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Corporate Governance

Basic Policy

The Seibu Group strives to maximize corporate value and shareholder value by fulfilling its social responsibilities through its business activities and earning the trust of its shareholders, customers, and all other stakeholders based on its Group Vision, which incorporates its management philosophy and management policy, and the Seibu Group Corporate Code of Ethics, which sets forth the Group's fundamental rules on compliance. To further promote corporate governance, the Group works to improve management soundness and transparency, to raise the level of and to accelerate decision-making by management, centered on the Board of Directors, and to continuously strengthen the entire Group’s internal control systems. In addition, to ensure the rights and equal treatment of shareholders, the Group engages in constructive dialogue with shareholders to improve corporate value and shareholder value over the medium to long term, and strives for timely and appropriate disclosure of information and appropriate cooperation with its stakeholders.

Corporate Governance Report

Management Structure (overview of current corporate governance system)

Seibu Holdings Inc.(The “Company”) has adopted a system of a company with Audit & Supervisory Board Members and has established the General Meeting of Shareholders, Board of Directors and Audit & Supervisory Board stipulated in the Companies Act as company organizations.

The Board of Directors is composed of 12 Directors (11 men and one woman), four of whom are outside Directors (all outside Directors are independent officers registered with the Tokyo Stock Exchange). The Board of Directors meets at least once a month in principle to make decisions on important matters related to management as well as matters stipulated by laws and regulations, and to supervise execution of business.

The Company believes that outside Directors in particular play a key role in enhancing the fairness of management from an objective and independent standpoint while reflecting their abundant knowledge and insight in management, as well as contributing to the further improvement of the corporate governance and internal control system, and accordingly has made sure that outside Directors make up 1/3 or more of all Directors.

Moreover, in order to ensure objectivity when deciding remuneration and the candidates for Directors, the Company obtains advice in the Remuneration Advisory Committee and the Nomination Advisory Committee, among whose members, respectively, are four outside Directors forming a majority.

                    

The Audit & Supervisory Board is composed of four Audit & Supervisory Board Members (all men), of whom two are outside Audit & Supervisory Board Members (both are independent officers registered with the Tokyo Stock Exchange). The Board meets at least once a month in principle. Each Audit & Supervisory Board Member audits the appropriateness and legality of the Directors’ execution of their duties by attending meetings of the Board of Directors and other important meetings and giving his opinion, exchanging opinions with the representative director, receiving verbal updates on the status of execution of business from Directors and others as required, and through other methods.

                    

The Company has adopted a Managing Officer system with the primary aim of ensuring swift and efficient decision-making and business execution to respond flexibly to changes in the management environment. In addition, the Company has established the Management Council as an organization where the Managing Officers and others deliberate on important matters, including proposals to be submitted to the Board of Directors, and holds meetings twice a month in principle to improve the quality of decision-making.

                    

Reasons for adoption of current corporate governance system

In order to conduct proper allocation of management resources, supervision of business management and other functions as a holding company, the Board of Directors of the Company is composed of Directors who are familiar with the Group’s businesses and their management, and independent outside Directors with abundant knowledge and insight. Moreover, the Company ensures the ability to improve the quality of decision-making by soliciting opinions and advice from outside Audit & Supervisory Board Members, attorneys at law, certified public accountants and other experts outside the Company.

In addition, the Company’s management believes that outside Directors and outside Audit & Supervisory Board Members contribute to further strengthening corporate governance and internal control systems by playing a role in improving management monitoring functions, including providing useful opinions and other feedback on management from a standpoint of objectivity, neutrality and independence, based on career histories, experience and knowledge that differ from those of people from inside the Company.

Through the above management structure, the Company believes it can ensure management soundness and transparency by properly auditing and supervising the execution of business.

Internal Control

Basic Stance on Internal Control Systems

The Company is working to build and maintain internal control systems for the entire Group based on the Seibu Holdings' Basic Policy on Internal Controls, with the understanding that further strengthening internal control systems contributes to the maximization of the corporate value of the entire Group over the medium-to-long term. In addition, the Internal Audit units verify and evaluate the effectiveness and efficiency of internal control systems, and conduct monitoring to maintain the soundness of business execution.

Internal Audits and Accounting Audits

For internal audits, the Company has established the Internal Audit and Internal Control Department, which is independent from departments that execute business operations, and, in addition to the head of the department, has assigned a staff of six full-time internal auditors, who conduct audits of the status of execution in each department and regularly coordinate with the Audit & Supervisory Board Members and the accounting auditor. Accounting audits are conducted by Ernst & Young ShinNihon LLC. The certified public accountants who conducted the accounting audit of the Company for the accounting auditor were Katsuyuki Kawai, Motoki Yoshimura and Masahiko Nagasaki. They were assisted in the accounting audit of the Company by 39 certified public accountants and 30 others.

Compliance

To enhance and strengthen the compliance structure by preparing a code of conduct for employees and officers, the Company has established the Seibu Group Corporate Code of Ethics as a basic policy shared by the Group and conducts activities in the three areas of rules, organization and penetration/establishment for the Code's implementation and observance.

Seibu Group Corporate Ethics Committee

The committee meets five times a year to conduct integrated administration of the compliance structure of the entire Seibu Group, chaired by the President and Chief Executive Officer of the Company and with officers of the Company, external experts and representatives of Group companies as members. The committee decides basic policies for compliance, verifies and reviews the status of their promotion, resolves issues related to corporate ethics and considers measures to prevent their recurrence, among other activities. The committee also holds lively debates including discussions of various compliance-related themes.

Hotlines (Internal Notification System)

For swift identification and resolution of internal issues, the Seibu Group has established two internal notification systems consisting of a corporate ethics hotline and a sexual harassment and human relations hotline. Both have internal contact points and external contact points (a subcontracting company and a law firm). The hotlines are available to all officers and employees of the Seibu Group, and although users give their real names in principle, anonymous calls are accepted. Information from the hotlines is centrally managed by the Company and has led to swift resolution of issues, prevention of recurrence and improvements in business operations, with advice and support accepted from experts as necessary.

Information Disclosure

Recognizing the importance of ensuring the trust of society, the Seibu Group works for enhanced information disclosure with accurate, swift and fair reporting on its activities, including management results and the status of its businesses, to its shareholders, investors and all other stakeholders. With Corporate Communication as the supervising department, the Group strives to provide more information to its stakeholders by conducting timely disclosure through stock exchanges as well as proactively disclosing other information.

Communication with Shareholders and Investors

The Company recognizes the importance of taking its shareholders' and investors' opinions seriously and incorporating them in its management. Consequently, it has established the Investor Relations Department as the department in charge of working for fuller communication with shareholders and investors.

For communication with individual shareholders and retail investors, the Company actively held presentations for individual investors in cooperation with securities companies, in addition to the General Meeting of Shareholders.

For communication with analysts and institutional investors, the Company held briefings for the announcement of its year-end and interim financial results, in addition to proactively conducting individual meetings, as well as holding tours of facilities.

For shareholders and investors outside Japan, the Company provides information through its website and actively participates in individual meetings and conferences sponsored by securities companies in addition to overseas IR roadshows conducted by top management.

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