company evaluates the effectiveness of the Board of Directors every year to confirm its effectiveness is guaranteed so as to continuously improve the functions. (For details, please refer to Supplementary Principle 4-11-3) ◆ Composition of Board of Directors balancing diversity including gender and international experience, etc. with appropriate size (Supplementary Principle 4-11-1) The Company gives consideration to a balance of personnel in the composition of the Board of Directors, and elects directors with abundant experience and excellent knowledge in their respective fields of management strategy, global strategy, finance and human resources as a holding company overseeing a variety of areas of business. Furthermore, independent outside directors participate in the Board of Directors with outside perspectives of people with years of practical experience in corporate management, experts in business law and finance, and academic experts, ensuring transparency and leading to the enhancement of corporate value. The Company has made the Board of Directors an effective and efficient framework by enabling sufficient functionality for a holding company and having certain officers concurrently serve on the boards of major subsidiaries. The Company has appointed two women as officers including one director and one corporate auditor. ◆ State of concurrent positions of outside directors and outside corporate auditors (Supplementary Principle 4-11-2) The positions concurrently held by the Company’s outside officers in listed companies are as follows. – Outside director Chiharu Baba also serves as an outside director, chairperson of audit committee of Resona Holdings, Inc. which are listed on the First Section of the Tokyo Stock Exchange. – Outside director Mayumi Yamamoto also serves as outside corporate auditor of Morinaga Milk Industry Co., Ltd., and outside director of JCU Corporation which is listed on the First Section of the Tokyo Stock Exchange. – Outside corporate auditor Chiaki Katsumaru (Ishikawa) also serves as an outside corporate auditor of Anabuki Kosan Inc., which is listed on the First Section of the Tokyo Stock Exchange. ◆ Disclosure of the results of analysis and evaluation of the effectiveness of the Board of Directors as a whole (Supplementary Principle 4-11-3) The Company endeavors to conduct sound and efficient management by checking the execution of duties of directors in meetings of the Board of Directors, such as compliance with laws and regulations, risk management, sharing of information, and the speed of resolution of issues. Furthermore, once per year, all directors and corporate auditors have conducted self-evaluations concerning the effectiveness of the Board of Directors to improve the function of the Board of Directors as a whole, and to share a common awareness concerning the intended direction of the Company’s corporate governance. Specifically, the self-evaluations were performed in the form of an anonymous survey enabling the hearing of unreserved opinions on the composition of the Board of Directors, the state of operation of the Board of Directors, the responsibilities and functions of the Board of Directors and the state of the Board of Directors from the perspective of outside directors and corporate auditors. The survey was collected by an external law firm with an obligation of confidentiality, and the collected survey content was analyzed by a third-party organization Based on the results of the analysis, the Company’s Board of Directors obtained good results when it examined and evaluated the current state, and also continued to discuss the issues related to the Board of Directors. In the survey, the opinion was expressed that deeper discussion should be conducted on the desired form of the new company after management integration scheduled for early in FY2022, matters related to the frame work of the new company such as the corporate philosophy, the long-term direction of the Group as a whole and the governance structure, and further enhancement of the risk management system and operating aspects assuming an increase in Group companies and the new company, and efforts will be made to conduct more in-depth discussion and continually maintain and enhance the effectiveness of the Board of Directors through discussion of medium- to long-term management strategies and management issues in the “Deliberation Forum” established in FY2017 as a place for members of the Board of Directors to freely exchange opinions. Outside directors and outside corporate auditors are given opportunities to tour the offices of operating companies and construction sites as appropriate to provide a deeper understanding of the Company’s business details and current condition. ◆ Collaboration between the Internal Audit Department and Directors/Corporate Auditors [Supplementary Principle 4-13-3] Internal audits are stipulated in the Rules on the Board of Directors, and the Board of Directors resolves the annual business audit plan and the scope of internal control of J-SOX. The results of business audits and the results of evaluation of the effectiveness of internal control are reported. To the corporate auditors, the internal audit department directly reports the audit results and receives various advice, so that there is a close collaboration between them. By way of these mechanisms, the Company can conduct audits and the like based on the instructions of outside directors and outside corporate auditors, and provide necessary information at right timing. Each operating company has the same rules as the MIRAIT Holdings, and a system has been established whereby the board of directors resolves an annual business audit plan for the entire group and reports the business audit results to the board of directors and the corporate auditors. ◆ Training Policy for Directors and Corporate auditors (Supplementary Principle 4-14-2) The Company periodically conducts officer training for directors and corporate auditors to provide a deeper understanding of their roles and legal responsibilities, etc. The training spans basic topics such as corporate governance, insider trading and the Construction Industry Act, in addition to case studies on corporate scandals and incidents. Furthermore, outside directors and outside corporate auditors are given opportunities to tour the offices of operating companies and construction sites as appropriate to provide a deeper understanding of the Company’s business details and current condition. ◆ Policy for constructive dialogue with shareholders (Principle 5-1) 1. Director responsible for overseeing dialogue with shareholders The Company positions dialogue with shareholders and investors (“IR activities”) as a means to ensure appropriate corporate valuation and trust, and contribute to sustained growth and medium- to long-term enhancement of corporate value, and continually implements such IR activities. IR activities are supervised by the Director and General Manager of the Finance and Accounting Department. The Investor Relations Office, which is the responsible department, endeavors to provide timely and appropriate disclosure of information in accordance with the “Disclosure Policy” published elsewhere. Individual interviews with shareholders/investors are carried out by a person in charge where possible, but to the reasonable extent, directors including outside directors, and corporate Auditors, may attend the interviews in consideration of the interests of shareholders/investors, and so on. Furthermore, in principle, the CEO directly provides explanations at the earnings briefings held twice each year and the overseas IR meetings held several times each year. 2. Cooperation between internal departments The Company has created a “timely disclosure system” and is making an effort to provide timely and appropriate disclosure of important information through cooperation between departments to ensure IR activities are constructive and meaningful. In addition, the Public Relations Office also cooperates to actively disclose a wide range of information by utilizing the Company’s website in addition to TDnet and EDINET. Meetings between the CEO, the Finance and Accounting Department, the Strategy Department and personnel responsible for each business are conducted on numerous occasions to review the materials used in IR activities such as earnings briefings, in an effort to provide materials that are easy to understand and useful for shareholders and investors. 3. Increasing opportunities for dialogue aside from individual meetings The Company holds two earnings briefings each year (for the 2nd and 4th quarters) for analysts and institutional investors. Videos of the earnings briefings are provided on the website, etc. The Company endeavors to provide important information to overseas institutional investors in English in a timely manner. The Company also sends the “MIRAIT Report” summarizing the Company’s performance and topics to all shareholders twice each year. Materials disclosed by the Company are published on the Company’s website (https://www.mirait.co.jp/en). In addition, online company briefings are held for individual investors, and the company also participates in briefings hosted by securities companies and other events as needed to explain the Company’s business performance, etc. 4. Feedback of shareholders’ views and concerns The Company periodically reports to directors, senior management and other relevant personnel in the Group on comments and concerns received from shareholders and investors using IR reports prepared by the Investor Relations Office, and also implements appropriate feedback as required on the results of overseas investor relations. 5. Measures to control insider information when engaging in dialogue The Company has established “Rules on the Regulation of Insider Trading” and conducts appropriate management of information in accordance with these rules if insider information is possessed when meeting with shareholders and investors to prevent such information from being communicated. In addition, there is a two-week quiet period before the announcement of earnings (including quarterly earnings) to prevent information on earnings being leaked, and no comments on earnings or responses to inquiries are provided during this period. However, if it is found that a difference compared with the performance forecast arising during the quiet period is a fluctuation subject to timely disclosure rules, the information is disclosed appropriately. ◆ Establishing and disclosing business strategies and business plans (Principle 5-2) The Company already bases all of its decisions and actions in the establishment of Mid-term Management Plans, judgements on strategic investment and evaluations of fiscal year-end financial results on understanding and consideration of the Company’s capital cost, and will continue to endeavor to determine and verify management policies and strategies conscious of capital cost. ◆ Clarification of the status of the business portfolio [Supplementary Principle 5-2-1] The basic policy regarding the business portfolio and the status of the review of the business portfolio are carried in the medium-term management plan (fiscal term ending March 2022). Please visit the Company’s website (https://www.mirait.co.jp/en/). 2. Capital Structure Name/ Company Name Number of Shares Owned Percentage (%) Percentage of Foreign Shareholders 20% to less than 30% [Status of Major Shareholders] Custody Bank of Japan, Ltd. (trust account) The Master Trust Bank of Japan, Ltd. (trust account) Sumitomo Electric Industries, Ltd GOVERNMENT OF NORWAY Sumitomo Densetsu Co., Ltd. MIRAIT Holdings Employee’s Stock Option Plan Custody Bank of Japan, Ltd. (trust account 5) Custody Bank of Japan, Ltd. (trust account 9) STATE STREET BANK AND TRUST COMPANY 505001 Mizuho Bank, Ltd. 10,936,300 9,557,300 3,668,725 2,504,381 2,488,640 1,930,383 1,443,900 1,385,100 1,317,741 1,300,508 10.74 9.38 3.60 2.46 2.44 1.90 1.42 1.36 1.29 1.28 Controlling Shareholder (Except for Parent Company) Parent Company ― None Supplementary Explanation ・The status of major shareholders as of March 31, 2021 is shown below. ・The ratio of the number of shares owned is calculated by deducting 6,482,718 treasury stocks. ・While the large shareholding report (change report) that was made available for public inspection on October 22, 2020 describes that NOMURA INTERNATIONAL PLC and its co-owners own the following shares as of October 15, 2020, the number of actually owned shares as of March 31, 2021 cannot be confirmed, so that the number of the following shares is not included in the status of the above major shareholders. The details of the large shareholding report (change report) are as follows. Name/ Company Name Number of Shares Owned Percentage (%) NOMURA INTERNATIONAL PLC NOMURA SECURITIES INTERNATIONAL, Inc. Nomura Asset Management Co., Ltd. ・While the large shareholding report (change report) that was made available for public inspection on February 4, 2021, describes that Sumitomo Mitsui Trust Bank, Limited and its co-owners have the following shares as of January 29, 2021, the number of actually owned shares as of March 31, 2021 cannot be confirmed, so that the number of the following shares is not included in the status of the above major shareholders. The details of the large shareholding report (change report) are as follows. 353,194 0 4,527,400 0.33 0.00 4.18 Name/ Company Name Sumitomo Mitsui Trust Bank, Limited Sumitomo Mitsui Trust Asset Management Co., Ltd. Nikko Asset Management Co., Ltd. Number of Shares Owned Percentage (%) 210,300 4,439,250 2,166,800 0.19 4.10 2.00 ・While the large shareholding report (change report) that was made available for public inspection on March 22, 2021 describes that Leos Capital Works Inc. owns the following shares as of March 15, 2021, the number of actually owned shares as of March 31, 2021 cannot be confirmed, so that the number of the following shares is not included in the status of the above major shareholders. The details of the large shareholding report (change report) are as follows. Name/ Company Name Rheos Capital Works Inc. Number of Shares Owned Percentage (%) 5,273,300 4.87 ・While the large shareholding report (change report) that was made available for public inspection on April 7, 2021 describes that Mizuho Bank, Ltd. and its co-owners have the following shares as of March 31, 2021, the number of actually owned shares as of March 31, 2021 cannot be confirmed, so that the number of the following shares is not included in the status of the above major shareholders. The details of the large shareholding report (change report) are as follows. Name/ Company Name Mizuho Bank, Ltd. Mizuho Securities Co., Ltd. Mizuho Trust & Banking Co., Ltd. Asset Management One Co., Ltd. Asset Management One International Ltd. Number of Shares Owned Percentage (%) 1,300,508 272,490 962,300 5,840,000 332,300 1.20 0.25 0.89 5.39 0.31 3. Corporate Attributes Fiscal Year End Type of Business Listed Stock Market and Market Section Tokyo Stock Exchange , First Section, March Construction More than 1,000 Number of Employees ( Consolidated) as of the End of the Previous Fiscal Year Sales ( Consolidated) as of the End of the Previous Fiscal Year Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year 100 billion yen to less than 1 trillion yen 50 to less than 100 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder ― 5. Other Special Circumstances Which May Have a Material Impact on Corporate Governance ― II. Status of Corporate Management Organizations and Other Corporate Governance Systems Related to Management Decisions, Execution and Supervision 1. Matters Pertaining to Organization Composition and Organization Management, etc. Structure of Organization Company with corporate auditors [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors Appointment of Outside Directors Appointed Number of Outside Directors Number of Independent Directors Outside Director’s Relationship with the Company (1) 2 Years President 11 11 3 3 Name Attribute BABA Chiharu YAMAMOTO Mayumi KAWARATANI Shinichi From other company Lawyer From other company *Selection items regarding the relationship with the Company Relationship with the Company* j f g h △ c d e i a b k *When the person corresponds to an item currently or recently, add an open circle (○); when he/she corresponded to the item previously, add an open triangle (△). *When a close relative corresponds to an item currently or recently, add a solid circle (●); when he/she corresponded to the item previously, add a solid triangle (▲). a Business executor of a listed company or its subsidiary b Business executor or non-business executive director of the parent company of a listed company c Business executor of a brother company of a listed company d A person whose main business partner is a listed company or its business executor e Major business partners of a listed company or its business executors f Consultants, accounting professionals, or legal professionals who obtain a large amount of money or other assets from a listed company in addition to officer’s renumeration g Major shareholder of a listed company (when the major shareholder is a corporation, the business executor of h Business executor (the person only) of a listed company’s business partner (those that do not fall under any of the corporation) d, e, and f) i Business executor (the person only) of a party with which there is a mutual appointment of outside directors j Business executor (the person only) of a party to which a listed company makes a donation k Other Outside Director’s Relationship with the Company (2) Name BABA Chiharu Independent Officer ○ Supplementary Explanation of Compliant Items – Former Deputy President and Representative Director of Mizuho Trust & Banking Co., Ltd. (until 2007) Reason for Election He has abundant corporate management experience and extensive knowledge of financial accounting, risk management and management in general, and has fulfilled his role as an outside director. His insight and knowledge are suitable for the supervision of management, and he has been nominated for re-election as outside director to improve transparency of the Board of Directors and strengthen its supervisory functions. Furthermore, he is expected to fulfill the role of improving governance of the Board of Directors and enhancing its supervisory functions, and has appropriately fulfilled this role by providing comments on topics such as the governance systems and internal control of the Group as a whole in meetings of the Board of Directors and the Nomination and Compensation Committee which he chairs. He has been designated as an independent officer because he satisfies the independence standard specified by the Tokyo Stock Exchange and the Company’s independence standard. She has advanced specialized knowledge and abundant experience concerning corporate legal affairs as an attorney at law, has served as a member of government councils such as the Central Labour Relations Commission, and she has been nominated for-election as outside director to improve transparency of the Board of Directors and strengthen its supervisory functions because she is suitable for executing monitoring of the Company’s management from an objective and specialized perspective. Furthermore, she is expected to have a role YAMAMOTO Mayumi ○ ― KAWARATANI Shinichi ○ ― in risk management, etc. related to business from a legal perspective, and has appropriately fulfilled this role through actions such as actively providing advice from this perspective in meetings of the Board of Directors and the Nomination and Compensation Committee. She has been designated as an independent officer because she satisfies the independence standard specified by the Tokyo Stock Exchange and the Company’s independence standard. He has been involved in business investment and the development of new businesses in the area of information and communications for many years, and has insight into the management of an information and communications company based on his experience as representative director and president of a company providing IT solutions. Furthermore, he has worked on the creation of a variety of new businesses in Japan and abroad as the CEO of his own venture capital company, and has extensive business experience overseas such as in the United States. His insight and knowledge of creating and developing new business in Japan and abroad, in addition to corporate management of a global business make him suitable for the supervision of management of the Group, and because he can be expected to fulfill this role, he has been nominated for election as outside director to improve transparency of the Board of Directors and strengthen its supervisory functions. He has been designated as an independent officer because he satisfies the independence standard specified by the Tokyo Stock Exchange and the Company’s independence standard. Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Compensation Committee Established Status of establishment, composition and attributes of chairman of voluntary committees Name of Committee Nomination and Compensation Committee Total members Standing members Inside directors Outside director Outside experts Other Chairman 4 0 1 3 0 0 Outside director Supplementary explanation In order to improve the objectivity and transparency of decisions on remuneration of directors, the Nomination and Compensation Committee was established in December 2018 as an advisory organ to the Board of Directors, and the Committee held six meetings in the current fiscal year (from the conclusion of the Ordinary General Meeting of Shareholders held in June 2020 until the Ordinary General Meeting of Shareholders held in June 2021). The Nomination and Compensation Committee comprises four members including three independent outside directors and the President and CEO as of the date of filing this report (December 24, 2021).The Committee reports the results of deliberation on nomination of candidates for director and policy, etc. related to decisions on the method of calculation of officer remuneration to the Board of Directors, which makes decisions based on those reports. [Corporate auditors] Establishment of the Board of Corporate auditors Maximum Number of Corporate auditors in Articles of Incorporation Number of Corporate auditors 5 4 Established State of coordination between corporate auditors, the accounting auditor and the internal audit unit As of the date of submission of this report (December 24, 2021), the Board of Corporate Auditors comprised four members including two outside corporate auditors, and there were two full-time corporate auditors including one outside corporate auditor. No dedicated staff members are assigned to corporate auditors, but various organizations provide support as needed. The Board of Corporate Auditors holds meetings monthly in principle, and also hold meetings as necessary. Eleven meetings were held in the current fiscal year. Each of the corporate auditors attended all eleven meetings (100% attendance rate), and conducting resolutions, reports and deliberations, etc. throughout the year. The Board of Corporate Auditors considered the formulation of audit plans, preparation of audit reports, selection of the accounting auditor, consenting to the compensation for the accounting auditor, and auditing of the content of proposals submitted to the Ordinary General Meeting of Shareholders. Corporate auditors attended meetings of the Board of Directors, audited the operation of proceedings and the content of resolutions, and provided opinions as needed. The attendance rate of corporate auditors at meetings of the Board of Directors was 100%. Furthermore, they periodically met and exchanged opinions with the representative director. Full-time corporate auditors attended other important meetings, coordinated with the internal audit unit, viewed important approval documents, conducted hearings of directors, communicated with the directors and corporate auditors, etc. of subsidiaries, and shared information on the status of audits with part-time corporate auditors in meetings of the Board of Corporate Auditors. Auditing of the state of execution of duties by directors by was carried out through these activities. Corporate auditors periodically exchanged information with the accounting auditor on audit plans, quarterly review results, audit results and quality management systems, and closely worked with the accounting auditor to perform monitoring and review activities for determining the suitability of accounting audit methods and results. As of December 24, 2021, the Company’s internal audit unit was made up of three members. The internal audit unit implements audits of the Company and Group subsidiaries centered on audits of operations after evaluating companywide internal controls. Furthermore, it strengthens audit functions by thoroughly checking the state of implementation of improvements such as corporate auditors’ findings and proposals. Corporate auditors and the internal audit unit coordinate with each other by meeting when necessary to exchange information on audit plans, the state of implementation of audits and problems identified as a result of auditing. Appointment of outside corporate auditors Appointed Number of outside corporate auditors 2 Number of Independent outside corporate auditors 2 Outside Corporate Auditor’s Relationship with the Company (1) Name Attribute Relationship with the Company* k f g h c d j △ △ e i a b l m From other company Certified public accountant SEKI Hiroshi KATSUMARU Chiaki (ISHIKAWA Chiaki)) *Selection items regarding the relationship with the Company *When the person corresponds to an item currently or recently, add an open circle (○); when he/she corresponded to the item previously, add an open triangle (△). *When a close relative corresponds to an item currently or recently, add a solid circle (●); when he/she corresponded to the item previously, add a solid triangle (▲). a Business executor of a listed company or its subsidiary b Business executive director or accounting counselor of a listed company or its subsidiary c Business executor or non-business executive director of the parent company of a listed company d Auditor of the parent company of a listed company e Business executor of a brother company of a listed company f A person whose main business partner is a listed company or its business executor g Major business partners of a listed company or its business executors h Consultants, accounting professionals, or legal professionals who obtain a large amount of money or other assets from a listed company in addition to officer’s renumeration i Major shareholder of a listed company (when the major shareholder is a corporation, the business executor of the corporation) j Business executor (the person only) of a listed company’s business partner (those that do not fall under any of f, g, and h) k Business executor (the person only) of a party with which there is a mutual appointment of outside directors l Business executor (the person only) of a party to which a listed company makes a donation m Other Outside Corporate Auditor’s Relationship with the Company (2) Name Independent Officer SEKI Hiroshi ○ Supplementary Explanation of Compliant Items – Former General Manager of Tochigi Branch, Nippon Telegraph and Telephone East Corporation (until 2010) – Former Executive Vice President and General Manager of Marketing Headquarters, NTT TownPage Corporation (until June 2018) Reason for Election He has abundant experience in various areas in the telecommunications industry including corporate sales in the business operations of Nippon Telegraph and Telephone East Corporation and its group companies, and he has been nominated for election as outside corporate auditor because he is a suitable choice for supervising the execution of the duties of directors from a neutral and objective perspective. He has been designated as an independent officer because he satisfies the independence standard specified by the Tokyo Stock Exchange and the Company’s independence standard. ○ ― KATSUMARU Chiaki (ISHIKAWA Chiaki) She has served as a certified public accountant for many years, and has rich career and a high level of expert knowledge concerning corporate finance and accounting in major audit firms and accounting companies, and she has been nominated for election as outside corporate auditor because she is a suitable choice for supervising the execution of the duties of directors from a neutral and objective perspective. She has been designated as an independent officer because she satisfies the independence standard specified by the Tokyo Stock Exchange and the Company’s independence standard. [Independence standard] Number of Independent Directors/Corporate auditors 5 Matters relating to Independent Directors/Corporate auditors The Company believes outside directors and outside corporate auditors (“outside officers”) must have sufficient independence to ensure the objectivity and transparency required for appropriate governance. The Company has established the following independence standard for outside officers of the Company, and deems that an outside officer (including candidates; the same applies below) does not have sufficient independence for the Company if any of the followings applies. 1. Formerly worked in the Company or a consolidated subsidiary of the Company (“the Group”) *1 2. A major shareholder of the Company *2 3. An executive of any of the following companies, etc. (1) Major trading partner of the Group *3 (2) Major lender to the Group *4 (3) Company in which the Group holds 10% or more of shares on the basis of voting rights, etc. 4. A certified public accountant who work for the auditing firm that is the Group’s accounting auditor 5. An expert such as a consultant, accountant, tax accountant, attorney at law, judicial scrivener or patent attorney who has received a large sum*5 of money or other property from the Group. 6. A person who has received a large donation from the Group *6 7. An executive of a company that is in a relationship of mutually appointing outside officers *7 8. A person whose close relative*8 is any of those listed in items 1 through 7 above (limited to important personnel*9 except in the cases of items 4 and 5) 9. A person to who any of items 2 through 8 has applied in the past three years 10. Notwithstanding the provisions of the preceding items, a person for whom it is otherwise found there are special grounds for a conflict of interests with the Company *1: Meaning a current executive director, executive officer or other similar person or employee (“executive”) or an executive who has ever belonged to the Group. *2: A major shareholder refers to a shareholder who holds 10% or more of shares on the basis of voting rights in his/her own name or in the name of another person at the end of the current business year. If a major shareholder is an organization such as a corporation or an association, this refers to an executive of said organization. *3: A major trading partner refers to a customer or supplier of the Group for whom annual transactions account for more than 3% of the Company’s consolidated net sales or the trading partner’s consolidated net sales. *4: A major lender refers to a financial institution from which the Group is borrowing, and for which the outstanding loans payable thereto exceed 2% of the Company’s consolidated total assets or the financial institution’s consolidated total assets and the end of the current business year. *5: Large sum refers to the following amounts according to the expert’s involvement in the services provided. (1) If the expert provides services to the Group as an individual, a large sum is when the consideration received from the Group exceeds 10 million yen per year. (2) If the organization to which the expert belongs provides services to the Group, a large sum is when the total amount of consideration received from the Group by the organization exceeds 2% of the organization’s annual sales or total revenue. However, even if 2% is not exceeded, if the annual amount received by the organization as consideration for services provided in which the expert is directly involved exceeds 10 million yen, this amount shall be deemed to be a large sum. *6: This refers to a person who receives annual donations from the Group exceeding 10 million yen. If the part receiving donations is an organization such as corporation or an association, this refers to a person who belongs to the organization and is directly involved in the research, education or other activity related to the donations. *7: This refers to a relationship in which an executive of the Group is an outside officer of another company, and an executive of the other company is an outside officer of the Company. *8: Close relative refers to a spouse or a relative of the second degree or less. *9: Important personnel refers to directors and executive officers. Introduction of performance-linked renumeration system [Incentives] Implementation status measures related to granting of an incentive to a director Supplementary explanation In accordance with the resolution of the 6th Ordinary General Meeting of Shareholders held on June 28, 2016, the “Board Benefit Trust” performance-linked stock-based remuneration system for the Group’s officers was implemented from September 30, 2016 with the objective of clarifying the connection between the remuneration of directors and the Company’s performance and share price, and raising awaren
