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BTMU Corporate Governance Policies

1. Purpose

1-1. Purpose

The BTMU Corporate Governance Policies (these "Policies") set out the policy and framework of the corporate governance of The Bank of Tokyo-Mitsubishi UFJ, Ltd. ("BTMU") as a core subsidiary of Mitsubishi UFJ Financial Group, Inc. ("MUFG") and serve as a guide for the actions of directors and management*.

(* "Management" means those responsible for management of our group; the executive officers and senior fellows of BTMU and the directors and executive officers of our group companies.)

1-2. Revision

These Policies will be revised as necessary, taking into account changes in the MUFG Corporate Governance Policies, BTMU's business and the business environment.

2. Approach to corporate governance

2-1. Basic approach

As a core subsidiary of MUFG, BTMU will aim for sustainable growth and increase of corporate value over the medium- to long-term, in consideration of the perspectives of its stakeholders including MUFG as a shareholder and MUFG's shareholders (together, "MUFG and its shareholders") as well as customers, employees and local communities.
BTMU will aim to realize effective corporate governance through fair and highly transparent management based on the guidance provided by these Policies.

2-2. Role as a parent company

As a core subsidiary of MUFG, BTMU will aim to increase the corporate value of our group as a whole through management of subsidiaries to ensure the sound and appropriate management of our entire group.

2-3. BTMU's governance structure

BTMU has chosen the governance structure of a company with Audit & Supervisory Committee (a company prescribed in Article 2, item (xi-2) of Japan's Companies Act) from the following perspectives.

  • To enhance flexibility of management by delegating a large portion of material business decisions from the Board of Directors to the Executive Committee, while also creating an effective management supervisory framework through the participation of directors who are Audit & Supervisory Committee members in resolutions of the Board of Directors.
  • To build an efficient and highly effective corporate governance structure through coordination between the Board of Directors and the Audit & Supervisory Committee.
  • To realize a corporate governance structure with even greater accountability to domestic and overseas stakeholders.

3. Role of the Board of Directors

3-1. Role of the Board of Directors

The Board of Directors decides key management policies and is responsible for management supervision. Decisions on matters of business execution other than specific matters stipulated by laws and regulations shall in principle be delegated to the Executive Committee; provided, however, that decisions on particularly important matters of business execution shall be made by the Board of Directors.

The matters performed by the Board of Directors are as follows.

  • Decisions on key management policies such as business strategy, risk management policy, capital policy and resource allocation for our entire group.
  • Supervision of the execution of duties by directors and management.
  • Decisions on our group's internal control systems, and supervision of the establishment and operation of such systems.
  • Supervision of matters such as the development of the corporate governance structure and the establishment of a sound corporate culture.

4. Duties of directors

4-1. Duties of directors

Directors, as elected by the shareholders and entrusted as managers, owe a duty of loyalty and a duty of care in respect of the execution of their duties, and shall contribute to BTMU's sustainable growth and increase of corporate value over the medium- to long-term.

Directors shall make timely and appropriate decisions on investment and other business matters based on the reasonable collection of information.

Directors shall thoroughly review reports and proposals from management and request explanations or express opinions as necessary for discussion.

Executive directors shall make business decisions delegated to them by the Board of Directors.

Executive directors shall periodically report to the Board of Directors regarding the status of the performance of their duties at least once every three(3) months.

4-2. Expectations for independent outside directors

In addition to the above duties of all directors, independent outside directors are expected to supervise the performance of duties by executive directors and management from an independent and objective standpoint, supervise conflicts of interest between BTMU and directors and management or controlling shareholders, and advise and provide support to executive directors and management based on their own experience and professional knowledge.

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5. Composition and other matters regarding the Board of Directors

5-1. Composition

The Board of Directors shall be composed of 30 directors or less in order to ensure its effectiveness.

The Board of Directors as a whole shall have an appropriately balanced composition that provides a deep understanding of our group's business and a wealth of knowledge and expertise on finance, financial accounting, risk management and compliance and so forth.

Accordingly, the Board of Directors shall meet the following requirements in particular.

  • The Board of Directors shall consist of internal directors who are familiar with the business of our group and several independent outside directors who supervise executive directors and management from an independent and objective standpoint.
  • To ensure the effectiveness of management supervision from an independent and objective standpoint by the Board of Directors, the Board of Directors shall have an appropriately balanced composition consisting of executive and non-executive directors.

5-2. Election of directors

For election of directors, the Board of Directors shall set forth Director election standards focused on the following and nominate persons who meet such standards as director candidates.

Proposals for the election of directors who are Audit & Supervisory Committee members must be approved by the Audit & Supervisory Committee in advance of submission to the General Meeting of Shareholders.

Outline of Director Election Standards

  • Directors, as elected by the shareholders and entrusted as managers, shall have the qualities required to be able to appropriately fulfill their duty of loyalty and duty of care in the execution of their duties and to contribute to the sustainable growth and the increase of corporate value of BTMU over the medium- to long-term.
  • Independent outside directors shall have a wealth of knowledge and experience in the fields of corporate management, finance, financial accounting and law and the qualities required for supervision of the performance of duties byexecutive directors and management from an independent and objective standpoint, meeting the independence standards of BTMU.
  • Executive directors shall have extensive knowledge of our group's business and the ability to appropriately perform management of our group.

5-3. Compensation of directors

The Board of Directors shall decide the details of the proposals for compensation of directors who are Audit & Supervisory Committee members and directors who are not Audit & Supervisory Committee members for the General Meeting of Shareholders.

The Board of Directors shall decide policies regarding decisions on the details of compensation with the aim of contributing to improved business performance over the medium- and long-term as well as the short-term, to enable sustainable growth and the increase of corporate value over the medium- to long-term.

The Board of Directors shall decide the establishment of and changes to the compensation system based on the discussions and proposals of the Compensation Committee of MUFG.

The Board of Directors shall decide details of individual compensation for each of the directors who are not Audit & Supervisory Committee members as appropriate for BTMU in light of social and economic situations.

Individual compensation of each of the directors who are Audit & Supervisory Committee members shall be decided through discussion among Audit & Supervisory Committee members.

5-4. Term of office of directors

The term of office of directors who are not Audit & Supervisory Committee members shall be one (1) year, and the term of office of directors who are Audit & Supervisory Committee members shall be two (2) years.

5-5. Directors with concurrent posts

A director may concurrently serve as a director, corporate auditor, corporate executive officer or executive officer at a company other than our group company only to the extent such director is able to have enough time required to appropriately fulfill the duties as a director of BTMU, such as understanding the business and other aspects of our group, and the director shall report periodically to the Board of Directors on the status of such concurrent posts.

6. Operation of the Board of Directors

6-1. Resolutions of the Board of Directors

Unless otherwise provided for by law or regulation, resolutions of a meeting of the Board of Directors shall be adopted by an affirmative vote of a majority of the directors present who constitute in number a majority of all the directors of the Company.

6-2. Requirements of Chairman of the Board of Directors

The role of Chairman of the Board of Directors and the role of President & CEO shall be separated and a suitable director shall be appointed as Chairman to ensure that the Board of Directors effectively fulfills its role of management supervision.

In principle, Chairman of BTMU shall be elected as Chairman of its Board of Directors.

6-3. Role of Chairman of the Board of Directors

Chairman of the Board of Directors shall lead the Board of Directors and shall be obligated to ensure the board's effectiveness.

Chairman of the Board of Directors shall set the schedule and agenda for board meetings after exchanging opinions with each director on a day to day basis, so that the Board of Directors is able to make sound decisions based on sufficient information.

6-4. Support framework

A Board of Directors Secretariat shall be established to assist Chairman of the Board of Directors and to correspond and coordinate with management and employees of BTMU so that sufficient information is provided to directors, including independent outside directors.

6-5. Provision of information

Management is obligated to provide sufficient information to directors that relates to the execution of duties of directors.

In principle, management shall distribute the Board of Directors' meeting agenda and deliberation materials prior to meetings of the Board of Directors to ensure that directors have the opportunity to understand the content in advance.

Management shall conduct training, explanatory seminars and the like, including training about the business activities and management environment of BTMU, particularly for independent outside directors, on an ongoing basis, including at the time of appointment, in order to provide necessary information in addition to the Board of Directors' meeting agenda.

6-6. Evaluation of the Board of Directors

In order to maintain and improve the effectiveness of the Board of Directors, evaluation of the Board shall be conducted periodically.

6-7. Information exchange among independent outside directors

Independent outside directors may, as necessary, convene meetings comprising only independent outside directors in order to perform their function from an independent standpoint.

6-8. Advice of outside professionals

Directors may obtain advice from outside professionals at BTMU's expense if it is necessary for the performance of their duties as a director.

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7. The Audit & Supervisory Committee

7-1. Role of the Audit & Supervisory Committee

The Audit & Supervisory Committee shall decide the content of proposals pertaining to the election, removal and non-reappointment of the accounting auditor to be submitted to a General Meeting of Shareholders, as well as auditing the performance of duties of directors and preparing auditing reports. The Audit & Supervisory Committee has the power to consent to decisions on compensation for accounting auditors.

Audit & Supervisory Committee members appointed by the Audit & Supervisory Committee may state its opinions on the election, removal or compensation of directors who are not Audit & Supervisory Committee members at the General Meeting of Shareholders.

The Audit & Supervisory Committee shall properly exercise its authority to perform investigations, including fieldwork, into the business and finance of BTMU and its subsidiaries, in order to effectively fulfill its role and duties.

7-2. Composition and resolutions of the Audit & Supervisory Committee

The Audit & Supervisory Committee shall be composed of three (3) or more members.

A majority of Audit & Supervisory Committee members shall be independent outside directors.

The Chairman of the Audit & Supervisory Committee shall be appointed from among the independent outside directors.

In order to ensure the effectiveness of audit, full-time member(s) of the Audit & Supervisory Committee shall be appointed.

Resolutions of the Audit & Supervisory Committee shall be adopted by an affirmative vote of a majority of the members present who constitute in number a majority of the members entitled to vote.

7-3. Ensuring the effectiveness of audit by the Audit & Supervisory Committee

An Audit & Supervisory Committee Secretariat shall be established in order to assist the Audit & Supervisory Committee with its duties.

The Audit & Supervisory Committee may give specific instructions to the Internal Auditing Division as necessary for the effective performance of audit.

The Audit & Supervisory Committee and the Internal Auditing Division shall share information as appropriate to ensure a system of mutual cooperation.

Decisions on the key personnel matters of the Internal Auditing Division must be approved by the Audit & Supervisory Committee.

8. Relations with shareholders and other stakeholders

8-1. Ensuring rights and equality of MUFG and its shareholders

BTMU will take the following actions to secure rights of MUFG and its shareholders and ensure that they are exercised effectively.

  • BTMU will take appropriate actions to ensure the effective exercise of voting rights by MUFG and its shareholders at General Meetings of Shareholders.
  • BTMU will provide information appropriately to contribute to appropriate decisions on the exercise of voting rights by MUFG and its shareholders.
  • BTMU will provide adequate explanation to shareholders about capital policy and the like that would have a significant effect on shareholder interests.
  • In addition to establishing its policy based on MUFG's policy with respect to cross-shareholdings of listed shares, BTMU will examine the medium- to long-term economic rationale and future outlook of major cross-shareholdings, taking into consideration the associated risks and returns, and provide appropriate explanations to MUFG about the purposes and so forth of such shareholdings. BTMU shall also formulate its standards based on MUFG's standards with respect to the exercise of voting rights.

8-2. Related party transactions

BTMU will establish appropriate procedures for and monitor transactions with related parties such as directors, so that such transactions do not harm the interests of BTMU or the common interests of MUFG and its shareholders.

8-3. Appropriate collaboration, etc. with stakeholders other than MUFG and its shareholders

BTMU's sustainable growth and increase of corporate value over the medium- to long-term are realized through the contributions of stakeholders such as customers, employees and local communities. In performing its management activities, BTMU will strive to build appropriate collaborative relationships with each of its stakeholders.

BTMU will adopt a Corporate Vision shared among the entire MUFG group in order to indicate its basic stance towards the performance of its management activities and to make such stance the policy for all of its activities, and will also adopt MUFG's Principles of Ethics and Conduct as a basis for the judgments and actions of all officers and employees.

BTMU will establish an appropriate framework for whistleblowing by employees and so forth, and monitor its enforcement.

9. Appropriate disclosure of information

9-1. Approach to disclosure of information

With an aim to ensure that stakeholders evaluate BTMU based on a proper understanding, BTMU will ensure transparency in information disclosure through appropriate disclosure of its financial information (such as information on its financial condition and operating results) and information regarding business strategy and risk management.

From the perspective of ensuring the fairness and soundness of the securities market, BTMU recognizes the importance of managing the security of undisclosed material information that would influence investment decisions and will practice strict information security.

9-2. External accounting audit

BTMU recognizes the responsibility that external accounting auditors owe towards shareholders and investors, and will take appropriate actions to secure the proper performance of audit.

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