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MUFG Corporate Governance Policies

1. Purpose

1-1. Purpose

The MUFG Corporate Governance Policies (these “Policies”) set out the policy and framework of the corporate governance of Mitsubishi UFJ Financial Group, Inc. (“MUFG”) and serve as a guide for the actions of directors and management.(note1)

(note1)
Those responsible for management of MUFG Group: meaning the corporate executive officers and executive officers of MUFG and the directors, corporate executive officers and executive officers of MUFG Group companies.

1-2. Revision

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

2. Approach to corporate governance

2-1. Basic approach

MUFG 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 shareholders as well as customers, employees and local communities.
MUFG 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 holding company

As a financial holding company, MUFG will aim to increase the corporate value of the Group as a whole through management of subsidiaries to ensure the sound and appropriate management of the entire Group.

2-3. MUFG’s governance structure

MUFG has chosen the governance structure of a company with three committees (a company prescribed in Article 2, item (xii) of the Companies Act) from the following perspectives.

  • ·To enhance the flexibility of management by division of executive and oversight functions, while also creating a strucure whereby the Board of Directors oversees management of the entire Group.
  • ·To build an efficient and highly effective corporate governance structure through coordination among the Board of Directors, committees required by the Companies Act (a Nominating and Governance Committee,(note2) Compensation Committee and Audit Committee) and optional committees (a Risk Committee) etc.
    (note2)
    Which is a “nominating committee” as provided for in the Companies Act.
  • ·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 oversight. Decisions on matters of business execution other than specific matters stipulated by laws and regulations shall in principle be delegated to corporate executive officers; 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 the entire Group.
  • ·Oversight of the execution of duties by directors and corporate executive officers.
  • ·Decisions on the MUFG Group’s internal controls system, and oversight of the establishment and operation of such systems.
  • ·Election of corporate executive officers.
  • ·Oversight 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 MUFG’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 management 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.

4-2. Expectations for independent outside directors

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

5. Composition and other matters regarding the Board of Directors

5-1. Composition

The Board of Directors shall be composed of 20 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 MUFG 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 have a balanced composition consisting of internal directors who are familiar with the business of MUFG Group and independent outside directors who oversee management and directors from an independent and objective standpoint.
  • ·The percentage of independent outside directors, in principle, shall be at least one third, and the percentage of non-executive directors(note3), in principle, shall be more than half.
  • (note3)
    Those who do not concurrently serve as an corporate executive officer, executive officer, employee or executive director of MUFG or an MUFG subsidiary.
  • ·To ensure the effectiveness of oversight of MUFG Group’s management by the Board of Directors, the Presidents of The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mitsubishi UFJ Trust and Banking Corporation, and Mitsubishi UFJ Securities Holdings Co., Ltd. will, in principle, also serve as directors of MUFG.

5-2. Election of Directors

For election of directors, the Nominating and Governance Committee shall set forth director election standards focused on the following and nominate persons who meet such standards as director candidates.

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 MUFG 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 oversight of the execution of duties by management from an independent and objective standpoint, meeting the independence standards of MUFG.
  • ·Executive directors shall have extensive knowledge of MUFG Group’s business and the ability to appropriately perform management of MUFG Group.

5-3. Term of office of directors

The term of office of directors shall be one (1) year. In discussion and decision by the Nominating and Governance Committee on a candidate for reappointment, the number of years since such candidate assumed the office of a director of MUFG shall be considered.

5-4. 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 an MUFG Group company only to the extent such director is able to have enough time required to appropriately fulfill the duties as a director of MUFG, such as understanding the business and other aspects of the MUFG Group, and the director shall report periodically to the Board of Directors on 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 the Chairman of the Board of Directors

The role of Chairman of the Board of Directors and the role of President and Group Chief Executive Officer 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 oversight.
In principle, when MUFG has a director who concurrently serves as Chairman and Executive Officer, such director shall be elected as Chairman of the 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 the Chairman of the Board of Directors and to correspond and coordinate with the company 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.
Management shall distribute the Board of Directors’ meeting agenda and deliberation materials prior to meetings of the Board of Directors in principle to ensure that directors have the opportunity to understand the content in advance.
Management shall conduct training and the like, including training about the business activities and management environment of MUFG, 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. Appointment of Lead Independent Outside Director

Independent outside directors may appoint a Lead Independent Outside Director from among themselves.

6-9. Advice of outside professionals

Directors may obtain advice from outside professionals at MUFG’s expense if it is necessary for the execution of their duties as a director.

7. Committees

7-1. Establishment of committees

In addition to the establishment of a Nominating and Governance Committee, a Compensation Committee and an Audit Committee as provided under the Companies Act, a Risk Committee shall also be established as an optional board committee. Moreover, in order to comply with the final rules for Enhanced Prudential Standards for Foreign Banking Organizations, U.S. Risk Committee shall be established.
Committees may appoint outside professionals as outside expert members and have them participate in committee deliberations.

7-2. Nominating and Governance Committee

  • (i)Role of the Nominating and Governance Committee
    • ·The Nominating and Governance Committee shall decide the content of proposals that are submitted to general meetings of shareholders regarding the election and removal of directors.
    • ·The Nominating and Governance Committee shall discuss and make recommendations to the Board of Directors on personnel matters regarding key management positions such as Chairman, Deputy Chairman and President and Group Chief Executive Officer of MUFG and Chairmen, Deputy Chairmen and Presidents of major subsidiaries.
    • ·The Nominating and Governance Committee shall discuss and make recommendations to the Board of Directors on matters pertaining to the policy and framework for corporate governance.
  • (ii)Composition and resolutions of the Nominating and Governance Committee
    • ·The Nominating and Governance Committee shall be composed of three (3) or more members, with the members being independent outside directors and the President and Group Chief Executive Officer.
    • ·The chairman of the Nominating and Governance Committee shall be appointed from among the independent outside directors.
    • ·Resolutions of the Nominating and Governance Committee shall be adopted by an affirmative vote of a majority of the members present who constitute in number a majority of all the members eligible to vote.
  • (iii)Nomination policy
    • ·The Nominating and Governance Committee shall establish Director Election Standards and nominate as director candidates those who meet such standards.
    • ·With respect to the nomination of candidates for key management positions such as Chairman, Deputy Chairman and President and Group Chief Executive Officer of MUFG and Chairmen, Deputy Chairmen and Presidents of major subsidiaries, the appropriateness of the nomination shall be discussed in light of the personnel requirements for each position.

7-3. Compensation Committee

  • (i)Role of the Compensation Committee
    • ·The Compensation Committee shall establish a policy regarding decisions on compensation for corporate executive officers and directors, and shall decide the details of individual compensation based on this policy. If an corporate executive officer or a director concurrently serves as an officer or employee of a subsidiary, the Compensation Committee shall in the same way decide the aggregate amount of compensation for such person inclusive of that to be received as an officer or employee of the subsidiary.
    • ·The Compensation Committee shall discuss and make recommendations to the Board of Directors on the establishment, revision and abolition of systems pertaining to compensation for officers, etc.(note4) of MUFG and its key subsidiaries.
    • (note4)
      Meaning directors, corporate auditors, corporate executive officers, executive officers, and so forth
  • (ii)Compositon and resolutions of the Compensation Committee
    • ·The Compensation Committee shall be composed of three (3) or more members, with the members being independent outside directors and President and Group Chief Executive Officer.
    • ·The chairman of the Compensation Committee shall be appointed from among the independent outside directors.
    • ·Resolutions of the Compensation Committee shall be adopted by an affirmative vote of a majority of the members present who constitute in number a majority of all the members eligible to vote.
  • (iii)Compensation policy
    • ·In order to achieve sustainable growth and increase of corporate value, policy regarding decisions on the details of compensation shall be determined with the aim of increasing motivation to contribute to medium- to long-term performance, not just short-term performance.
    • ·Levels of compensation shall be decided as appropriate for MUFG and its subsidiaries in light of the state of the economy and society.

7-4. Audit Committee

  • (i)Role of the Audit Committee
    • ·The Audit Committee shall decide the content of proposals pertaining to the election, removal and non-reappointment of the accounting auditor to be submitted to general meetings of shareholders, as well as auditing the execution of duties by corporate executive officers and directors and preparing auditing reports. The Audit Committee has the power to consent to decisions on compensation for accounting auditor.
    • ·The Audit Committee shall properly exercise its authority to perform investigations, including fieldwork, into the business and finance of MUFG and its subsidiaries, in order to effectively fulfill its role and duties.
  • (ii)Composition and resolutions of the Audit Committee
    • ·The Audit Committee shall be composed of three (3) or more members who are non-executive directors.
    • ·A majority of the members of the Audit Committee shall be appointed from among the independent outside directors.
    • ·The chairman of the Audit 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 Committee shall be appointed.
    • ·Resolutions of the Audit Committee shall be adopted by an affirmative vote of a majority of the members present who constitute in number a majority of all the members eligible to vote.
  • (iii)Ensuring the effectiveness of audit by the Audit Committee
    • ·An Audit Committee Secretariat shall be established in order to assist the Audit Committee with its duties.
    • ·The Audit Committee may give specific instructions to the Internal Auditing Division as necessary for the effective performance of audit.
    • ·The Audit Committee and the Internal Auditing Division shall share information as appropriate to ensure a system of mutual cooperation.
    • ·Decisions on the key personnel of the Internal Auditing Division must be approved by the Audit Committee.

7-5. Risk Committee

  • (i)Role of the Risk Committee
    • ·The Risk Committee shall discuss and make recommendations to the Board of Directors on various matters regarding risk management in general pertaining to the entire Group.
    • ·The Risk Committee shall discuss and make recommendations to the Board of Directors on material matters regarding risk management in general, matters regarding the top risk matters (including critical compliance matters etc.) and any other material matters that require discussion by the Risk Committee.
    • ·The Risk Committee shall approve and amend U.S. Risk Committee Policy etc. and concur with liquidity risk tolerance at CUSO (Combined U.S. Operation) level prior to the approval at the U.S. Risk Committee.
  • (ii)Composition of the Risk Committee
    • ·The Risk Committee shall be composed of independent outside directors, internal directors and outside professionals.
    • ·The chairman of the Risk Committee shall be appointed from among the independent outside directors.
  • (iii)Collaboration with the corporate executive officer in charge of risk management
    • ·The Risk Committee shall receive reports on material risk management matters from the corporate executive officer in charge of risk management and the risk management department and shall collaborate with them as appropriate.
  • (iv)Relationship with U.S. Risk Committee
    • ·The Risk Committee shall regularly monitor the operations of U.S. Risk Committee and report it to the Board of Directors.

7-6. U.S. Risk Committee

  • (i)Role of the U.S. Risk Committee
    • ·The U.S. Risk Committee shall approve risk management policies of all MUFG’s U.S. operations and liquidity risk management important matters.
    • ·The U.S. Risk Committee shall oversight overall risk management framework in respect of MUFG’s operations in the U.S. and the material risks to which MUFG’s operations in the U.S may be exposed.
    • ·The U.S. Risk Committee shall deliberate on the status, control and management of all types of risk on a group basis, report and make recommendations to MUFG Risk Committee.
  • (ii)Composition of the U.S. Risk Committee
    • ·The U.S. Risk Committee shall be composed of the members of the Americas HD Risk Committee, delegate(s) from MUFG, Regional Executive for the Americas and the Americas HD CEO.

8. Corporate executive officers

8-1. Duties of Corporate executive officers

Corporate executive officers shall execute business and make decisions on the execution of business delegated to them by the Board of Directors.
Corporate executive officers owe a duty of loyalty and a duty of care in respect of the execution of their duties, and shall contribute to MUFG’s sustainable growth and increase of corporate value over the medium- to long-term.
Corporate executive officers shall periodically report to the Board of Directors regarding the status of the execution of their duties at least once every three (3) months.
Corporate executive officers shall make explanations on matters as requested by the Board of Directors and the Board committees.
Corporate executive officers are obligated to provide the Board of Directors with information necessary for directors to fulfill their duties, and to report necessary proposals to the Board of Directors.
Accordingly, any events that may have a particularly material effect on the management of the Group, such as events that may require a change to the Group’s key management policies or internal control system, shall be reported to the Board of Directors.

9. Relations with shareholders and other stakeholders

9-1. Ensuring shareholders’ rights and equality

MUFG will take the following actions to secure shareholder rights and ensure that they are exercised effectively. MUFG will give consideration to the equal treatment of all shareholders, including minority and overseas shareholders.

  • ·MUFG will take appropriate actions to ensure shareholders’ effective exercise of voting rights at General Meetings of Shareholders.
  • ·MUFG will provide information appropriately to contribute to allow shareholders to make appropriate decisions on the exercise of their voting rights.
  • ·MUFG will provide adequate explanation about capital policy and the like that would have a significant effect on shareholder interests.
  • ·In addition to disclosing its policy with respect to cross-shareholdings of listed shares, MUFG 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 about the purposes and so forth of such shareholdings. MUFG shall also establish and disclose standards that ensure the appropriate exercise of voting rights pertaining to cross-held shares.

9-2. Dialogue with shareholders

Through dialogue with shareholders, MUFG will seek their understanding of MUFG’s business strategy and so forth, and will strive to take appropriate actions based on an understanding of shareholders’ perspectives.
The Board of Directors shall establish and disclose policies relating to the organizational structures and measures aimed at promoting constructive dialogue with shareholders.

9-3. Related party transactions

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

9-4. Appropriate collaboration, etc. with stakeholders other than shareholders

MUFG’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, MUFG will strive to build appropriate collaborative relationships with each of its stakeholders.
MUFG will establish a Corporate Vision 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 establish Principles of Ethics and Conduct as a basis for the judgments and actions of all officers and employees.
MUFG will establish an appropriate framework for whistleblowing by employees and so forth, and monitor its enforcement.

10. Appropriate disclosure of information

10-1. Approach to disclosure of information

With an aim to ensure that stakeholders evaluate MUFG based on a proper understanding, MUFG 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, MUFG recognizes the importance of managing the security of undisclosed material information that would influence investment decisions and will practice strict information security.

10-2. External accounting audit

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

Yuko Kawamoto retired as an employee of one of MUFG’s subsidiaries more than 25 years ago. While she is eligible to be an outside director under the 2014 amendment of Japan’s Companies Act which allows former employees who left a company more than 10 years previously to be outside directors, in accordance with applicable transitional measures, the amended provisions of the Companies Act regarding eligibility of outside directors will not become effective at MUFG until after its 2016 Ordinary General Meeting of Shareholders.
However, because the amended Companies Act is already in force and we believe that Ms. Kawamoto is substantially independent from MUFG to a degree equivalent to that of an outside director, we will treat her as an independent outside director for the purpose of these Policies.

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