Corporate Governance

Chapter 1: Basic Policy

Based on the recognition that respecting the rights and profits of all stakeholders such as the unitholders, officers and employees, the parent company, partner companies such as end tenants that occupy retail properties, etc. that are assets for investment, business partners, creditors, suppliers and local communities, securing the transparency and fairness of management, and making prompt and decisive decisions are important and essential for achieving the sustainable growth of the Company and the Investment Corporation and increasing their corporate and asset value in the medium and long term, the Company sets the fostering and embedded nature of such corporate culture and climate as the basic policy for corporate governance.

The Company will realize the best and most effective corporate governance by working to strengthen the responsible management system and supervisory function by fulfilling its accountability and social responsibilities for all stakeholders and acting in line with the six fundamental principles set forth below.

Section 1: Securing of rights of the unitholders and equality among them

The Company will take appropriate measures for the rights of the unitholders to be substantively secured and improve the environment for the unitholders to be able to exercise their rights appropriately. The Company will also secure substantive equality among the unitholders. The Company will give full consideration to minority unitholders and foreign unitholders, as problems and concerns will easily arise as to the substantive securing of their rights, the environment for exercising their rights, and the securing of substantive equality among them.

The Company will take appropriate measures for the rights of the unitholders, including their voting rights, to be substantively secured at a general meeting of unitholders of the Investment Corporation (hereinafter referred to as the "Unitholders' Meeting").

Recognizing that the Unitholders' Meeting is a forum for holding constructive dialogues with the unitholders, the Company will develop an appropriate environment for their rights to be exercised at the Unitholders' Meeting from the perspective of the unitholders.

If the Company conducts a transaction with a related party of the Company for the sake of the Investment Corporation, the Board of Directors will establish appropriate procedures beforehand according to the importance and nature of the transaction, disclose the framework of the procedures, and conduct monitoring in light of the procedures, so that such a transaction will not harm the interests of the Investment Corporation and the unitholders and that such concerns will not be raised.

Section 2: Appropriate cooperation with stakeholders other than shareholders

Fully recognizing that the sustainable growth and the medium- and long-term creation of the corporate and asset values of the Company and the Investment Corporation are the result of the provision of resources and contributions by various stakeholders, the Company will strive for appropriate cooperation with these stakeholders.

The directors and the senior management will exercise their leadership for the fostering and embedded nature of the corporate culture and climate to respect sound business activity ethics and the rights and position of these stakeholders.

With respect to appropriate cooperation with stakeholders, respect for their rights, and sound business activity ethics, etc., the Company will set forth and practice the code of conduct that the officers and employees should follow by showing its values as a company. The Board of Directors will be obligated to formulate and revise the code of conduct and make efforts to ensure that the code of conduct penetrates throughout the Company and is complied with.

Section 3: Appropriate information disclosure and the securing of transparency

The Company will disclose the financial information and investment policies as well as the non-financial information on the risks and governance, etc. of the Company and the Investment Corporation in an appropriate and timely manner in accordance with laws, regulations, rules and guidelines and work proactively to provide information other than that disclosed in accordance with laws, regulations, rules and guidelines.

On this occasion, in light of the fact that disclosed and provided information will become the basis for holding constructive dialogues with the unitholders, the Board of Directors will make efforts to ensure that such information (particularly non-financial information) is accurate and easy to understand for users and is highly useful as information.

Section 4: Duties of the Board of Directors

In light of the fiduciary responsibility and accountability for the Investment Corporation and the unitholders, the Board of Directors will appropriately fulfill its roles and duties, including

1. Offering a major direction for the asset management strategies of the Company and the Investment Corporation,
2. Developing an environment that enables the directors and the senior management to make appropriate proposals, and
3. Exercising the highly effective supervision of the directors and the senior management from an independent and objective standpoint,

in order to promote the sustainable growth and the medium- and long-term enhancement of the corporate and asset values of the Company and the Investment Corporation and improve their earnings power and asset efficiency, etc.

Regarding it as one of its major roles and duties to establish the management philosophy, etc. of the Company and shape its strategic orientation, the Board of Directors will hold constructive discussions about specific business strategies and business plans, etc., and when making decisions on the execution of important business, take the strategic orientation above into account.

Regarding it as one of its major roles and duties to develop an environment that supports appropriate proposals by the directors and the senior management, the Board of Directors will conduct a multilateral and sufficient examination of these proposals from an independent and objective standpoint to secure its fiduciary responsibility and accountability for the Investment Corporation and the unitholders, while welcoming sound proposals from the directors and the senior management, and, when approved proposals are put into practice, support prompt and decisive decision-making by the directors and the senior management.

Regarding it as one of its major roles and duties to exercise the highly effective supervision of the directors and the senior management from an independent and objective standpoint, the Board of Directors will appropriately evaluate the business performance, etc. of the Company and appropriately reflect the evaluation on the personnel affairs of the directors and the senior management. The Board of Directors will also exercise supervision so that information will be disclosed in a timely and accurate manner, and appropriately develop a system for internal control and risk management. In addition, the Board of Directors will appropriately manage conflicts of interest between related parties such as the senior management and controlling shareholders and the Company and the Investment Corporation.

The Audit & Supervisory Board members will make appropriate decisions from an independent and objective position when they carry out their roles and duties such as the audit of the execution of duties by the directors and the senior management and the use of their authority, including by maintaining effective communication with the external auditor. For the Audit & Supervisory Board members to fully fulfill their functions, including business audits and accounting audits and their roles and duties, it is not appropriate to define the scope of their services excessively narrowly. Accordingly, the Audit & Supervisory Board members will use their powers proactively and actively and appropriately provide their opinions to the directors and the senior management at the Board of Directors meetings.

Recognizing their fiduciary responsibility and accountability for the Investment Corporation and the unitholders, the directors, the Audit & Supervisory Board members and the senior management will act in the interests of the Investment Corporation and the unitholders, while securing appropriate cooperation with the stakeholders.

The Board of Directors will be made up in such a manner to satisfy both diversity and an appropriate size, and will be equipped in a balanced manner with the knowledge, experience, and abilities to fulfill its roles and duties effectively. The Board of Directors will also appoint one or more persons with appropriate knowledge of finance and accounting as the Audit & Supervisory Board members. The Board of Directors will improve its functions by analyzing and evaluating the effectiveness of the Board of Directors as a whole.

The Board of Directors will work to foster an atmosphere that respects free-spirited and constructive discussions and exchanges of opinions.

The Board of Directors and the Audit & Supervisory Board members will work proactively to obtain information to fulfill their roles and duties effectively and ask the Company to provide additional information as required. The Company will develop a framework to support the directors and the Audit & Supervisory Board members, including support for their manpower. The Board of Directors will make sure that the smooth provision of information required by the directors and the Audit & Supervisory Board members is secured.

To appropriately fulfill the roles and duties expected of those who play a part in the important governing institution of the Company, the directors and the Audit & Supervisory Board members will deepen their understanding of their roles and duties and work to improve them by acquiring the necessary knowledge and updating it appropriately. To this end, the Company will provide and arrange training opportunities tailored to individual directors and Audit & Supervisory Board members and support the related expenses, and the Board of Directors will check whether or not these measures are taken appropriately.

Section 5: Dialogues with the unitholders

To contribute to the sustainable growth and the medium- and long-term enhancement of the corporate and asset values of the Company and the Investment Corporation, the Company will hold constructive dialogues with the unitholders, also on occasions other than the Unitholders' Meetings.

The directors and the senior management will pay due attention to the interest and concerns of the unitholders through such dialogues by listening to their voices, and make efforts to obtain their understanding by explaining the investment policy of the Investment Corporation clearly in an easy-to-understand manner. Through these efforts, the directors and the senior management will work to understand the position of the stakeholders in a balanced manner and make appropriate responses based on this understanding.

The Company will respond positively to unitholders' requests for dialogue within a reasonable range in order to contribute to the sustainable growth and the medium- and long-term enhancement of the asset value of the Investment Corporation.

Section 6: Full enforcement of compliance management

When operating business, the Company will strictly comply with all laws and regulations, perform sincere and fair corporate activities, and secure management soundness based on self-discipline by setting forth the basic compliance policy as the corporate ethics and the compliance standards as the principles of conduct for the officers and employees.

Giving due consideration to social responsibility and public duties as a financial service provider under the Financial Instruments and Exchange Act and a building lots and buildings business operator that has obtained approval for entrustment-based agency services for transactions under the Building Lots and Buildings Transaction Business Act, the Company will widely establish the trust of society as a whole by contributing to economic and social development through sound business operation.

The Company will also seek to become a company that is trusted by society and the market by fostering a sincere and innovative corporate culture, with all the officers and employees sharing the value of "Create a future lifestyle that leads to a smile for each and every person" based on the "Aeon Group Future Vision" and wish to realize the future where customers will be "fulfilled and full of smiles" by feeling "a brighter society" and " happiness that is uniquely their own".