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Hitachi

Hitachi Capital Corporation

Corporate Governance

Introduction

In order to contribute to the creation of a richer society by creating values desired by society and customers, Hitachi Capital Corporation (the “Company”) will cooperate appropriately and endeavor to develop and maintain relationships of trust with shareholders, investors, customers, business partners, employees, creditors, local communities, and all the other various stakeholders supporting the Company under our management philosophy of “Sustainable Growth”, “Respect for Human Dignity”, and “Implementation of Corporate Ethics”.
Corporate Governance Standards (the “Standards”) have been established under the resolutions of the Board of Directors and the relevant committees with the purpose of creating an ideal corporate governance structure in order to implement our management philosophy and enhance the corporate value of the Company over the mid- to long-term.

Article 1  Basic Views on Corporate Governance

  1. The Company will pursue an ideal corporate governance structure for conducting transparent, fair, timely and decisive decision-making and for managing risks appropriately while giving constant care to the ever-changing environment around the Company, including business, management, and social circumstances.
  2. The Company will endeavor to strengthen its corporate governance structure in accordance with the following basic views.
    1. The Company will respect the rights and ensure the equal treatment of shareholders.
    2. The Company will appropriately cooperate with stakeholders and build mutually valuable relationships.
    3. The Company will appropriately disclose corporate information in a timely manner and ensure transparency.
    4. The Company will establish a framework that allows each director to fully perform its expected roles, and the Board of Directors will fully perform its function in supervising business operation.
    5. The Company will engage in constructive dialogue with its shareholders.
  3. The Company has adopted the “Company with a Nominating Committee, etc.” system, under the Companies Act, in order to enhance managerial transparency and to promptly and appropriately resolve any management issues that the Company is facing now or will face in the future by dividing the functions of managerial supervision and business operation.

Article 2  General Meeting of Shareholders

  1. The Company will strive to send convening notices of general shareholder’s meeting early enough to ensure sufficient time for shareholders to consider proposals and allow them to exercise their voting rights and will disclose the convening notice on the Company website promptly after convocation has been resolved.
  2. The Company will endeavor to develop an environment in which all shareholders, including those who do not attend shareholder meetings, are easily able to exercise their voting rights by adopting systems for voting through electronic means, the Electronic Voting Platform, and other systems.

Article 3  Shareholder Returns

Returning profits to shareholders is one of the most important managerial measures of the Company; as a fundamental policy, the Company seeks to maintain a stable distribution of dividends linked to business performance while ensuring a sound financial position and securing internal reserves necessary for sustainable growth and for coping with the changes in the business circumstances.

Article 4  Cross-shareholdings

  1. The Company will not engage in cross-shareholding unless those holdings are found to have value for the Company or there are other such grounds for doing so.
  2. The Company will comprehensively determine whether to vote for or against proposals and appropriately exercise voting rights of cross-shareholdings.

Article 5  Code of Conduct

In order to ensure that the conduct of directors, executive officers, and employees, etc. always complies with law, ordinance, and social ethics, the Company will establish and endeavor to implement internal regulations.

Article 6  Whistleblower System

The Company has established a whistleblower system as a means for Hitachi Capital Group employees, etc. to convey concerns about illegal or improper activity in relation to the Hitachi Capital Group to officers, attorneys, and other such individuals, and the Company will prescribe in its internal regulations that no whistleblower will receive any disadvantageous treatment from the Company due thereto.

Article 7  Conflict of Interest Transactions, etc.

  1. Directors and executive officers will promptly report to the Board of Directors, if any issue concerning a conflict of interests arises involving themselves, and will receive the approval of the Board and take other appropriate measures in accordance with the Companies Act.
  2. When conducting transactions with our affiliated companies, subsidiaries of our affiliated company, or our own subsidiaries, the Company will apply the same general transaction conditions that would apply to other business partners.

Article 8  Role of the Board of Directors

  1. The Board of Directors will work to realize efficient and effective corporate governance and strive towards the sustainable growth and maximized corporate value of the Company over the mid- to long-term.
  2. The Board of Directors shall exercise its function in supervising overall management in order to ensure managerial fairness and transparency, and engage in the best possible decision-making for the benefit of the Company by nominating and evaluating the president and chief executive officer and other management, evaluating significant risks that the Company is facing now or will face in the future, determining the Company’s material business operation, and deciding other such matters.

Article 9  Establishment of Internal Control Systems

The Board of Directors will prescribe matters in relation to the establishment of frameworks to ensure the appropriateness of business operations of Hitachi Capital Group pursuant to the Companies Act and will create effective internal control systems.

Article 10  Board of Directors Composition

  1. The Board of Directors of the Company will consist of 15 or less directors, including at least two independent outside directors.
  2. The Nominating Committee will separately prescribe views on the designation of director candidates and independence standards for outside directors.

Article 11  Term of Office and Number of Concurrent Positions of Independent Outside Directors

When deciding independent outside director candidates, the Nominating Committee will take into consideration of the directors’ terms of office and number of concurrent positions.

Article 12  Chairman of the Board of Directors

  1. In order to more firmly divide the roles of supervision and execution, the Board of Directors will designate a director that does not serve as an executive officer as Chairman of the Board of Directors (torishimariyaku-kaichou).
  2. The Chairman of the Board of Directors will, as a chairman of the Board of Directors, endeavor to enhance the quality of Board discussions and to ensure the effective and efficient operation of the Board.

Article 13  Committee Composition

  1. Each of the Nominating Committee, Compensation Committee, and Audit Committee will include at least one independent outside director.
  2. The Board of Directors will designate at least one person with appropriate expertise on finance and accounting to serve on the Audit Committee.

Article 14  Self-evaluation

The Board of Directors will evaluate its own effectiveness and other such matters at least once per year.

Article 15  Director Responsibilities

  1. Each director will gather sufficient information for performing their duties and will actively state their opinions and have thorough discussions.
  2. Each director will perform its duties as a director by displaying their expected capabilities and devoting sufficient time to the Company.

Article 16  Role of Independent Outside Directors

The Company expects the main role of the independent outside directors will be stating their opinions at Board of Directors meetings and engaging in other active conduct after considering the interests of minority shareholders and all other stakeholders from a position independent from management and controlling shareholders.

Article 17  Role of Directors Concurrently Serving as Officers of Majority Shareholders

When electing directors who serve concurrently as directors or executive officers of Majority Shareholders (meaning a shareholder who holds voting rights exceeding 10 percent of the total of the number of the voting rights), its subsidiaries or its affiliated companies, the Company expects the main role of such directors will be providing necessary advice on each proposal brought before the Board of Directors based on the director’s knowledge and experience. The same shall apply to cases where the Company elects individual Majority Shareholder as a director.

Article 18  Succession Plan

The Board of Directors will, when needed, establish and regularly review a succession plan for the Company’s management, which is led by the president and chief executive officer. This succession plan will prescribe requirements for candidate designation in consideration of the Company’s business strategies.

Article 19  Director and Executive Officer Remuneration, etc.

  1. The Compensation Committee will decide the amount of remuneration, etc. for each director and executive officer based on the policies for doing so established by the Committee.
  2. The remuneration, etc. of executive officers will reflect the business results of the Company, including mid- to long-term results.

Article 20  Agenda Item Selection and Materials for Board of Directors Meetings

In addition to appropriately selecting agenda items for Board of Directors meetings, the Company will, unless under extraordinary circumstances, distribute materials on agenda items and proposals to each director prior to the day of the meeting to allow for sufficient discussion at each meeting.

Article 21  Information Gathering by Directors

Whenever necessary, directors may request explanations or reports from other directors, executive officers, or employees and may request to be provided with internal materials.

Article 22  Information Exchange among Outside Directors

Independent outside directors may, as necessary, hold meetings comprised only of independent outside directors, and freely discuss any matters related to the Company and seek to exchange information with each other.

Article 23  Officer Training and Education

  1. The Company will provide explanations to directors and executive officers, promptly upon assuming office and as necessary, regarding Company business strategies, the Company’s financial condition, and other material matters related to the Company’s business, as well as compliance, liability of the officer, and other legal matters.
  2. In order to fulfill their roles, the directors and executive officers of the Company will at all times actively gather information and educate themselves on the Company’s financial condition, legal compliance systems, corporate governance, and other such matters.

Article 24  Information Disclosure and Dialogue with Shareholders

To achieve sustainable growth and enhance corporate value over the mid- to long-term, the Company will separately prescribe and disclose policies on efforts and establishment of systems which promote constructive dialogue with shareholders and timely and appropriate information disclosure.

Article 25  Revision of these Standards

The Board of Directors and relevant committees will continually verify the validity and appropriateness of these Standards and make revisions as necessary.

End

(Established and enacted on October 27, 2015)
(Amended on April 1, 2016)
(Amended on October 3, 2016)

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