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Governance

Status of Corporate Governance

In terms of strengthening corporate governance, Mitsui & Co. worked to improve diversity among members ofthe 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 beenmoving 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 3 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.”

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 of the Effectiveness of the Board of Directors

Every fiscal year, the Company carries out an evaluation of the effectiveness of the Board of Directors, whereby we confirm results of various initiatives carried out to address board performance issues we have previously recognized and whereby we also select new areas of focus in order to enhance board effectiveness. Based on the results of this year's evaluation, the Board of Directors and its secretariat implemented the following initiatives in the fiscal year ended March 31, 2019, to further improve Board effectiveness.

Recognition of issues based on evaluation results carried out on March 31, 2018. Initiatives Evaluation of questionnaire carried out on March 31, 2019.
Composition of the Board of Directors We discussed the ideal composition of the Board of Directors at Free Discussion camping.
For the next fiscal year, Mr. Uchiyamada, who has significant business experience (Chairman of Toyota Motor Corporation), will be appointed as an external director at the general shareholders meeting, which is scheduled to be held on June 20, 2019.
A significant majority of the external members responded with favorable assessment, and a majority of the respondents overall feel the situation has improved in comparison with the previous year.
Discussion topics Create a board agenda suitable for discussions with external directors and set up opportunities for discussions among directors on internal control, risk management, sustainability and similar company-wide themes and topics based on trends around the world and current affairs. A significant majority of the external members responded with favorable assessment, and a majority of the respondents overall feel the situation has improved in comparison with the previous year.
Discussion Method of the Board of Directors We held a free discussion with the Directors and Auditor & Supervisory Board Members at our training center. A significant majority of the external members responded with favorable assessment.
Advisory Committee In the fiscal year ended March 2019, we conducted reports to the Board of Directors on the deliberations by each Advisory Committee, and implemented measures to enhance the determination procedures for, and discussion of, meeting frequency of each Advisory Committee. A significant majority of the external members responded with favorable assessment, and a majority of the respondents overall feel the situation has improved in comparison with the previous year.

Evaluation of the Effectiveness of the Board of Directors for the Fiscal Year Ended March 31, 2019

In light of the results of the questionnaires, the resolution was passed at a Board of Directors' meeting held in March 2019 after discussions were held at an External Members Meeting and at meetings of the Governance Committee, which took place in February 2019.

Questionnaire
  • Carried out in Jan 2019 Included 14 directors, 5 Audit & Supervisory Board Member
  • Each question had five grades that could be assigned and room was available for year-on-year evaluations and comments.
  • With respect to carrying out the above evaluation method, at a Governance Committee meeting held in September 2019, the decision was made, as the current format's effectiveness was recognized, to persist with the current self-evaluation format involving the evaluation of effectiveness of the Board of Directors for the fiscal year ended March 31, 2019, upon having verified the adequacy of the processes that encompass methods of evaluating the effectiveness of the Board of Directors carried out by a third party.

 

Summary of evaluation results
  1. Many commented that improvement has been achieved in addressing the 3 challenges stated last year with respect to (1) composition of the Board of Directors, (2) matters for deliberation by the Board of Directors, (3) method of deliberation by the Board of Directors, (4) certain matters related to the advisory Committee.
  2. The Board of Directors has a wealth of diversity and has prepared a structure to secure effective management oversight.
  3. Meetings of the Board of Directors have been operating smoothly, underpinned by adequate support of the Board of Directors Secretariat in areas such as preparing materials for meetings of the Board of Directors, providing information, and scheduling.
  4. The Board of Directors has been securing sufficient time for deliberations and engaging in constructive discussions and exchanges of opinion.
  5. The Company's direction and business strategy continue to be actively discussed at the Board of Directors meetings.
  6. At meetings of the Board of Directors, reports are given on results of risk analysis from multiple Company-wide angles based on which the Board of Directors discusses and reviews such risks drawing on knowledge furnished by respective Directors and Audit & Supervisory Board Members.
  7. The respective Directors and Audit & Supervisory Board Members, upon understanding the Board of Directors' duty to carry out oversight and auditing of Company management, have all been devoting sufficient time and effort in fulfilling their responsibilities as Directors or Audit & Supervisory Board Members, from an objective standpoint and separate from business execution.
  8. The Company adequately ensures the availability of opportunities and funds for enabling Directors & Supervisory Board Members to acquire knowledge necessary to fulfill their roles and duties and also on the whole the Company has ensured availability of frameworks for collaboration involving external members, the management, the Independent Auditor, and the Internal Auditing Division.
  • Based on the details summarized above, the Company's Board of Directors concludes that it has adequately maintained its effectiveness during the fiscal year ended March 31, 2019.

 

Further plans to enhance governance
1. Deepening discussion of Individual Business Projects
Creation of documents of the Board of Directors that are easy to understand with respect to the position in the segment strategy of individual business projects.
2. Free Discussion Camping (FD)
Continue FD and consider devising enhanced methods and determining discussion topics and FD.
3. Review of operation of the Board of Directors
Further dissemination of Board materials; regarding important matters, (i) early release of Board materials; (ii) enrichment of materials, (iii) securing longer discussion time, (iv) briefing prior to the Board for external Board members by the GM of Investment Administrative Div., (v) Further utilization of written resolution, and (vi) more accurate, objective, and clear sharing of discussions at the Corporate Management Committee.
4. Advisory Committee
Period reporting of the activities of the Advisory Committee to the Board, discussion at the Board as to the direction and activity policy.
5. The method of the Effectiveness of the evaluation of the Board of Directors
Considering the direction for appointing third party evaluations on the effectiveness evaluation of the Board of Directors next fiscal year.

Remuneration of Directors and Audit & Supervisory Board Members

Structure of Remuneration

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

Remuneration of Directors

Taking into consideration the result of the deliberation at the Remuneration Committee, which is chaired by an External Director, the remuneration of Directors (excluding External Directors) is determined as the sum of fixed basic remuneration, performance-related bonuses based on important KPI set by management and stock-based compensation stock options with stock price conditions as medium and long-term incentive compensation and limited to within the amounts resolved at the General Meetings of Shareholders. Retirement compensation is not paid to Directors.

  • The performance-related bonuses paid to directors are calculated based on the following formula, which has been deemed appropriate by the Remuneration Committee and subsequently approved by the Board of Directors.
    Total payment amount = (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 and individual payment amounts are proportionally distributed based on a point system determined by director position. In the event that consolidated profit for the year (attributable to owners of the parent) is negative, i.e., a loss, or if the core operating cash flow is negative, i.e., a net cash outflow, the items are calculated as zero.

  • The stock option scheme is granted to directors in order to have them share the benefits and risks of stock price fluctuations with the Company’s shareholders and to give them greater incentive to make contributions to improvements in medium- and long-term business performance and corporate value. Under the stock option scheme, subscription rights to shares, up to annual amounts of ¥500 million and 500,000 shares, are assigned to all Directors. The period for the right to exercise subscription rights to shares is 27 years from the day following the passage of three years from the allotment date.
    The exercise price is set at ¥1. In the case eligible recipients lose their Director and/or Managing Officer, and/or Audit & Supervisory Board Member status, and 10 years pass from the following day of such forfeiture, they are no longer able to exercise their subscription rights to shares.
  • Each Director (excluding External Directors) is required to purchase the Company’s shares in an amount equivalent to at least 10% of his or her monthly remuneration but less than ¥1 million through the Mitsui Executives’ Shareholding Association.

The remuneration for External Directors is limited to a fixed remuneration that does not include a performance-related portion, and there is no obligation of share purchasing for the External Directors.

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, 2018

Please scroll horizontally to look at table below.

Category of Position Number of Recipients(*1) (¥ million)
Basic Remuneration Bonus Stock Option Total Remuneration(*2)
Directors (Excluding External Directors) 11 733 542 129 1,405
Audit & Supervisory Board Members (Excluding External Audit & Supervisory Board Members) 2 132 - - 132
External Directors and External Audit & Supervisory Board Members 10 151 - - 151
Total 23 1,016 542 129 1,688
  • *1 The above includes Directors and Audit & Supervisory Board Members who retired from office in the fiscal year to March 2018.
  • *2 In addition to the above amounts, a total of ¥559 million was paid to 119 retired Directors, and ¥62 million to 17 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, 2018
Name Toshiro Muto
Independent Director(*)
Reasons for Appointment Mr. Muto has deep insight into fiscal and monetary affairs, as well as in economics in general, gained at the Ministry of Finance and the Bank of Japan. At the Board of Directors’ meetings, he uses his specialist knowledge to speak out actively, making a significant contribution to deepening the discussion. In the fiscal year ended March 31, 2018, he served as the committee chair of the Remuneration Committee and a member of the Governance Committee, contributing to the study, revision and so forth of the remuneration system for Directors, which helped to further strengthen Mitsui’s corporate governance. The Company has reappointed him as an External Director so that he may continue to advise and supervise its management.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings) (13/15)
Significant Concurrent Positions (As of June 21, 2018)
  • Chairman, Daiwa Institute of Research Ltd.
  • CEO (Chief Executive Officer) and Director General, the Tokyo Organising Committee of the Olympic and Paralympic Games
Name Izumi Kobayashi
Independent Director(*)
Reasons for Appointment Ms. Kobayashi has advanced expertise 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. During the fiscal year ended March 31, 2018, Ms. Kobayashi served as a member of the Remuneration Committee and exercised strong leadership as chair of the Nomination Committee in examining the composition of the Board of Directors, the selection process for Directors and Managing Officers, and related matters. In view of these points, the Company has reappointed her as an External Director so that she may continue to advise and supervise its management.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings) (15/15)
Significant Concurrent Positions (As of June 21, 2018)
  • External Director, ANA HOLDINGS INC. Governor
  • Japan Broadcasting Corporation External Director
  • Mizuho Financial Group, Inc.
Name Jenifer Rogers
Independent Director(*)
Reasons for Appointment Ms. Rogers has a global perspective and advanced expertise 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. Since the fiscal year ended March 31, 2016, she has served as a member of the Governance Committee, actively stating her opinions on the building of a highly transparent governance system. In view of these points, the Company has reappointed her as an External Director so that she may continue to advise and supervise its management.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings) (15/15)
Significant Concurrent Positions (As of June 21, 2018) General Counsel Asia, Asurion Japan Holdings G.K.
Name Hirotaka Takeuchi
Independent Director(*)
Reasons for Appointment Mr. Takeuchi has deep insight related to management gained as an expert in international corporate strategy. At the Board of Directors’ meetings, he makes thought-provoking proposals on Mitsui’s management strategies, making a significant contribution to enhancing the supervisory function of the Board of Directors. Since the fiscal year ended March 31, 2017, he has served as a member of the Nomination Committee, helping to improve the transparency of the Company’s officers’ nominations. The Company has reappointed him as an External Director so that he may continue to advise and supervise its management.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings) (14/15)
Significant Concurrent Positions (As of June 21, 2018)
  • Professor Emeritus, Hitotsubashi University
  • Professor, Harvard Business School
  • External Director, Daiwa Securities Group Inc.
  • External Director, BrightPath Biotherapeutics Co., Ltd.
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 automotive industry and as chief executive officer of an international mining and resources company. At the Board of Directors’ meetings, he makes proposals and suggestions from a broad-minded standpoint based on his experience of managing a global company, and makes significant contributions to active discussions at the meetings of the Board of Directors, and to improving the effectiveness of said meetings. During the fiscal year ended March 31, 2018, Mr. Walsh served as a member of the Governance Committee and actively provided his opinions on building of a highly transparent governance system. The Company has selected him as an External Director so that he may continue to advise and supervise its management.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings) (11/11) (Since his appointment in June 2017)
Significant Concurrent Positions (As of June 21, 2018) -
  • * 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, 2018
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 FY2018 (Number of Meetings Attended / Total Number of Meetings)
  • Meetings of Board of Directors (15/15)
  • Meetings of Audit & Supervisory Board (21/21)
Significant Concurrent Positions (As of June 21, 2018)
  • Attorney at law
  • External Director, T&D Holdings, Inc.
  • External Director, Mitsubishi UFJ Financial Group, Inc.
  • External Director, VITEC HOLDINGS CO., LTD.
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, from the many years of experience and perspective he has gained, mainly as a prosecutor.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings)
  • Meetings of Board of Directors (15/15)
  • Meetings of Audit & Supervisory Board (21/21)
Significant Concurrent Positions (As of June 21, 2018)
  • 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 because the Company deems him capable of clearly expressing an opinion as External Audit & Supervisory Board Member from a neutral and objective perspective based on his advanced expertise in corporate accounting cultivated through his many years of experience as a certified public accountant.
Attendance at Meetings in FY2018 (Number of Meetings Attended / Total Number of Meetings)
  • Meetings of Board of Directors (10/11)
  • Meetings of Audit & Supervisory Board (15/16) (Appointed in June 2017)
Significant Concurrent Positions (As of June 21, 2018)
  • 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 for Independence of 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. Independent auditor of the Company or its consolidated subsidiary or employee, etc. of the same
  6. Person providing professional services such as consultant, lawyer and certified public accountant who received from the Company monetary payment or other property benefits exceeding ¥10 million in total other than officer remuneration in the most recent fiscal year (referring to the person belonging to the organization if the one who received the relevant property is an organization such as corporation and association)
  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 its consolidated subsidiary the payment equivalent to 5% or more of its annual transaction volume (non-consolidated) in the most recent fiscal year or the relevant business partner obtained from the Company or its consolidated subsidiary the money loans equivalent to 5% or more of its consolidated total assets in the most recent fiscal year, the relevant business partner is deemed to be the person whose major business partner is the Company or its 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, in addition to the timely provision of corporate information by the Full-time Audit & Supervisory Board Members and staff in the Audit & Supervisory Board Member Division, the essence of the meetings between Full-time Audit & Supervisory Board Members and the Audit & Supervisory Board Member Division is provided periodically. When necessary, advance distribution of materials and advance explanations are conducted regarding regular and extraordinary meetings of the Audit & Supervisory Board and of the Board of Directors. The Company provides its External Directors and External Audit & Supervisory Board Members with specialized personal computers and distributes materials for meetings of the Board of Directors in a timely manner via e-mail. In doing so, the Company ensures that the external members have sufficient time to review agenda items. At the same time, the Company has set up a database for storing information, such as meeting minutes and other materials from past meetings of the Board of Directors, and the external members can access this database using their specialized personal computers.

External Members Meetings

The meeting composed of all External Directors and External Audit & Supervisory Board Members is held periodically, for the purpose of exchanging information and opinions regarding important matters in management among External Directors, or among External Directors and/or Internal Directors, Audit & Supervisory Board Members, and Managing Officers. The External Members Meetings were held six times in the fiscal year ended March 31, 2018, 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 the corporate management policy, audits, and the operation of operating segments.

Cooperation among External Directors and External Audit & Supervisory Board Members in Audits, Internal Audits, Corporate Audits, and Independent Audits, as well as Their Relationship with Internal Control Departments

External Directors and External Audit & Supervisory Board Members, through the Board of Directors and the Audit & Supervisory Board, 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. Furthermore, at External Members Meetings, External Directors, Corporate Auditors, and Independent Auditors exchange opinions and information on auditing policy.

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 Listed Shares

When holding listed shares for any purposes other than purely for investment returns, the Company holds such listed shares only in the case where it is judged to be reasonable after strict and comprehensive examination of several factors, including the necessity for maintaining or strengthening relationships with the investee, medium- to long-term economic rationale, and future outlook. With respect to the Group’s asset portfolio that includes listed shares, Mitsui reviews the significance of holding such assets every year in light of medium- to long-term economic rationale and future outlook, and reports said significance to the Board of Directors. With respect to exercising voting rights for listed shares held by the Group, deliberation is conducted on a case-by-case basis as to whether or not a proposal should be approved by comprehensively taking into consideration any impact that the relevant proposal may have on corporate value of the investee.

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.