Board of Directors/Audit & Supervisory Board/Nomination and Remuneration Committee | Corporate Governance | Governance | Sustainability

Appointment Process for Directors and Audit & Supervisory Board Members

The President prepares a list of candidates for Directors, and the Board of Directors deliberate and make decisions in light of reports on the results of deliberations in the Nomination and Remuneration Committee.
The President prepares a list of candidates for Audit & Supervisory Board Members and gains the consent of the Audit & Supervisory Board in accordance with the provisions of the Companies Act, after which the Board of Directors deliberates and makes decisions.
Appointment or dismissal of the Chairman and the President will be deliberated and decided at the Board of Directors based on the deliberations in the Nomination and Remuneration Committee. With regard to the dismissal of the Chairman or the President, if deemed necessary by the Nomination and Remuneration Committee, the Nomination and Remuneration Committee may exclude Internal Directors from its composition and report to the Board of Directors after seeking opinions of Outside Directors and Outside Audit & Supervisory Board Members.

Members of the Boards (skill matrix and meeting attendance)

	Name			Nomination and Remuneration Committee	Gender	Term of office	Expertise ( ◎ A field for which Outside Officers are particularly expected)
	Name			Nomination and Remuneration Committee	Gender	Term of office	Corporate Management	Finance & Accounting	Legal & Risk Management	Knowledge of real estate businesses	Constructionn	Technology & Energy
Board of Directors	Koichi Minami	Standing		●	Male	8 years	●	●	●	●
	Tsuneo Wakabayashi	Standing		●	Male	3 years	●	●	●	●
	Yoshikazu Asakusa	Standing			Male	ー			●		●	●
	Takashi Yoshida	Outside	Independent	●	Male	7 years		◎	●
	Masao Nomura	Outside	Independent	●	Male	5 years	◎	●	●			◎
	Chiho Takeda	Outside	Independent	●	Female	2 years			◎
	Atushi Miyanoya	Outside	Independent	●	Male	ー		●	●	◎
Audit & Supervisory Board	Shigeru Nishida	Standing			Male	5 years		●	●
	Hideharu Nagasawa	Outside	Independent		Male	3 years	◎	●	●			◎
	Hideyuki Kamijo	Outside	Independent		Male	2 years	●	◎	●	◎

(Note)

The above table does not present a copmlete list of the expertise and experience possessed by each Officer.
The Director, Ms. Chiho Takeda was in office for three years as Outside Audit & Supervisory Board Member of the Company before taking office as Director.
The Audit & Supervisory Board Member, Mr. Shigeru Nishida was in office for four years as Director of the Company before taking office as Audit & Supervisory Board Member.

Independence Criteria for Independent Outside Officers

The Company has formulated the following criteria regarding the independence of outside officers, in order to ensure objectivity and transparency in the corporate governance of the Company. If outside officers do not fall under any of the following items, it is judged that they are sufficiently independent from the Company.

1	A person who is a principal business partner ^(1) of the Company or its business executor ^(2)
2	A person for whom the Company is a principal business partner or its business executor
3	A principal shareholder ^(*3) of the Company (If this is a corporation, association, or any other organization, this refers to a person belonging to such organization.)
4	A business executor of a corporation of which the Company is a principal shareholder
5	A person who belongs to an auditing firm that serve as the Company's Independent Accounting Auditor
6	A consultant, accounting expert, or legal expert who receives money or other assets exceeding 10 million yen annually from the Company in addition to officer remuneration (If the person receiving such assets is a law firm, auditing firm, consulting firm, or any other corporations, or association or any other organization, this refers to a person belonging to such organization.)
7	A person who receives donations exceeding 10 million yen annually from the Company (If the person receiving such large amount of donations is a corporation, association, or any other organization, this refers to a person belonging to such organization.)
8	A person who belongs to a company with whom the Company has a relationship for the mutual appointment of Officers
9	A person whose spouse or relative within the second degree of kinship falls under any of the above items 1 through 8
10	A person who fell under any of the above items 1 through 8 within the past three years
11	A person who has been in office for a total of more than 8 years as an outside officer
12	In addition to the preceding items, a person who may have a conflict of interest with general shareholders, and who is reasonably judged to be unable to perform his or her duties as an independent outside officer

(Notes)

"A principal business partner" refers to any of the followings:
1. A person who has transactions with the Company, and the annual transaction amount is 2% or more of the consolidated net sales of either the Company or said person; or
2. A financial institution from which the Company makes loans, and the outstanding loans from such institution is 2% or more of the Company's total consolidated assets.
A "business executor" refers to an executive director, corporate officer or executive officer.
A "principal shareholder" refers to a shareholder who holds 10% or more of the Company's voting rights in his or her own or another name as of the end of the most recent fiscal year.

Activity Status of Nomination and Remuneration Committee

With an aim to ensure objectivity and transparency in matters related to the personnel and remuneration of the management team, we have established a Nomination and Remuneration Committee. The majority of the committee members, including the chairperson, are Independent Outside Directors. The Nomination and Remuneration Committee deliberates on the following matters in advance of the Board of Directors, and reports the results of these deliberations to the Board of Directors.
The Board of Directors makes final decisions on matters deliberated by the Nomination and Remuneration Committee, but we believe that independence and authority of the committee are fully secured because the majority members of the Board of Directors are Independent Outside Directors concurrently serving as the Nomination and Remuneration Committee members.

1. Personnel matters for management executives

Proposals for the Shareholders' Meeting regarding the appointment of candidate Directors and dismissal of Directors
Establishment, revision, or abolishment of basic policies, rules, procedures, etc., regarding the appointment of candidate Directors
Appointment and dismissal of the President and the Chairman
Succession of the President and Chief Executive Officer
Appointment and dismissal of Executive Officers
Other matters recognized as necessary by the Nomination and Remuneration Committee

2. Matters concerning remuneration of management executives

Details of remuneration of individual Directors and Executive Officers
Establishment, revision, or abolishment of basic policies, rules, procedures, etc., regarding the remuneration of Directors and Executive Officers
Other matters recognized as necessary by the Nomination and Remuneration Committee

Name of the committee	Total committee members	Chairperson	Number of meetings held (FYE March 2024)
	Internal Directors	Outside Directors
Nomination and Remuneration Committee	6 persons	2 persons	4 persons	Outside Director	5 times

Name of the committee

Total committee members

Chairperson

Number of meetings held

(FYE March 2024)

Internal Directors

Outside Directors

Nomination and Remuneration Committee

6 persons

2 persons

4 persons

Outside Director

5 times

Succession Planning

The Nomination and Remuneration Committee believes that members of the top management of the Company need to possess the six qualities presented below in order to execute the Long-Term Business Plan and enhance corporate value, in addition to the basic qualities of "A person trusted by others," "A person capable to seek innovation and efficiency," and "A person with a high level of expertise," which are derived from the Company's corporate philosophy.
Succession planning of top management is an important management issue. At a time of great change in the environment surrounding the Company when it is transforming its structure away from that of a company specializing in the leasing industry, the importance of the Company's top management and its succession plan is increasing. We will continue discussing and examining the matter at the Nomination and Remuneration Committee.

Qualities required of top management
Comprehensive experience and capabilities related to overall management
Leadership
Knowledge of the real estate industry
Empathy with employees
Ability to respond to changes in the market environment, determination, and courage
Human networks in the business community

Analysis and Evaluation of the Effectiveness of the Board of Directors

With the purpose of ensuring effectiveness in the Board of Directors and enhancing the corporate value, self-assessments have been carried out by the Board of Directors since 2017. In 2024, the Company followed the process shown below to analyze and evaluate the effectiveness of the board, and confirmed that the Board of Directors was being operated appropriately overall.
We will continue to engage in enhancing the function of the Board of Directors by implementing periodic analysis and evaluation of the board's effectiveness.

Progress on the issues pointed out in the 2023 survey

Issues pointed out in the past	Details of progress on the issues
Providing opportunities for exchanging opinions between outside officers and executive officers other than at the Board of Directors' Meetings	• Provided opportunities for Outside Directors and executive officers engaged in business operations to meet and talk outside of the Board of Directors' Meetings.
Strengthening the supervisory function of the Board concerning initiatives for sustainability	• Held sustainability training sessions for officers

Main agenda items of the Board of Directors (FYE March 2024)

Matters resolved	Matters reported
• Formulation of Long-Term Business Plan	• Evaluation of the effectiveness of the Board of Directors
• New investments	• Progress with the Long-Term Business Plan
• Important personnel matters (directors, executive officers, and members of the Nomination and Remuneration Committee) and remuneration	• Reports on business execution by various departments
• Examination of validity of cross- shareholdings	• Reports on activities of various committees (Sustainability, Risk Management, Compliance)
• Examination of business portfolio	• Reports on the implementation of internal audits
• Settlement of accounts
• Formulation of Human Rights Policy
• Formulation of sustainability-related policies

Training for Directors and Audit & Supervisory Board Members

In order to optimize our business strategies through timely and appropriate decision-making by the Board of Directors, the Company provides Directors and Audit & Supervisory Board Members with opportunities for training related to themes according to the business environment and inspections of the Company's properties. Especially for newly appointed Directors and Audit & Supervisory Board Members, the Company provides trainings on issues such as their legal authority and obligations, also utilizing outside institutions. Whether these opportunities are being appropriately provided is also verified during the annual evaluation of the effectiveness of the Board of Directors.
In FYE March 2024, we held a training session on the theme of sustainability (business and human rights).

At a training session for officers

Status of Coordination between Audit & Supervisory Board Members, Independent Accounting Auditors, and Internal Auditing Division

Audit & Supervisory Board Members regularly receive audit reports from an Independent Accounting Auditor. In addition, Audit & Supervisory Board Members share information with the Independent Accounting Auditor on changes in accounting standards and policies and other matters that may have a significant impact on the Company's business results by holding meetings as necessary.
Audit & Supervisory Board Members share information with the internal auditing division by holding liaison meetings monthly between the Audit & Supervisory Board Member (Standing) and the Audit Department. In addition, the Audit & Supervisory Board receives quarterly internal audit reports directly from the Head of the Audit Department.
In this manner, we strive to improve the effectiveness of audits through close coordination between the Audit & Supervisory Board Members, the Independent Accounting Auditor, and the internal auditing division.