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Governance

Status of Corporate Governance

In terms of strengthening corporate governance, Mitsui & Co. worked to improve diversity among members of the Board of Directors. At the same time, an even greater number of discussions were held at Board of Directors' meetings regarding Mitsui & Co.'s future direction and business strategies. In these ways, Mitsui & Co. has been moving forward with efforts to enhance the effectiveness of the Board of Directors.

Basic View on Corporate Governance

In structuring the corporate governance framework, the Company places emphasis on "improved transparency and accountability" and "the clarification of the division of roles between the oversight activities and the executive activities of management." For "improved transparency and accountability," the Company ensures sound supervision and monitoring of management with the viewpoints of External Directors and External Audit & Supervisory Board Members. The Company has also established an internal control system for disclosure so that all executives and employees fulfill their accountability to stakeholders under the principle of fair disclosure. For "the clarification of the division of roles between the oversight activities and the executive activities of management," the Company delegates execution of business to Managing Officers substantially while the Board of Directors retains a supervisory role over Managing Officers' business activities. Chief Operating Officers of the 16 Headquarter Business Units and the 2 Overseas Regional Business Units serve concurrently as Managing Officers and engage in business operations for the consolidated Group in a responsive and flexible manner.

While increasing the effectiveness of supervisory functions by having Audit & Supervisory Board Members, the Company implements corporate governance by maintaining an Audit & Supervisory Board system because it believes that having internal Directors who are familiar with its business practices and operations is essential to the business of a general trading company. By adopting a Committee System in which External Directors and External Audit & Supervisory Board Members participate, the Company achieves highly effective corporate governance to secure "improved transparency and accountability" and "the clarification of the division of roles between the oversight activities and the executive activities of management."

Mitsui & Co. has presented to the Tokyo Stock Exchange and other stock exchanges a corporate governance report that describes the status of Mitsui & Co.'s corporate governance.

Filed on June 18, 2021


Corporate Governance Report (PDF 1.07MB)

Board of Directors

The Board of Directors is the highest authority for execution of business and supervision, and in order to secure this function, the Company has limited the number of Directors to the maximum to enable substantial discussions and gives priority to the appointment of new External Directors in the case of increasing the number of board members in order to enhance the division of roles between management oversight and execution. In addition, the Company has established the Governance Committee, the Nomination Committee, and the Remuneration Committee to serve as advisory bodies to the Board of Directors. These committees comprise mainly external members.

At Board of Directors' meetings, matters that are deliberated or reported on abide by the Company's internal regulations. In addition to matters concerning fundamental policies related to management, important business execution and matters authorized by resolutions of the General Meeting of Shareholders, the Company passes resolutions on matters determined by law and company statute. We also receive reports regarding matters determined by law and the status of important business operations.

Regular meetings of the Board of Directors are held once every month in principle and extraordinary meetings are held from time to time at any time if deemed necessary.

Audit & Supervisory Board

The Audit & Supervisory Board Members supervise the Directors' execution of duties as an independent institution with the mandate of the shareholders. For this purpose, Audit & Supervisory Board Members carry out multifaceted, effective audit activities such as attending important internal meetings, verifying reports and investigating our business, and take necessary measures in a timely manner.

Audit & Supervisory Board meetings are held periodically and precede meetings of the Board of Directors. Moreover, additional meetings are held on an as-needed basis. The Audit & Supervisory Board Members attend meetings of the Board of Directors to monitor how the proceedings of the meetings are managed and the content of the decisions made. These members also actively express their opinions.

Auditing by the Audit & Supervisory Board Members covers a variety of areas, among which are execution of duties by Directors, decision-making processes at the meetings of the Board of Directors and others, status of construction and operation of the internal control system, independence of the Independent Auditors, system of financial reporting, accounting policies and processing of financial information, tax policies and tax processing.

Evaluation Results of the Effectiveness of the Board of Directors

Each year, the Board of Directors analyzes and evaluates its effectiveness, taking into consideration relevant matters, including self-evaluations of each Director, and discloses a summary of the results.

At the Board of Directors meeting held on April 7, 2021, we analyzed and evaluated the effectiveness of the Board of Directors meeting for the year ended March 31, 2021. We would like to inform you of the results.

The Board of Directors continues to work to maintain and improve the effectiveness of the Board of Directors, and aims to ensure thorough supervision of management by the Board of Directors and to achieve sustainable increases in corporate value.

The methods and results of the evaluation of effectiveness of the Board of Directors for the year ended March 31, 2021, and prior years, are summarized as follows:
Please note that the summary of the methods and results of the evaluation of effectiveness of the Board of Directors is also described in the Corporate Governance Report.

Evaluation of effectiveness (Excerpt from the Corporate Governance Report)

Summary of Effectiveness Evaluation of the Board of Directors

The effectiveness of the Board of Directors is evaluated every year in order to check actions on issues identified in the previous fiscal year and identify issues to be tackled in the next fiscal year. The process emphasizes the maintenance of a PDCA cycle for the improvement of effectiveness of the Board of Directors.
Based on the results of the effectiveness survey for the fiscal year ended March 2020, the Board of Directors and its Secretariat took action on the following matters in the fiscal year ended March 2021.

Issues identified from the effectiveness evaluation results for FYE 3/2020 Actions Evaluations in the FYE 3/2021 survey
Need for further improvement in the operations of Board meetings
  • Extension of time for pre-briefings on important matters (30→45 min.)
  • Implementation of two free discussion sessions without overnight stays
  • Enhancement of Board meeting materials, including information about CF/IRR trends relating to projects affected by impairment losses
  • Enhancement of progress reports on projects approved by the Board of Directors
The majority of board members (and the majority of external board members) gave positive evaluations and stated that there had been an improvement since the previous fiscal year. Some board members thought that pre-briefings had improved.
Need for further improvement of the effectiveness of the Board of Directors in relation to discussions about overall strategies Two free discussion sessions focusing on the themes of Sustainable revenue growth strategy considering ESG perspectives and Mitsui & Co.'s Materiality, DX strategy, and the Mitsui Engagement Survey The majority of board members (and the majority of external board members) gave positive evaluations and stated that there had been an improvement since the previous fiscal year. One board member commented that the free discussion sessions were useful opportunities to talk about macroscopic themes, and another stated that there was deeper discussion in the context of change in the social environment.
Need for clarification of the expected roles of the advisory committees The Mitsui & Co., Ltd. Corporate Governance and Internal Control Principles and the Internal Regulations on Advisory Committees to the Board of Directors were revised to classify the functions of the Governance Committee, Nomination Committee, and Remuneration Committee and establish roles and expectations for each of these committees. The majority of board members (and the majority of external board members) provided positive evaluations and stated that there had been an improvement since the previous fiscal year. Some board members also expressed the view that the expected roles of the advisory committees had been clarified.

Effectiveness evaluation for FYE 3/2021

After discussion of the results from the survey at an External Members Meeting and a Governance Committee meeting in February 2021, and a Corporate Management Committee meeting in March 2021, the effectiveness evaluation was resolved by the Board of Directors in April.

Self-evaluation
  • Implemented in January 2021 by 14 directors and 5 Audit & Supervisory Board members
  • 5-level evaluations, comparisons with the previous fiscal year, and comments for each question
  • The evaluation of the effectiveness of the Board of Directors in FYE 3/2021 was carried out through self-evaluation.

 

Evaluation results
  1. Actions on issues from the previous year
    • Need for further improvement in the operations of Board meetings: Enhancement of pre-briefings, two free discussion sessions without overnight stays, enhancement of information about CF/IRR trends relating to projects affected by impairment losses, enhancement of progress reports on projects approved by the Board of Directors, etc.
    • Need for further improvement of the effectiveness of the Board of Directors in relation to discussions about overall strategies: Two free discussion sessions, discussion on macroscopic themes, deeper discussion in the context of change in the social environment
    • Need for clarification of the expected roles of the advisory committees: Expected roles of advisory committees clarified through the revision of rules
  2. Composition of the Board of Directors: Further enhancement of diversity through the appointment of a female external board members, Director Ms.Egawa.
  3. Operations of Board meetings: Qualitative improvement of the provision of information by the Board Secretariat, including early distribution of materials
  4. Stronger awareness of corporate governance thanks to the time provided for thorough pre-briefings before deliberations in actual meetings
  5. Meeting operations during the COVID-19 crisis characterized by thorough precautions against infection, allowing free and open discussions in Board meetings
  • The overall conclusion based on the above results is that the Board of Directors achieved an appropriate level of effectiveness in FYE 3/2021.

 

Steps toward further improvement of effectiveness
  • Ongoing consideration of the optimal overall number of directors, the ratio of external to internal members, the number of internal directors, and organizational design
  • We will continue to discuss and consider the optimal overall number of directors, the ratio of external to internal members, the number of internal directors, and organizational design, with reference to trends in other companies. These matters will be discussed primarily by the Governance Committee.

Remuneration of Directors and Audit & Supervisory Board Members

Structure of Remuneration

*Upper limit of total amount paid:¥240 million per year

Remuneration of Directors

The Company has established a policy for determining the remuneration of individual Directors by resolution of the Board of Directors, following deliberation by and reporting from the Remuneration Committee, which is chaired by an External Director (Independent Director). The remuneration of Directors (excluding External Directors) comprises fixed basic remuneration, performance-related bonuses based on management indicators for the Company and share performance-linked restricted stock-based remuneration as medium and long-term incentives. In each fiscal year, the Remuneration Committee discusses the remuneration system for Directors and Audit & Supervisory Board Members, and examines the appropriateness of the proportions of fixed remuneration, performance-related bonuses, and stock-based compensation based on trends at other companies and then reports this as well as the appropriateness of claw-back provisions to the Board of Directors, among other measures, in order to emphasize transparency in the determination of Directors' and Audit & Supervisory Board Members' remuneration. Retirement compensation is not paid to Directors.

  • Operating diverse businesses, the Company emphasize consolidated profit for the year and core operating cash flow as common performance indicators, and also references these when determining the dividend policy. Directors' bonuses are calculated using the following formula, which is linked to these indicators.
    Total amount of bonuses = (consolidated profit for the year [attributable to owners of the parent] × 50% × 0.1%) + (core operating cash flow × 50% × 0.1%)

The upper limit for the total amount is set at ¥700 million. In the event that consolidated profit for the year (attributable to owners of the parent) is negative, i.e., a net loss, and/or if the core operating cash flow is negative, i.e., a cash outflow, the items are calculated as zero.

  • The purpose of the remuneration system of share performance-linked restricted stock (hereinafter referred to as the "System") is to provide an additional incentive to Directors to achieve sustained growth in medium-to long-term performance and Mitsui's value. And to foster a heightened sense of shared value with shareholders, by paying remuneration consisting of the Company's ordinary shares, with a transfer restriction period and claw-back clause, to Directors (shares allocated under the System will be referred to as the "Shares") in addition to basic fixed remuneration and performance-related bonus. This new compensation system is a share performance-linked remuneration system, since the number of Shares held by Directors at the end of a certain period would vary based on a comparison of the growth rate of the Company's stock price and the Tokyo Stock Price Index(TOPIX) over a specified period. By taking into account not only movements in the Company's stock price but also the performance of the Company's stock compared with the stock market as a whole, the System is intended to give Directors a heightened awareness of the need to improve the Company's corporate value by amounts greater than the growth of the stock market.
  • Each Director (excluding External Directors) is required to purchase the Company's shares by paying from his or her monthly remuneration but less than ¥1 million through the Mitsui Executives' Shareholding Association.

From the perspective of respecting the independence of External Directors who are independent from business execution, remuneration for External Directors is limited to a fixed remuneration that does not include a performance-related portion.

Remuneration of Audit & Supervisory Board Members

Remuneration of the Audit & Supervisory Board Members is determined through deliberation among the Audit & Supervisory Board Members, the total of which should not exceed the amount determined at the General Meeting of Shareholders.
Audit & Supervisory Board Members receive only monthly fixed remuneration, which is not related to the performance of Mitsui. Retirement compensation is not paid to the Audit & Supervisory Board Members.

Remuneration of directors and Audit & Supervisory Board Members in the fiscal year ended March 31, 2021

Please scroll horizontally to look at table below.

Category of Position Number of Recipients(*1) (¥ million)
Basic Remuneration Bonus Stock Compensation Total Remuneration(*2)
Directors (Excluding External Directors) 11 710 497 320 1,526
Audit & Supervisory Board Members (Excluding External Audit & Supervisory Board Members) 2 132 - - 132
External Directors 6 104 - - 104
External Audit & Supervisory Board Members 3 60 - - 60
Total 22 1,006 497 320 1,822
  • *1 The above includes Directors who retired from office in the fiscal year to March 2021.
  • *2 In addition to the above amounts, a total of ¥458 million was paid to 101 retired Directors, and ¥41 million to 12 retired Audit & Supervisory Board Members, as pensions (representing payments determined prior to the abolition of those systems).

External Directors / External Audit & Supervisory Board Members

Selection Criteria

External Directors

  • The prospective person's extensive business experience and knowledge are required to deliberate and knowledge of his or her particular area of business should be used.
  • The Company puts great value on ensuring independence of External Directors from Mitsui in the pursuit of their management oversight functions.
  • With a view to overseeing business operations in a way that reflects the perspectives of our diverse stakeholders, Mitsui shall take into consideration the fields from which candidates originate, along with their gender.
Reasons for Appointing Each External Director / Major Activities in the Fiscal Year Ended March 31, 2021
Name Izumi Kobayashi
Independent Director(*)
Reasons for Appointment Ms. Kobayashi has deep insight in organizational management and risk management for generating innovation, which she has accumulated through her experience working as the representative of private sector financial institutions and a multilateral development bank. She speaks out actively from diverse perspectives at the Board of Directors' meetings, making a significant contribution to deepening the discussion. In the year ended March 31, 2021, Ms. Kobayashi served as a member of the Remuneration Committee and contributed to the discussions related to the design of a remuneration system for Officers and performance review system for Officers. In addition, as chair of the Nomination Committee, she exercised strong leadership in enhancing the transparency and effectiveness of the procedures for the CEO succession plan. In view of these points, the Company appointed her as an External Director so that she may continue to advise and supervise its management.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Nomination Committee 9/9
  • Remuneration Committee 3/3
  • External Members Meeting 12/13
Significant Concurrent Positions (As of June 18, 2021)
  • External Director, ANA HOLDINGS INC.
  • External Director, Mizuho Financial Group, Inc.
  • External Director, OMRON Corporation
Name Jenifer Rogers
Independent Director(*)
Reasons for Appointment Ms. Rogers has a global perspective and deep insight in risk management cultivated through her experience working for international financial institutions and her experience in legal work as in-house counsel. She makes many useful comments concerning risk control at the Board of Directors' meetings, making a significant contribution to enhancing the supervisory function of the Board of Directors. In the year ended March 31, 2021, she served as a member of the Governance Committee, actively provided her opinions with the aim of creating of a highly transparent governance system. In view of these points, the Company appointed her as an External Director so that she may continue to advise and supervise its management.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 15/16
  • Governance Committee 4/4
  • External Members Meeting 12/13
Significant Concurrent Positions (As of June 18, 2021)
  • General Counsel Asia, Asurion Japan Holdings G.K.
  • External Director, Kawasaki Heavy Industries, Ltd.
  • External Director, Nissan Motor Co., Ltd.
  • President, American Chamber of Commerce in Japan
Name Samuel Walsh
Independent Director(*)
Reasons for Appointment Mr. Walsh has global expertise and excellent management skills cultivated through his long years working in upper management within the automobile industry and as chief executive officer of an international natural resources company. At the Board of Directors' meetings, he makes many proposals and suggestions from a broad-minded standpoint based on his abundant business management experience, and makes significant contributions to active discussions at the meetings of the Board of Directors, and to improving the effectiveness of said meetings. In the year ended March 31, 2021, Mr. Walsh served as a member of the Governance Committee and actively provided his opinions with the aim of creating a highly transparent governance system. He has diverse perspectives based on global corporate management experience and expertise and knowledge related to capital policy and business investment. The Company appointed him as an External Director so that he may continue to advise and supervise its management.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Governance Committee 4/4
  • External Members Meeting 13/13
Significant Concurrent Positions (As of June 18, 2021)
  • Chairman of the Board, Gold Corporation (Australia) the Perth Mint
  • Non Executive Director, Ma'aden Mining Limited (Saudi Arabia)
Name Takeshi Uchiyamada
Independent Director(*)
Reasons for Appointment Mr. Uchiyamada has long been involved in research on environmental and safety technologies at Toyota Motor Corporation that could realize a mobility society responding to the needs of the times, as well as in the development of products demanded by consumers, and has been exercising his excellent managerial skills as an executive officer of Toyota Motor Corporation. At the Board of Directors' meetings, he makes many proposals and suggestions from a broad-minded standpoint based on his management experience at a global company and his in-depth knowledge of society in general, and makes significant contributions to active discussions as the meetings of the Board of Directors, and to improving the effectiveness of said meetings. In the year ended March 31, 2021, he served as a member of the Nomination Committee, and contributed to the discussions with the aim of enhancing the transparency and effectiveness of the procedures for the appointment of executives, including the CEO succession plan. In view of these points the Company appointed him as an External Director so that he may continue to advise and supervise its management.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Nomination Committee 9/9
  • External Members Meeting 13/13
Significant Concurrent Positions (As of June 18, 2021)
  • Chairman of the Board of Directors, Toyota Motor Corporation
  • External Director, JTEKT CORPORATION

JTEKT CORPORATION is an equity accounted associated companies of Toyota Motor Corporation.

Name Masako Egawa
Independent Director(*)
Reasons for Appointment Ms. Egawa has deep insight in finance and corporate management gained through her experience of management as a director of the University of Tokyo, her many years of experience working at global financial institutions, and her research on management and corporate governance at Japanese companies. Her broad range of public contributions includes the activities at the Japan-United States Educational Commission and councils of the Ministry of Finance. In the year ended March 31, 2021, she served as a member of the Governance Committee, actively provided her opinions with the aim of creating a highly transparent governance system. In addition, as a member of the Remuneration Committee, she contributed to the discussions related to the design of a remuneration system for Officers and performance review system for Officers. Although Ms. Egawa has no direct experience participating in corporate management, considering the above, the Company appointed her as an External Director so that she may advise and supervise its management.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 12/12
  • Governance Committee 3/3
  • Remuneration Committee 3/3
  • External Members Meeting 10/10
Significant Concurrent Positions (As of June 18, 2021)
  • External Director, Tokio Marine Holdings, Inc.
  • External Director, Mitsui Fudosan Co., Ltd. (retired)
  • Specially Appointed Professor, Graduate School of Business Administration, Hitotsubashi University
  • * An External Director who is unlikely to have conflicts of interest with general shareholders, as stipulated by the stock exchange

External Audit & Supervisory Board Members

The External Audit & Supervisory Board Members shall be selected with the objective of further heightening the neutrality and independence of the auditing system, and, in particular, it is expected that the External Audit & Supervisory Board Members will give an objective voice to their auditing opinions from the standpoint of neutrality, building on such factors as independence. When selecting candidates for External Audit & Supervisory Board Members, the Audit & Supervisory Board shall confirm that no issues with independence arise by taking into consideration such factors as relations with the Company, management and important staff members.

Reasons for Appointing Each External Audit & Supervisory Board Member / Major Activities in the Fiscal Year Ended March 31, 2021
Name Haruka Matsuyama
Independent Audit & Supervisory Board Member(*)
Reasons for Appointment Ms. Matsuyama is appointed as an External Audit & Supervisory Board Member in expectation of the expression of her objective audit opinions from an independent and neutral standpoint, with advanced insight into corporate governance and risk management cultivated through her many years of experience in legal affairs as a judge and as an attorney at law.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Audit & Supervisory Board 28/28
  • Governance Committee 4/4
  • External Members Meeting 11/13
Significant Concurrent Positions (As of June 18, 2021)
  • Attorney at law
  • External Director, T&D Holdings, Inc.
  • External Director, Mitsubishi UFJ Financial Group, Inc.
  • External Director, Restar Holdings Corporation
Name Hiroshi Ozu
Independent Audit & Supervisory Board Member(*)
Reasons for Appointment Mr. Ozu is appointed as an External Audit & Supervisory Board Member in expectation of the expression of his objective audit opinions from an independent and neutral standpoint, with advanced insight into governance and risk management cultivated through the many years of experience and perspective in legal affairs he has gained, as a prosecutor and an attorney at law.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Audit & Supervisory Board 28/28
  • Nomination Committee 9/9
  • External Members Meeting 12/13
Significant Concurrent Positions (As of June 18, 2021)
  • Attorney at law
  • External Audit & Supervisory Board Member, Toyota Motor Corporation
  • External Audit & Supervisory Board Member, Shiseido Company, Limited
Name Kimitaka Mori
Independent Audit & Supervisory Board Member(*)
Reasons for Appointment Mr. Mori is appointed as an External Audit & Supervisory Board Member in expectations of the expression of his objective audit opinions from an independent and neutral standpoint, with advanced insight into corporate accounting, accounting audit activities and risk management cultivated through his many years of experience as a certified public accountant.
Attendance at Meetings in FY2021 (Number of Meetings Attended / Total Number of Meetings)
  • Board of Directors 16/16
  • Audit & Supervisory Board 28/28
  • Remuneration Committee 3/3
  • External Members Meeting 12/13
Significant Concurrent Positions (As of June 18, 2021)
  • Certified Public Accountant
  • External Director, Japan Exchange Group, Inc.
  • External Audit & Supervisory Board Member, East Japan Railway Company
  • External Director, Sumitomo Life Insurance Company
  • * An External Audit & Supervisory Board Member who is unlikely to have conflicts of interest with general shareholders, as stipulated by the stock exchange

Criteria of Independence for External Officers (Directors/Audit & Supervisory Board Members)

External Directors or External Audit & Supervisory Board Members of the Company who do not fall under any of the following items are to be judged to have independence.

  1. Person who is currently or was in the past 10 years an executive director, executive officer, managing officer, manager, employee, administrative officer, etc. (hereinafter referred to as "executing person") of the Company or its consolidated subsidiaries
  2. Person or the executing person of a corporation holding either directly or indirectly 10% or more of the total number of the voting rights of the Company
  3. Person whose major business partner is the Company or its consolidated subsidiaries*1 or the executing person of the same
  4. Major business partner of the Company or its consolidated subsidiary*2 or the executing person of the same
  5. Person who is in charge of auditing operations of the Company or the Company's consolidated subsidiary, as partners etc. of the auditing firm of the Independent Auditor of the Company or the Company's consolidated subsidiary
  6. Person providing professional services such as consultant, lawyer and certified public accountant who received from the Company monetary payment or other property benefits ¥10 million or more in total other than officer remuneration in the most recent business year (if the one who received the relevant property is an organization such as corporation and association, it shall be referred to the person who belongs to an organization which received from Mitsui property benefits more than higher of either ¥10 million or 2% of the consolidated gross sales of such organization)
  7. Person or the executing person of a corporation who received the annual total of ¥10 million or more of donations or aid funds from the Company or its consolidated subsidiary in the most recent fiscal year
  8. Person who has fallen under any of 2. to 7. above in the past three years
  9. Spouse or relative within the second degree of kinship (hereinafter referred to as "close relatives") of the person who is currently or has been recently the important executing person of the Company or its consolidated subsidiary (including director who is not the executing person in the case of External Audit & Supervisory Board Member)
  10. Close relatives of the person who currently falls or has fallen recently under any of 2. to 7. above (excluding the one who is not important)
  • *1. If the relevant business partner received from the Company or the Company's consolidated subsidiary the payment equivalent to 2% or more of its annual consolidated transaction volume in the most recent business year or the relevant business partner obtained from the Company or the Company's consolidated subsidiary the money loans equivalent to 2% or more of its consolidated total assets in the most recent business year, the relevant business partner is deemed to be the person whose major business partner is the Company or the Company's consolidated subsidiary.
  • *2. If the Company or its consolidated subsidiary received from the relevant business partner the payment equivalent to 2% or more of Mitsui's annual consolidated transaction volume in the most recent fiscal year or the relevant business partner provided the Company or its consolidated subsidiary with the money loans equivalent to 2% or more of Mitsui's consolidated total assets, the relevant business partner is deemed to be the major business partner of the Company or its consolidated subsidiary.

Support Systems

For External Directors, before regular and extraordinary meetings of the Board of Directors, materials on the proposals are provided and advance explanations are given. For External Audit & Supervisory Board Members, company information which contributes their auditing, including summaries of regular meetings between Full-time Audit & Supervisory Board Members and staff in the Audit & Supervisory Board Member Division, are timely provided by the Full-time Audit & Supervisory Board Members and the staff. Advance distribution of materials and advance explanations are conducted regarding regular and extraordinary meetings of the Audit & Supervisory Board and the Board of Directors.

For External Members, the Company provides personal computers tablets ("Officer PCs") and distributes materials for meetings of the Board of Directors in a timely manner, thereby ensuring the time to review agendas. In the FYE 21/3, since it has been difficult and inappropriate that all Directors and Audit & Supervisory Board Members gather physically due to the spread of COVID-19, the Company holds the meetings of the Board of Directors and the meetings of the Audit & Supervisory Board Members as fully or partially remote meetings using web conference system, depending on the situation around COVID-19. The Company has set up the usage environment of such web conference system on the Officer PCs and provides supports to use them in order to ensure the environment that allows the External Directors and External Audit & Supervisory Board Members to discuss effectively in remote meetings. The Company has set up Board of Director's database for use in storing information such as minutes and other materials from past meetings of the Board of Directors, and maintain a platform that enables access to such database from the Officer PCs.

External Members Meetings

External Members Meetings are periodically held for the purpose of exchanging information and opinions regarding important matters in management among External Members, or among External Members, Internal Directors, Full-time Audit & Supervisory Board Members, and/or Managing Officers. The External Members Meetings were held 13 times in the FYE 21/3, where External Directors, External Audit & Supervisory Board Members, Internal Directors, Full-time Audit & Supervisory Board Members, Independent Auditors, and Managing Officers exchanged information and opinions regarding matters such as FYE 20/3 Full Year Results and Medium-term Management Plan Market Reaction, DX Comprehensive Strategy, the company's Efforts in Response to Climate Change/Decarbonization, etc.

Coordination between supervision by the External Directors or auditing by External Audit & Supervisory Board Members, the auditing by the Internal Auditing Division, Audit & Supervisory Board Members and the Independent Auditors, and relationship with divisions involved in internal control

External Members, through the Board of Directors, the Audit & Supervisory Board and the External Members Meetings respectively, mutually coordinate with internal audits, auditing by Audit & Supervisory Board Members and accounting audits, as well as supervise and audit the internal control system. Specifically, they periodically receive reports on the following at meetings of the Board of Directors and the Audit & Supervisory Board, respectively: results of the internal audits and internal audit plans, results of auditing by the Audit & Supervisory Board and audit implementation plans, summary of management letters by Independent Auditors, assessment results with regard to the internal control system in accordance with the Financial Instruments and Exchange Act of Japan, the operational status of compliance programs, and other matters regarding the structure and management of internal controls. At the External Members Meetings, External Directors, Audit & Supervisory Board Members and Independent Auditors mutually exchange information and opinions and regarding the policy of audits, and Audit & Supervisory Board Members hosted the free discussion meeting with External Directors.

Full-time Audit & Supervisory Board Members, at their discretion, hold a meeting to exchange opinions beforehand among the External Directors and Audit & Supervisory Board Members on certain important matters to be discussed at meetings of the Board of Directors, in order to provide External Board Members with sufficient information for effective discussion at meetings of the Board of Directors.

Policy on Training for Directors and Audit & Supervisory Board Members

Upon assumption, opportunities are given to Directors and Audit & Supervisory Board Members for gaining full understanding of the business, financial affairs, organization, etc., of Mitsui, the Companies Act of Japan and related laws and regulations, corporate governance and internal control to ensure that they may fulfill their duties including the respective roles expected of Directors or Audit & Supervisory Board Members, which are mandated by the shareholders (fiduciary responsibility) and each legal responsibility. Furthermore, opportunities are given for keeping them up to date as necessary.

Policy Related to Acquisition and Holding of Cross-Shareholdings

The Company defines listed shares held for reasons other than purely for investment returns as cross-shareholdings. These are acquired and held in accordance with the following policy.

(1) The purpose of cross-shareholdings in investees for the equity method applies is to improve the corporate value of the investees and increase the equity method-based profit and dividends to be received through participation in the management of the investees. Cross-shareholdings in companies other than equity-method applicable investees (including deemed shareholdings) are categorized as "listed shares for general investment purpose" and regarded as a means of creating business opportunities and building, maintaining, or strengthening business and collaborative relationships.

(2) Investments in the shares of equity-method applicable companies are implemented only in cases where the economic rationale is recognizable. At the same time, each year the Board of Directors reviews the meaning of and policy on holding such shares, including a verification of the rationale in relation to the Company's cost of capital, within the framework of portfolio reviews that are carried out in relation to investment assets generally, including unlisted shares. If the meaning of holding these assets has significantly declined, a policy toward withdrawal shall be determined.

(3) When acquiring listed shares for general investment purpose, the Company conducts a stringent prior assessment of the probability of the investment, creating business opportunities, or building, maintaining, or strengthening business and collaborative relationships, and owns the shares only if there is a viable rationale. At the same time, each year the Board of Directors reviews the meaning of and policy on holding listed shares for general investment purposes by verifying the economic rationale based on the status of dividends, business-related profits, and other related profits, in comparison to the Company's overall costs, including its acquisition cost, market value, and cost of capital, with verification of qualitative aspects based on the status of and collaborative relationship with each cross-shareholdings investee. If as a result of this review the meaning of holding these assets has significantly declined, our policy is to sell such assets, thereby reducing the cross-shareholdings.

Independent Auditors

The Company appoints certified public accountants belonging to Deloitte Touche Tohmatsu LLC as Independent Auditors to carry out auditing under the Companies Act of Japan and the Financial Instruments and Exchange Act of Japan as well as auditing of consolidated financial statements in English. To secure prompt financial closing and reliability, the auditing work of the Company and its consolidated subsidiaries is in principle entrusted solely to Deloitte Touche Tohmatsu, which belongs to the same network as Deloitte Touche Tohmatsu LLC.