Keio : Corporate Governance Report

March 31, 2021 at 02:04 am

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Corporate Governance Report

Last Update: March 31, 2021

Keio Corporation

Yasushi Komura President and Representative Director Contact: Finance and Accounting Department +81-42-337-3135 Securities Code: 9008 https://www.keio.co.jp/

The corporate governance of Keio Corporation (the "Company") is described below.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other

Basic Information

I. 1. Basic Views

(Basic Views on Corporate Governance)

Aiming to secure a position as the "Top Brand in Trust," as set forth in the "Keio Group Philosophy," the Group is advancing the "creation of the preferred lifestyle, location and rail line" based on the "Keio Group Code of Conduct." With our railway business in particular, we have formulated our "Basic Policy on Safety" and a "Code of Conduct for Employees in Regard to Safety" in order to become a trusted and much-loved railway, and all employees are working as one, striving to build a culture of safety.

As a railway business operator, the Company ensures safety and business continuity as it makes prompt and decisive decision making that ensures transparency and fairness pursuant to the "Keio Group Philosophy." Through these efforts, in order to secure the trust of our shareholders and all other people with whom we have connections, and to achieve sustainable growth of the Group and greater mid- to long-term corporate value, the Company will strive to promote the enhancement and strengthening of its corporate governance based on the following basic policy.

The Company further improved its corporate governance structure by transitioning from a company with an audit and supervisory board to a company with an audit and supervisory committee, introducing an executive officer system, and amending the executive compensation system.

(Basic Policy on Corporate Governance)

1. Ensuring the rights and equal treatment of shareholders

To fully secure rights and fairness for various shareholders, the Company discloses necessary information in a timely and appropriate manner, and together with this, creates an environment which enables shareholders to properly execute such rights.

2. Appropriate cooperation with stakeholders other than shareholders

The Company is fully aware that sustainable corporate growth and creation of corporate value are supported by all those who are involved with the Company. While striving to appropriately work together in sincerity with stakeholders, we endeavor to foster a corporate culture and atmosphere where sound business activity ethics are respected.

3. Ensuring appropriate information disclosure and transparency

In line with its "Disclosure Policy," the Company not only strives to make information disclosure in a timely and appropriate manner in compliance with laws and regulations, but to take the initiative in providing information beyond that required by laws and regulations, and improving the utility of such information.

4. Responsibilities of the Board of Directors

The Company's Board of Directors shapes the direction of the Group's management strategy, and conducts highly effective management supervision within the defined scope of delegation to the senior management.
Directors of the Company are constantly aware of their fiduciary responsibilities and accountability to shareholders, and conduct decision making pursuant to appropriate procedures that adhere to the "Management Judgment Principles" defined by the Company.
As advisory bodies to the Board of Directors, the Company establishes its Governance Committee and Nomination and Compensation Committee so as to improve Group governance and ensure management transparency.

5. Dialogue with shareholders

The Company regularly engages in constructive dialogue with shareholders, listening to them and paying due attention to their interests and concerns. In addition to this, the senior management clearly explains management policy to shareholders in an easy-to-understand manner, and strives to gain a balanced understanding with regard to the standpoints of all those with whom it has connections, including shareholders.

6. Formulation, amendment and abolition of this Basic Policy

Formulation, amendment and abolition of the Basic Policy is conducted through resolution of the Board of Directors.
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[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company complies with all of the Corporate Governance Code principles.

[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1-3] Basic strategy for capital policy

In its currently disclosed 3-YearMedium-Term Management Plan, the Company has established reference indicators, namely, as of the end of fiscal 2020, ROE of 7.6% and a D/E ratio of 1.0 times. In addition, to realize higher ROE, the Company has placed emphasis on raising ROA by improving the asset efficiency and bolstering profitability, and has set ROA of 5.0% at the end of fiscal 2020 as one of its management indicators.

However, due to the spread of the new coronavirus infection, the number of foreign visitors has sharply dropped, and personal consumption in Japan has slumped as people refrain from going out. As a result, the Group's business activities have been largely impacted. Given that it is not possible to anticipate normal business activities in the current situation, we have not set management indicators for fiscal 2020.

Given the highly public nature of the railway business, which the Company positions as a core business, the Company considers it vital to secure business continuity in its capital policy. For that reason, in preparation for continuing business operations by swiftly restoring services in the event of a disaster, etc., and to fulfill our responsibilities on our own resources, we post general reserve in its capital.

[Principle 1-4]Cross-shareholdings

The Company engages in business of a highly public nature, primarily the railway business, and considers it important to grow based on a mid- to long-term perspective. For that reason, it holds the shares of other companies when it has been determined that such holding will contribute to the Group's business continuity and enhancement of its corporate value.

In light of transaction status and risks, the shares that are held are comprehensively examined. If, as a result of such examination, the Company determines that the holding of such shares is neither worthwhile nor economically rational, it will consider the sale of these shares, and will work to reduce the number of shares held.

At the meeting of the Board of Directors held in April 2020, the Company verified based on its standards for holding listed shares, whether the listed shares held as of March 31, 2020 carried significance in terms of business continuity and improvement of corporate value.

Furthermore, some of our shareholdings were reviewed during the current fiscal year. As a result, the number of stocks held decreased by one at the end of the current fiscal year, from 36 stocks we held as of March 31, 2019.

In the exercise of voting rights, from the perspective of raising corporate value over the mid- to long-term, and after verifying on an individual basis that there will be no significant damage to shareholder value, we will make an overall decision to approve or disapprove.

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[Principle 1-7] Related party transactions

With regard to Directors' competing transactions, and transactions involving conflicts of interest, the Company, pursuant to laws and regulations, approves upon confirming the details of the transaction at the Board of Directors' meeting, and reports following the transaction.

In addition, with regard to transactions, etc. made between the Company or its consolidated subsidiaries and officers, or those with close relationships to such officers, the Company performs regular confirmation of the existence of such transactions.

[Principle 2-6] Roles of corporate pension funds as asset owners

The Company has established the Pension Committee with regard to the operation and management of the pension assets of corporate pension funds. The Company has formulated a basic policy that defines the principles and basic portfolio pertaining to pension asset management, and by utilizing a pension consultant, evaluates the asset managers from both an objective perspective as well as in quantitative and qualitative terms, and regularly conducts monitoring. In addition, the Company also ensures that conflicts of interest that may arise between a corporate pension beneficiary and the Company are properly managed.

[Principle 3-1] Full disclosure

The Company strives to provide information proactively, and discloses information as follows.

Corporate Philosophy, Management Plan
Please refer to the information disclosed on the Company's website.

Corporate Philosophy, Keio Group Code of Conduct https://www.keio.co.jp/company/corporate/summary/corporate_manual/pdf/2015/2015_p001_p002.pdf
Management Plan https://www.keio.co.jp/company/stockholder/businessplan/index.html

Basic views and basic policy on corporate governance Please refer to "I.1. Basic Views" in this report.
Policies and procedures in determining the remuneration of senior management and Directors

Following the resolution made at the 99th Ordinary General Meeting of Shareholders held on June 26, 2020, the Company overhauled the executive compensation system.

After the transition to a company with an audit and supervisory committee, compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) is categorized into base salary and annual performance-linked compensation that is linked to the Company's

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performance in each business year. In addition, we introduced a stock-based compensation plan.

Outside Directors and Directors who are Audit and Supervisory Committee Members are only paid base salary, taking into account their duties and other relevant factors.

The Company has set an appropriate level of compensation for each officer based on their responsibilities, taking into account each officer's position and other relevant factors. The Company has also adopted annual performance-linked compensation that is linked to the Company's performance in each business year, whereby a part of remuneration reflects the status of progress toward business results, in comprehensive consideration of consolidated operating profit and other factors in each fiscal year. Furthermore, a stock-based compensation plan has been introduced to raise the motivation of Directors to contribute to enhancing medium- to long-term performance and to maximizing shareholder value.

The Nomination and Compensation Committee deliberates on compensation amounts and submits its opinions to the Board of Directors to ensure management transparency. While respecting what has been discussed by the Nomination and Compensation Committee, the Board of Directors leaves it to the discretion of the President and Representative Director to determine compensation amounts for each Director (excluding Directors who are Audit and Supervisory Committee Members) within the range not exceeding the total amount of compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members), which is set by a resolution of the General Meeting of Shareholders.

Compensation for Directors who are Audit and Supervisory Committee Members is determined through their discussions within the range not exceeding the total amount of compensation set by a resolution of the General Meeting of Shareholders.

The Nomination and Compensation Committee, which is a voluntary advisory body to the Board of Directors and consists of members including Outside Directors (excluding Directors who are Audit and Supervisory Committee Members), deliberates on executive compensation and verifies the appropriateness of compensation amounts.

The resolution of the General Meeting of Shareholders regarding the Company's executive compensation was made on June 26, 2020. It set the amount of compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members) at no greater than 420 million yen a year (of which, up to 40 million yen shall be allocated to Outside Directors), and the amount of compensation for Directors who are Audit and Supervisory Committee Members at no greater than 130 million yen a year.

At the Board of Directors held on March 1, 2021, the Company has determined the "policy on determination of the content of individual remuneration for officers".

Policies and procedures in the appointment/dismissal of senior management, the nomination of candidates for Director, and the appointment of Executive Officers

Nomination of candidates for Directors and appointment of Executive Officers is premised on candidates possessing qualities and insights suitable to that of an officer. For the positions of full-time and part-time Directors who are not Audit and Supervisory Committee Members and Executive Officers, an individual

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shall have a wealth of experience and capability that will enable contribution to increased corporate value, and for the positions of full-time Directors who are Audit and Supervisory Committee Members, the candidate shall have the ability to appropriately audit and supervise business executors. In addition, from the perspective of strengthening governance, the Company appoints Outside Directors who are not Audit and Supervisory Committee Members who possess experience and insights as corporate managers, and Outside Directors who are Audit and Supervisory Committee Members who have specialized knowledge with regard to finance, accounting, and legal affairs.

In addition, if it is objectively deemed reasonable that an officer should be dismissed due to serious violation of laws and regulations, and the Articles of Incorporation, etc., the Nomination and Compensation Committee will deliberate, and then submit recommendations to the Board of Directors.

Individual reasons for the appointment of Directors

The information is disclosed in Reference Documents (proposal for election) in the "Notice of the 99th Ordinary General Meeting of Shareholders." https://www.keio.co.jp/company/stockholder/shareholdersmeeting/index.html

[Supplementary principle 4-1-1] Scope of matters delegated to the senior management

Pursuant to the Standard for Submitting Proposals for Meetings, the Company specifies the scope of matters to be delegated to the Board of Directors and the Management Committee made up of full-time Directors and full-time Executive Officers, making appropriate management decisions that adhere to standards. All matters addressed by the Management Committee are reported to the Board of Directors. In addition, the Company established new provisions in the Articles of Incorporation regarding the delegation of decision-making authority on the execution of important operations to the Company's Directors in order to allow for swift decision-making.

[Principle 4-9] Criteria for determining the independence and qualifications of Independent Outside Directors With regard to the Company's "Criteria for Determining the Independence of Outside Officers," please see "II. 1. [Independent Directors/Audit & Supervisory Board Members] Matters relating to Independent

Directors/Audit & Supervisory Board Members" in this report.

[Supplementary principle 4-11-1] Views on the balance between knowledge, experience and skills of the Board of Directors as a whole, and on diversity and appropriate scale

To further improve the corporate governance structure, the Company has transitioned to a company with an audit and supervisory committee and appointed five Outside Directors among 15 Directors.

In order to make appropriate management decisions as a business company, the Company considers it vital that persons well versed in each business field participate in decision making as Directors, and based on this belief, appoints eight full-time Directors (including two Directors who are Audit and Supervisory Committee

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Members (one of them is an Outside Director)) and three part-time Directors who serve concurrently as presidents of major Group companies. Through this structure, we supervise management, check the direction of the entire Group, and strive to strengthen Group management.

In addition to the aforementioned 11 Directors, the Company appoints four Outside Directors (including two Outside Directors who are Audit and Supervisory Committee Members (one of them is female)), and by having them properly perform monitoring functions through their experience and insights as corporate managers at major financial institutions as well as through their expertise in finance, accounting, and legal affairs, we strive to strengthen governance.

From the above, we believe that the Board of Directors is sufficiently fulfilling its function as a management decision making body and that the current condition is of an appropriate scale.

[Supplementary principle 4-11-2] Status of concurrently serving officers

We believe that officers who serve concurrently at other companies are appropriately fulfilling their respective roles and responsibilities at the Board of Directors of the Company and are devoting the required amount of time and effort to the Company.

For information on the status of concurrent service, please refer to the "Notice of the 99th Ordinary General Meeting of Shareholders," which is disclosed on the Company's website. https://www.keio.co.jp/company/stockholder/shareholdersmeeting/index.html

[Principle 4-11-3] Ensuring effectiveness of the Board of Directors as a whole

We use surveys, etc. of each of the Directors to evaluate the effectiveness of the Board of Directors. The Governance Committee, a voluntary advisory body to the Board of Directors, which is composed of members that include Outside Directors, analyzes, conducts assessments, and reports to the Board of Directors.

As a result of the analysis and assessments for fiscal 2019, which examined the Board of Directors based on the perspectives of Board of Directors' composition, operational status, decision-making processes, and a support structure for Outside Officers, the Company recognizes that the effectiveness of the Board of Directors of the Company is ensured.

As to "further enhancing the provision of information to Outside Officers," which was the initiative for fiscal 2019, the Company conducted advance briefings on highly important agenda items and performed inspections of railway operation facilities. Facilitating the smooth provision and sharing of information allowed us to gain advice based on their external perspectives and insights that contributed to management decisions.

For fiscal 2020, we will work on "the transition to a company with an audit and supervisory committee, the introduction of an executive officer system, and the amendment of the executive compensation system," as well as "the review of matters to be presented to the Board of Directors and a method to present them." Through these measures, we aim to further strengthen the Company's corporate governance structure.

As to the Audit & Supervisory Board as well, the effectiveness of the Audit & Supervisory Board is evaluated. The audit activities in fiscal 2019 were discussed and assessed by Auditor & Supervisory Board

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Members, and it has been unanimously confirmed that the effectiveness of the Audit & Supervisory Board of the Company is ensured.

For fiscal 2020, as we transition to a company with an audit and supervisory committee, we will enhance the effectiveness of the Audit and Supervisory Committee through its cooperation with the internal audit section in carrying out organizational audits.

[Supplementary principle 4-14-2] Training policy for Directors

In consideration of individual experience, etc., the Company provides Directors with the opportunity to obtain necessary training and other learning to carry out their roles and responsibilities. In addition to this, ongoing training is conducted so that they can gain an understanding of economic conditions, revisions to laws and regulations, and the business environment in which the Group operates.

[Principle 5-1] Policy for constructive dialogue with shareholders

The Company has the following organizational structures and initiatives aimed at promoting constructive dialogue with shareholders and investors.

For dialogue with shareholders and investors, the Director in Charge of Finance and Information Disclosure shall have responsibility.
In the conduct of dialogue, the Finance and Accounting Department with person in charge of IR will play

a central role in providing assistance.

The Finance and Accounting Department acts as the Disclosure Committee's secretariat, and collects information from the Group Business Management Department that aggregates information from Business Departments, General Administration Departments, and each Group company, in addition to the information obtained from internal meetings.

As to dialogue other than individual meetings, in addition to holding twice-yearly briefings for analysts and institutional investors, we hold company briefings for individual investors, primarily in the Company's business area. In this manner, through promoting understanding, we strive to further enhance IR activities.
While reporting to the senior management in a timely manner the opinions and other comments from shareholders and investors obtained through dialogues, by conveying the contents to respective departments, we strive to properly share these opinions company-wide and reflect them to management.
The Company will properly manage insider information in accordance with the internal regulation, "Regulations on Prevention of Insider Trading."
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I. 2. Capital Structure

	Foreign Shareholding Ratio		From 10% to less than 20%

[Status of Major Shareholders]

	Name / Company Name		Number of Shares			Percentage
		Owned			(%)

	The Master Trust Bank of Japan, Ltd. (trust account)	10,466,100	8.57

	Nippon Life Insurance Company		6,141,672	5.03

	TAIYO LIFE INSURANCE COMPANY		5,862,032	4.80

	Custody Bank of Japan, Ltd. (trust account)		4,604,500	3.77

	Sumitomo Mitsui Trust Bank, Limited		3,648,200	2.99

	The Dai-ichi Life Insurance Company, Limited		2,222,500	1.82

	STATE STREET BANK WEST CLIENT - TREATY 505234	2,204,440	1.81

	Custody Bank of Japan, Ltd. (trust account 5)		2,166,700	1.77

	MUFG Bank, Ltd.		2,117,831	1.73

	Custody Bank of Japan, Ltd.(Sumitomo Mitsui Trust Bank Retirement	2,000,000	1.64
	Benefit Trust Account)


	Controlling Shareholder (except for Parent		ー
	Company)

	Parent Company		None

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange, First Section
	Fiscal Year-End		March
	Type of Business		Land Transportation
	Number of Employees (consolidated) as of the		More than 1000
	End of the Previous Fiscal Year

	Sales (consolidated) as of the End of the		From ¥100 billion to less than ¥1 trillion
	Previous Fiscal Year

	Number of Consolidated Subsidiaries as of the		From 10 to less than 50
	End of the Previous Fiscal Year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

ー

5. Other Special Circumstances which may have Material Impact on Corporate Governance

ー

II.1. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

	Organization Form		Company with an audit and supervisory committee

[Directors]

	Maximum Number of Directors Stipulated in		20
	Articles of Incorporation

	Term of Office Stipulated in Articles of		1 year
	Incorporation

	Chairperson of the Board		Chairman (except when Chairman concurrently serves as
		President)

	Number of Directors		15
	Appointment of Outside Directors		Appointed
	Number of Outside Directors		5
	Number of Independent Directors		5

Outside Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

Atsushi Takahashi

From another company

△

Takeshi Furuichi

From another company

○

Hiroshi Takekawa

From another company

△

Keiko Kitamura

Academic

Masashi Kaneko

Lawyer

Categories for "Relationship with the Company"
"○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past
"●" when a close relative of the director presently falls or has recently fallen under the category; "▲"when a close relative of the director fell under the category in the past

Executive of the Company or its subsidiaries
Non-executivedirector or executive of a parent company of the Company
Executive of a fellow subsidiary company of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the listed company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/kansayaku
Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
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h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)

i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director himself/herself only)

j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)

k. Others

Outside Directors' Relationship with the Company (2)

Designation

Supplementary

Name

Explanation of

Reasons of Appointment

Independent

the Relationship

Director

Atsushi Takahashi

○

• Honorary Advisor

Atsushi

Takahashi

has

abundant

experience and knowledge as a management

of Sumitomo

executive, and plays an appropriate role in

Mitsui Trust Bank,

enhancing

corporate governance of the

Limited

Company by providing useful opinion from

• Outside Director of

the external point of view. Therefore, the

The Bank of Iwate,

Company appoints him as Outside Director.

Ltd.

Atsushi Takahashi served as Director of

Sumitomo Trust and Banking Co., Ltd.

(currently Sumitomo Mitsui Trust Bank,

Limited) until March 2011. That company is

in a business relationship with the Company

involving borrowing funds, etc., but all of

which are based on the same terms and

conditions

those

for

ordinary

transactions.

As Atsushi Takahashi satisfies the

Criteria for Determining the Independence

of Outside Officers stipulated by the

Company and the independence criteria set

forth by the Tokyo Stock Exchange, the

Company registered him with the Exchange

as an Independent Officer with no risk for

conflict

interest

with

general

shareholders.

Takeshi Furuichi

○

• Representative

Takeshi Furuichi has abundant experience

and knowledge as a management executive,

Director and Vice

and plays an appropriate role in enhancing

Chairman of

corporate

governance of the Company by

Nippon Life

providing useful opinion from the external

Insurance

point of

view.

Therefore, the

Company

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		Company	appoints him as Outside Director.

		• Outside Director of	Nippon Life Insurance Company is in a
		business relationship with the Company
		Daicel Corporation
		involving borrowing funds, etc., but all of

			which are based on the same terms and
			conditions	as	those	for	ordinary
			transactions.
			As Takeshi Furuichi satisfies the Criteria
			for Determining the Independence of
			Outside Officers stipulated by the Company
			and the independence criteria set forth by
			the Tokyo Stock Exchange, the Company
			registered him with the Exchange as an
			Independent Officer with no risk for conflict
			of interest with general shareholders.

Hiroshi Takekawa	○	－	Hiroshi	Takekawa	has	experience
			working at financial institutions, has
			abundant knowledge in finance and
			accounting, and a wealth of experience and
			high level knowledge from serving as an
			executive officer of a financial institution.
			The Company appoints him as Outside
			Director who is Audit and Supervisory
			Committee Member as it has determined
			that he plays an appropriate role in
			enhancing corporate governance of the
			Company by appropriately fulfilling the
			audit function from a neutral and fair
			perspective.
			Hiroshi Takekawa was Executive Officer
			of Mitsubishi UFJ Financial Group, Inc.
			until May 2018, and Executive Officer of
			MUFG Bank, Ltd. until June 2018.
			As Hiroshi Takekawa satisfies the
			Criteria for Determining the Independence
			of Outside Officers stipulated by the
			Company and the independence criteria set
			forth by the Tokyo Stock Exchange, the
			Company registered him with the Exchange
			as an Independent Officer with no risk for
			conflict	of	interest	with	general
			shareholders.

		- 12 -

Keiko Kitamura	○	• Honorary	Keiko Kitamura has abundant knowledge
		in finance	and accounting	from	her
		Professor, Chuo
		experience	as	a	university	professor
		University
		specializing in accounting over many years.

		• Outside Director of	The Company appoints her as Outside

		Meiji Yasuda Life	Director who is Audit and Supervisory
		Insurance	Committee Member as it has determined
		Company	that she plays an appropriate role in
		• Outside Audit &	enhancing	corporate	governance of	the
		Company by	appropriately fulfilling	the
		Supervisory Board
		audit function	from	a neutral	and	fair
		Member of Hino
		perspective.
		Motors, Ltd.
		As Keiko Kitamura satisfies the Criteria

			for Determining the Independence of
			Outside Officers stipulated by the Company
			and the independence criteria set forth by
			the Tokyo Stock Exchange, the Company
			registered her with the Exchange as an
			Independent Officer with no risk for conflict
			of interest with general shareholders.

Masashi Kaneko	○	－	Masashi Kaneko is an attorney at law and
		has abundant experience and knowledge as

			a legal specialist. The Company appoints
			him as Outside Director who is Audit and
			Supervisory Committee Member as it has
			determined that he plays an appropriate role
			in enhancing corporate governance of the
			Company by appropriately fulfilling the
			audit function from the perspective of legal
			compliance.
			As Masashi Kaneko satisfies the Criteria
			for Determining the Independence of
			Outside Officers stipulated by the Company
			and the independence criteria set forth by
			the Tokyo Stock Exchange, the Company
			registered him with the Exchange as an
			Independent Officer with no risk for conflict
			of interest with general shareholders.

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[Audit and Supervisory Committee]

Committee's Composition and Attributes of Chairperson

All Committee

Full-time

Inside Directors

Outside

Chairperson

Members

Directors

Audit

and

Supervisory

Inside Director

Committee

Appointment of Directors and/or Employees

to Support the Audit and Supervisory

Appointed

Committee

Matters Related to the Independence of Such Directors and/or Employees from Executive Directors

To increase the effectiveness of audits by the Audit and Supervisory Committee and to carry out audit operations smoothly, the Company assigns dedicated employees including those with expertise. In performing their duties, these employees abide by directions and orders of Directors who are Audit and Supervisory Committee Members. For the transfer, personnel evaluation and disciplinary action on these employees, a consent from the full-time Directors who are Audit and Supervisory Committee Members appointed by the Audit and Supervisory Committee is required.

Cooperation among Audit and Supervisory Committee, Accounting Auditors and Internal Audit Departments

So that audits by the Audit and Supervisory Committee and Accounting Auditor, and internal audits are carried out efficiently and effectively, the Three-Pillar Audit Liaison Committee is held regularly to exchange and share information with regard to respective audit plans and audit results, thereby strengthening collaboration.

In addition, audit plan explanations are presented by Accounting Auditors at the Audit and Supervisory Committee meetings, and Directors who are Audit and Supervisory Committee Members receive timely reports, during the fiscal period, on the status of audit progress from Accounting Auditors. In addition, Directors who are Audit and Supervisory Committee Members receive explanations on overviews of audit results based on the Financial Instruments and Exchange Act. In this manner, we strive to collaborate with Accounting Auditors.

Moreover, audit plans and audit results from the Internal Audit Department, the internal audit division, are reported to the Audit and Supervisory Committee. In addition, Directors who are Audit and Supervisory Committee Members are receiving reports on individual audit plans and audit results, as well as reports from the sections in charge of internal control with regard to internal control associated with financial reporting and risk management activities, etc., thereby working to achieve collaboration.

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[Voluntary Establishment of Nomination/Remuneration Committee]

Voluntary Establishment of

Committee(s)

Corresponding to Nomination Committee or

Established

Remuneration Committee

Committee's Name, Composition, and Attributes of Chairperson

Committee

Corresponding

Committee

Corresponding

Nomination Committee

Remuneration Committee

Committee's Name

Nomination

and Compensation

Nomination

and Compensation

Committee

All Committee Members

Full-time Members

Inside Directors

Outside Directors

Outside Experts

Other

Chairperson

Inside Director

Voluntary Committees and Supplementary Explanation

As a voluntary advisory body to the Board of Directors, the Company has established a Governance Committee in addition to the Nomination and Compensation Committee above.

For an overview of the Nomination and Compensation Committee and the Governance Committee, please see "II. 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" in this document.

[Independent Directors]

Number of Independent Directors	5

Matters relating to Independent Directors

The Company registers all the Outside Officers who are deemed to be independent pursuant to the following criteria as Independent Officers with the Tokyo Stock Exchange.

[Criteria for Determining the Independence of Outside Officers]

Keio Corporation (hereafter, the "Company") deems Outside Directors to whom none of the following criteria apply to be independent.

A business executor (Note 1) at the Company or an affiliated company (hereafter, the "Group") at present or in the past ten (10) years;
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An entity for whom the Group is an important business partner (Note 2) or its business executor;
An important business partner of the Group (Note 3), or its business executor;
A major shareholder (Note 4) of the Group, or its business executor;
A major lender (Note 5) for the Group, or its business executor;
A person who is employed with the audit firm serving as the Group's Accounting Auditor;
A consultant, lawyer, certified public accountant, tax specialist, or other (a person affiliated with the particular group in the event that the entity receiving the assets is a group) who receives or has received a large amount of money or other assets (Note 6) from the Group excluding a director's remuneration;
An organization that has received a large contribution exceeding a certain amount (Note 7) from the Group, or its business executor;
In the event that the Group's full-time Director or full-time Audit & Supervisory Board Member also serves as an Outside Officer of another company, the officer in question serves as a business executor at that company, that company's parent company, or a subsidiary;
A person to whom (2) through (9) above have applied in the past three (3) years; or
The spouse of a person to whom (1) through (10) above apply who has an important position (Note 8) or a relative within two degrees of that person.

Notes:

A business executor refers to a director, executive officer, corporate officer, staff executing business, a manager, or other equivalent person and employee of a corporation or other group.
An entity or its business executor for whom the Group is an important business partner refers to a person or company that received payments from the Group equivalent to 2% or more of the consolidated sales of that party in the most recent business year.
An important business partner of the Group refers to a person or company who pays to the Company an amount equivalent to 2% or more of the Company's consolidated sales in the most recent business year.
A major shareholder refers to someone who holds 10% or more of the voting rights in the Company directly or indirectly.
A major lender refers to a counterparty that is essential for the Group's financing and on whom the Group depends to the extent that it has no alternatives.
A large amount of money or other assets refers to an amount of money or assets exceeding ¥10 million per year, other than compensation for directors, on average over the past three (3) business years (in the event that the person receiving the assets is a corporation, association, or other group, an amount of money or assets exceeding 2% of that group's consolidated sales on average over the past three (3) business years).
A large contribution exceeding a certain amount refers to contributions equivalent to ¥10 million per
- 16 -

year on average over the past three (3) years or 30% of the average annual total costs of that organization, whichever is higher.

8. An important position refers to Director (excluding Outside Director), Audit & Supervisory Board Member (excluding Outside Audit & Supervisory Board Member), and a manager at the rank of General Manager and higher.

[Incentives]

Incentive Policies for Directors	Other

Supplementary Explanation

Following the resolution made at the 99th Ordinary General Meeting of Shareholders held on June 26, 2020, the Company overhauled the executive compensation system.

Outside Directors and Directors who are Audit and Supervisory Committee Members are only paid base salary, taking into account their duties and other relevant factors.

The Company has set an appropriate level of compensation for each officer based on their responsibilities, taking into account each officer's position and other relevant factors. The Company has also adopted annual performance-linked compensation that is linked to the Company's performance in each business year, whereby a part of remuneration reflects the status of progress toward business results, in comprehensive consideration of consolidated ordinary profit and other factors in each fiscal year. Furthermore, a stock-based compensation plan has been introduced to raise the motivation of Directors to contribute to enhancing medium- to long-term performance and to maximizing shareholder value.

The Nomination and Compensation Committee, which is a voluntary advisory body to the Board of Directors and consists of members including Outside Directors (excluding Directors who are Audit and

- 17 -

Supervisory Committee Members), deliberates on executive compensation and verifies the appropriateness of compensation amounts.

Recipients of Stock Options

Supplementary Explanation

ー

[Director Remuneration]

Disclosure of Individual Directors' RemunerationNo Individual Disclosure

Supplementary Explanation

Total amount of the remuneration for officers (fiscal 2019) Directors (excluding Outside Directors): 437 million yen
Audit & Supervisory Board Members (excluding Outside Audit & Supervisory Board Members): 27 million yen
Outside Directors and Outside Audit & Supervisory Board Members: 62 million yen For a total of 526 million yen
Note: Aside from the above, 84 million yen was paid to six Directors who are concurrently serving as employees, as salaries in the capacity of employee.
Total amount of consolidated remuneration, etc. by officer
Description is omitted as no person was awarded a consolidated remuneration of 100 million yen or more in total.

Policy on Determining Remuneration Amounts

Established

and Calculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

Please refer to "I. 1. [Disclosure Based on the Principles of the Corporate Governance Code] Principle 3-1 (3)" in this report.

[Supporting System for Outside Directors]

In convening the Board of Directors' meeting, proposal documents are distributed in advance to all
Directors including Outside Directors. In addition, explanations are provided in advance as needed.
Support including the provision of information to Outside Directors who are not Audit and Supervisory Committee Members is offered by the Secretariat and the Management Planning Department.
- 18 -

Support including the provision of information to Outside Directors who are Audit and Supervisory Committee Members is provided by the Office of Audit and Supervisory Committee.

[Retired presidents/CEOs holding advisory positions (advisor, consultant, etc.)]

Information on retired presidents/CEOs holding advisory positions (advisor, consultant, etc.)

Employment terms

Date when

former

role

Name

Job title/

Responsibilities

(Full/part time, with/without

Term

position

as president/

compensation, etc.)

CEO ended

Kan Kato

Corporate

He provides advice

Part-time, with compensation

June 26,

One-year

Advisor

2015

delegation

at the request of the

agreement

management team,

leveraging his

knowledge and

career as a former

executive.

Number of

retired presidents/CEOs holding

advisory positions (advisor, consultant, etc.)

Others

Upon consultation with the Nomination and Compensation Committee (a voluntary advisory body to the
Board of Directors), the Company's Corporate Advisors may conclude a delegation contract of a one-year period, based on a resolution of the Board of Directors.
At the Company, there are cases where a person who retired as Corporate Advisor is appointed to
"HonoraryAdvisor," for which no business or duties are assigned, and no remuneration is paid.
The aforementioned "Corporate Advisor" and "Honorary Advisor" do not involve in any way with the Company's management decision making.

- 19 -

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)
1. Business execution and supervision
1. The Company's Board of Directors is currently comprised of 15 members (there are four Directors who are Audit and Supervisory Committee Members), including five Outside Directors and three presidents of major Group companies. The Board of Directors meeting is held once a month, in principle, to resolve important management matters as well as matters stipulated by laws and regulations, and supervise business execution.
2. By delegating decision-making authority on the execution of important operations to the Company's

Directors, we aim to enhance management efficiency and achieve swift decision-making.

The Management Committee made up of full-time Directors and full-time Executive Officers makes deliberation and decision on important management matters based on the policies determined by the Board of Directors.
The Group Management Council made up of full-time Directors, part-time Directors who are not Audit and Supervisory Committee Members, Executive Officers, and presidents of Group companies, etc. discusses the management issues of the entire Group to strengthen and promote the Group management.

(Status of the major meetings in fiscal 2019)

Board of Directors meetings: 11 times Resolution by the Board of Special Directors meeting: 0

Executive Committee: 29 times Group Management Council: 3 times

2. Audits by the Audit and Supervisory Committee

The Audit and Supervisory Committee audits the execution of duties of Directors by inspecting important approval documents and investigating the status of operation and assets based on the basic policy determined by the committee, pursuant to laws and regulations, Articles of Incorporation, rules for the Audit and Supervisory Committee, Standards for the Audit and Supervisory Committee Audit, etc., and other rules. In addition to this, Directors who are Audit and Supervisory Committee Members attend the Board of Directors meetings and other important meetings and have voting rights at the Board of Directors as Board members, while being entrusted with the audit function and endeavoring to raise the effectiveness of the
Board's supervision function of business execution.
The Audit and Supervisory Committee also closely cooperates with the Internal Audit Department, which constitutes the Company's internal audit section, in carrying out organizational audits, and requests and instructs the Internal Audit Department to conduct an investigation when it deems necessary.
Furthermore, the Audit and Supervisory Committee determines standards for the selection and evaluation of external Accounting Auditor and confirms its independence and expertise, and strengthens cooperation with external Accounting Auditor through having it attend the meetings of the Audit and Supervisory
- 20 -

Committee.

The Audit and Supervisory Committee meets once a month, in principle. The objectives of these meetings are: to resolve and discuss important matters related to audits, including the analysis and evaluation of the

committee's audit plans, appropriateness of the Accounting Auditors' auditing method and results, development and operational status of the internal control system, and the effectiveness of the Audit and Supervisory Committee; to share the details of audits conducted; and to receive preliminary briefings from responsible departments on major agenda items among matters presented to the Board of Directors.

In addition to regularly holding meetings with Representative Directors, Director and Senior Managing Executive Officers, and Director and Managing Executive Officers, full-time Directors who are Audit and Supervisory Committee Members conduct interviews with all General Managers. They also interview operation site managers when visiting and inspecting major railway operation sites.
Aside from periodically holding the Group Audit & Supervisory Board meeting attended by full-time Directors who are Audit and Supervisory Committee Members and Audit & Supervisory Board Members of Group companies, a meeting of Audit & Supervisory Board Members of Group companies and the

Company's President is held to enhance and strengthen the audit for the Group as a whole.

Standards for the Audit and Supervisory Committee Audit, etc. stipulate cooperation between the
Company's Audit and Supervisory Committee and Audit & Supervisory Board Members of Group companies. Full-time Directors who are Audit and Supervisory Committee Members exchange information with Audit & Supervisory Board Members of Group companies as appropriate, and receive reports on each company's audit status from all Audit & Supervisory Board Members of Group companies during and at the end of each fiscal period in principle.
Furthermore, Audit and Supervisory Committee Members are given opportunities to exchange opinions with Representative Directors and Audit & Supervisory Board Members of Group companies. Opinion exchanges take place on a regular basis for several Group companies. In addition, full-time Directors who are Audit and Supervisory Committee Members share responsibilities and concurrently serve as part-time Audit & Supervisory Board Members of important subsidiaries. Through these procedures, we conduct audits as a corporate group.
The Independent Outside Officers Liaison Committee attended by Outside Directors who are Audit and Supervisory Committee Members and Outside Directors who are not Audit and Supervisory Committee Members is held once a year to exchange information and share their understandings from independent and objective perspectives.
To support the duties of the Audit and Supervisory Committee, the Office of the Audit and Supervisory Committee assigns four dedicated employees, including those with expertise.
(Status of meetings in fiscal 2019)
Audit & Supervisory Board meetings: 15 times
Group Audit & Supervisory Board meetings: 10 times
- 21 -

3. Deliberation on corporate governance

As a voluntary advisory body to the Board of Directors, the Governance Committee, which is composed of Outside Directors who are not Audit and Supervisory Committee Members and full-time Outside Directors who are Audit and Supervisory Committee Members, is established to deliberate on the Group corporate strategies and governance system by bringing views of Outside Directors into the discussion. In addition, collaboration among Representative Directors and Outside Directors is strengthened, thereby achieving sustainable growth of the Group and greater mid- to long-term corporate value.

(Status of meetings in fiscal 2019) Governance Committee: twice

4. Decision on nomination and remuneration

As a voluntary advisory body to the Board of Directors, the Nomination and Compensation Committee, which is composed of members that include Outside Directors who are not Audit and Supervisory Committee Members, deliberates on executive appointments and remuneration, and then submits recommendations to the Board of Directors, thereby ensuring management transparency.

(Status of meetings in fiscal 2019)

Nomination and Compensation Committee: twice

5. Internal audits

Internal audits are performed for the purpose of verifying the compliance with laws and regulations and internal regulations, and appropriateness and effectiveness of management. Recommendations are made for management rationalization, business improvement, greater efficiency and sound development of business operations.
To maintain independence and objectivity of internal audit, the Internal Audit Department is an organization under the direct control of the President. As of March 31, 2020, the Internal Audit Department has 31 members, including General Manager of Internal Audit Department.
In accordance with the Internal Audit Ethics Code and the Internal Audit Regulations, thematic audits and special-purpose audits are performed on the Company and its Group companies, in addition to general audits focusing on accounting and overall business operations.
Internal audit plan for each fiscal year is reported to the Audit and Supervisory Committee and the Board of Directors upon obtaining approval of the President. An outline of audit result is also reported to the Audit and Supervisory Committee and the Board of Directors, in addition to the President.
Audited parties are requested to submit improvement plans and the status of improvement is confirmed as needed.
Full-timeAudit & Supervisory Board Members of the Group companies belong to the Internal Audit
- 22 -

Department, in principle. They are enhancing and strengthening the audit system of the Group as a whole through mutual collaboration.

6. Accounting audit and internal control audit

Certified public accountants who performed operation in the fiscal year ended March 2020

Names, years of continuous audit service for the Company, and the audit firm to which they belong

Designated Limited Liability Partner/Engagement Partner	Satoshi Yokosawa 4 years
	KPMG AZSA LLC
Designated Limited Liability Partner/Engagement Partner	Mutsumi Kanai 5 years
	KPMG AZSA LLC

Assistants involved in audit service are comprised of 14 certified public accountants and 15 other staff members.

There are no special interests between the Company and either of the audit firm and the engagement partners of the said audit firm engaged in the audit of the Company. As such, they are all in an independent and neutral position.

3. Reasons for Adoption of Current Corporate Governance System

To further enhance our corporate governance structure, we made a transition to a company with an audit and supervisory committee on June 26, 2020 and introduced a new executive officer system.

The objectives of this transition are to ensure that Directors who are Audit and Supervisory Committee Members will have voting rights at the Board of Directors as Board members, while being entrusted with the audit function and endeavoring to raise the effectiveness of the Board's supervision function of business execution, in order to increase the transparency and fairness of the Board of Directors; and that the Audit and Supervisory Committee will closely cooperate with the Internal Audit Department, which constitutes the Company's internal audit section, in carrying out organizational audits, and request and instruct the Internal Audit Department to conduct an investigation when it deems necessary, in order to further improve the internal control system.

Furthermore, the executive officer system was adopted to build a structure that can swiftly respond to changes in the business environment surrounding the Group, by achieving more flexible decision-making and business execution.

To strengthen supervisory functions towards management, the Company appoints two Outside Directors who are not Audit and Supervisory Committee Members, who possess experience and insight as corporate managers of major financial institutions, as well as three Outside Directors who are Audit and Supervisory Committee Members. In addition, as advisory bodies to the Board of Directors, the Company has established the Governance Committee and the Nomination and Compensation Committee so as to

- 23 -

improve management transparency and fairness.

To enhance the effectiveness of audits performed by the Audit and Supervisory Committee, the Company appoints highly independent Directors who are Audit and Supervisory Committee Members, with considerable knowledge in finance, accounting and legal affairs. In addition, the Company ensures a cooperation system between the Audit and Supervisory Committee and Accounting Auditor, and between the internal audit section and the sections in charge of internal control.

In addition, Outside Directors who are Audit and Supervisory Committee Members perform audits by complying with laws and regulations as well as other standards, and following the basic policy formulated by the Audit and Supervisory Committee, while full-time Directors who are Audit and Supervisory Committee Members attend important internal meetings and present their views as required.

Furthermore, the Company aims to exert comprehensive capability through diversified business development centered on railway lines. As such, we include presidents of major Group companies as the members of the Board of Directors, and hold the Group Management Council comprised of members including the presidents of Group companies, the Keio Group Presidents Council, and the Group Audit & Supervisory Board meeting, etc., thereby enhancing its Group governance system.

From the above, we believe that the Company's corporate governance system is functioning sufficiently.

Implementation of Measures for Shareholders and Other Stakeholders

III. 1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights

					Supplementary Explanations
Early	Notification	of		The notice of the 99th Ordinary General Meeting of Shareholders to be held on
General	Meeting	of

Shareholders				June 26, 2020 was sent three weeks before the day of the meeting (June 4,
					2020). Also, prior to the mailing, we posted early the notice of convocation on
					the Company's website on May 27.

Allowing		Electronic		Electronic Exercise of Voting Rights became available from the 88th Ordinary
Exercise of Voting Rights

					General Meeting of Shareholders (held on June 26, 2009).
Participation	in Electronic		Electronic Voting Platform was introduced from the 88th Ordinary General
Voting Platform

					Meeting of Shareholders (held on June 26, 2009).
Providing	Convocation		The convocation notice became available in English from the 95th Ordinary
Notice in English

					General Meeting of Shareholders (held on June 29, 2016).
Other					At the General Meetings of Shareholders, we explain the contents of the
					Business Report to shareholders using visual aid.
				- 24 -

III. 2. IR Activities

		Supplementary Explanations		Explanation by
				Representative
Preparation and Publication of		Disclosure Policy was formulated in April 2006, and is
Disclosure Policy

		posted on the Company's website.
		[Disclosure Policy]
		The Company strives to ensure timely and appropriate
		disclosure of information in order for shareholders and
		investors to evaluate the Company's corporate value
		properly.
		(1) The Company discloses information in accordance
		with the Financial Instruments and Exchange Act, the
		Companies Act and timely disclosure rules set forth by
		the Tokyo Stock Exchange.
		(2) In addition to the information provided in (1), the
		Company also proactively discloses information such as
		major decisions and occurrence of facts that could have
		a significant influence on the decisions of shareholders
		and investors.
		(3) The Company discloses information in an
		expeditious manner, and strives to ensure that
		information is delivered to all shareholders and
		investors in an impartial manner.
		(4) The Company emphasizes accuracy, clarity and
		continuity in the contents of information subject to
		disclosure.
		(5) The Company internally shares feedbacks from
		shareholders and investors about the	disclosed
	- 25 -

				information, and strives to reflect them in the
				management properly.
Regular Investor Briefings for		Regular briefings are held twice a year, in principle,	Yes
Analysts	and	Institutional

Investors				with the President or a Director in charge of finance and
				information disclosure acting as an explainer. At the
				briefings, we explain about the consolidated financial
				results and management plan, along with the status of
				their progress.
Posting of	IR	Materials on		IR Materials are posted at the following
Website

				URL: https://www.keio.co.jp/company/
				Following types of information are available at the
				above website:
				Earnings summary, financial results briefing materials,
				securities report/quarterly report, monthly business
				overview, financial highlights, investors guide, IR
				calendar, materials related to General Meetings of
				Shareholders, and other news release (including
				financial information and timely disclosure information
				other than financial information)
Establishment	of Department		The Company established Disclosure Committee. The
and/or Manager in Charge of

IR				Committee is chaired by a Director in charge of finance
				and information disclosure, who is responsible for
				information handling. The Accounting Department is in
				charge of administrative communication.
Other				Investor relations periodicals "INVESTOR'S GUIDE
				KEIO" is published twice a year. In addition, we hold
				company briefings for individual investors at branch
				offices of securities companies located in the
				Company's business areas to promote individual
				investors' understanding of the Group's financial results
				and business contents, etc.

III. 3. Measures to Ensure Due Respect for Stakeholders

			Supplementary Explanations
Stipulation of	Internal Rules		The "Keio Group Philosophy" and the "Keio Group Code of Conduct"
for Respecting the Position of

Stakeholders			stipulate that we shall be sincere to all stakeholders and mutually respect the
		- 26 -

				position of each stakeholder.
Implementation	of		The Company operates an environmental management system, issues the
Environmental Activities, CSR

Activities etc.				"Safety, Social and Environmental Report," and discloses it on its website.
				As part of our contribution to the local community, we conduct "Keio
				Clean Campaign" and provide support for "Takao Forest Regeneration"
				volunteer activities.
Development	of Policies	on		The "Keio Group Code of Conduct" stipulates that we shall ensure timely
Information	Provision	to

Stakeholders				and appropriate disclosure. With regard to information disclosure to
				shareholders and investors, we formulated "Disclosure Policy" and
				concrete rules have been established in accordance therewith.
Other				As of March 31, 2020, the number of female regular employees of the
				Company including those who are seconded to the Group companies, is
				245. The number of those who are in managerial positions is 20. After
				experiencing a job rotation in a wide range of fields covering a variety of
				business domains from the forefront of the railway operation to overseas
				assignment, talented human resources capable of proactively pursuing their
				careers are performing well.
				Also, the action plans based on the "Act on the Promotion of Female
				Participation and Career Advancement in the Workplace" set the numerical
				target of increasing the number of women in managerial positions (Manager or
				higher position) by 50% compared to the April 2016 level by March 2021.
				Furthermore, the Company developed, announced, and has been
				implementing the following measures aimed at achieving the target: (1)
				creation of the Diversity Promotion Section (June 29, 2017); (2) increasing the
				percentage of female new graduates hired for career-track positions to 30% or
				over of the total number of new graduates hired for those positions; and (3)
				reviewing various systems and evaluating and implementing new systems with
				the aim to further improve work-family balance and to create a more
				comfortable workplace.
				We have been taking initiatives targeted at female employees and those
				engaged in childrearing and nursing care, including the enhancement of an
				employment system that allows them to achieve a balance between childcare
				and work, establishment of an in-house nursery school, and holding work-life
				balance support seminars. In addition to these ongoing initiatives, we launched
				a Working Style Reform Project as a joint initiative with relevant departments
				in January 2018, implementing various measures with focus on reducing
				overtime working hours and raising the usage rate of annual paid leave.
				In addition to the foregoing, the Company implements action plans in
				- 27 -

accordance with the "Act on Advancement of Measures to Support Raising Next-Generation Children," and promotes measures to support employees in balancing their work and family life. These efforts led the Company to acquire the next generation certification mark "Kurumin."

Going forward, based on the belief that fostering a better working environment will lead to the enhancement of individuals' work and social life, as well as to the invigoration of a company, we will promote work-life balance initiatives and other various measures related to further promotion of women's advancement.

- 28 -

IV. Matters Related to the Internal Control System

IV. 1. Basic Views on Internal Control System and the Progress of System Development

[Keio Group Basic Policies on Internal Control System]

Keio Corporation (hereinafter, the "Company") and its Group companies develop and operate internal control systems pursuant to these basic policies, in order to conduct business activities properly and continuously based on the "Keio Group Philosophy," while conforming to laws and regulation as well as the Articles of Incorporation.

1. System for ensuring that the execution of business by Directors, Executive Officers and employees complies with laws and regulations as well as the Articles of Incorporation

To ensure that the execution of business by officers and employees of the Group complies with laws and regulations as well as the Articles of Incorporation, and is conducted in a sound manner, the Company ensures that the entire Group is thoroughly informed of the "Keio Group Code of Conduct," which was formulated based on the "Keio Group Philosophy." Directors and Executive Officers make decisions properly pursuant to the "Management Judgment Principles" established by the Company.
At the Company, the Compliance Committee composed of members including external experts takes a central role in the development of the Group-wide compliance system. Important matters are reported to the Board of Directors on a regular basis.
To address and resolve compliance-related issues, the Company operates "Keio Helpline," a dedicated consultation counter for the entire Group pursuant to the Whistleblower Protection Act.
Through continuously holding a compliance training, etc., the Company raises employees' awareness of compliance and thereby strengthens the Group-wide compliance system.
The Company has in place the Internal Audit Department, which is an internal audit section under direct control of the Representative Director President and CEO, and performs internal audits of the Company and the Group companies for the purpose of verifying the compliance with laws and regulations as well as internal rules and other standards, and appropriateness and effectiveness of the management. The Audit and Supervisory Committee may request and instruct the Internal Audit Department to conduct an investigation when it deems necessary.
To ensure reliability of its financial reports, the Company develops and operates an internal control system pursuant to the Financial Instruments and Exchange Act and other laws and regulations. We carry out timely and appropriate information disclosure as required by laws and regulations.
With respect to anti-social forces that pose a threat to the social order and safety, we will strictly confront them in a resolute manner across the organization so as to live up to the trust of stakeholders.

2. System for Storing and Managing Information Relating to the Execution of the Duties of Directors and Executive Officers

29 -

The Company properly stores and manages the information relating to the execution of the duties of Directors and Executive Officers pursuant to laws and regulations and internal regulations.
The information is accessible for Directors and Executive Officers of the Company as necessary.

3. Rules and System Related to the Management of Risk of Loss

Upon making decisions on important management issues, the Company's Directors and Executive Officers sufficiently verify the likelihood of loss.
In accordance with the "Risk Management Policy" established by the Company's Board of Directors, which is intended to identify and manage risks associated with business execution, the Risk Management Committee, made up of Risk Management Committee chair, heads of relevant departments and external experts, carries out activities to reduce and prevent risks for the Company and its Group companies, and develops systems in preparation for the outbreak of crisis.
As a Group engaged in a variety of businesses centered on the railway business with highly public nature, we recognize the safety of customers as an issue of the highest importance in our risk handling measures.
In the event of a major crisis, the Company promptly organizes a Crisis Management Headquarters headed by the Representative Director President and CEO in order to carry out activities aimed at responding to the crisis and quickly bringing it under control.

4. System for Ensuring That the Duties of Directors and Executive Officers are Executed Effectively

Pursuant to laws and regulations and internal regulations, the Board of Directors of the Company and its Group companies meet on a regular basis and on an ad-hoc basis as necessary. Important matters related to corporate management are deliberated in advance by meeting bodies made up of full-time Directors and full-time Executive Officers prior to the resolution by the Board of Directors. In addition, based on the provisions of the Articles of Incorporation, the Company delegates decision-making authority on the execution of important operations to Directors by resolution of the Board of Directors. The delegated matters are deliberated in advance by meeting bodies made up of full-time Directors and full-time Executive Officers prior to the decision-making.
The Board of Directors of the Company and its Group companies set company-wide goals. Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members) and Executive Officers set department-specific goals, manage budget, and formulate and implement concrete measures toward achieving company-wide goals. The Company monitors the implementation status of the management plans of each company.
The organizations and division of duties of the Company and its Group companies, as well as each position's responsibilities, authorities and approval criteria associated with the business execution are set forth in the internal regulations, and thereby basic functions of each position and mutual relations are clarified, and expeditious decision-making and business execution are facilitated.
- 30 -

5. System for Ensuring Appropriate Operations of the Corporate Group Consisting of the Company, Its Parent and Its Subsidiaries

With regard to the matters of importance for the management of each Group company, the Group companies discuss with and report to the Company in accordance with the "Group Company Consultation Standard" established with the Company. The Group companies enhance their internal control systems on a continual basis pursuant to the "Keio Group Basic Policies on Internal Control System" set forth by the Company's Board of Directors. The implementation status at each company is monitored by the Company.
We establish within the Company a department responsible for initiatives related to the internal control of Group companies, in order to promote the development of a system under which a discussion, information sharing, and communication of directions and requests are effectively made between the Company and each Group company.
The compliance systems of the Company and its Group companies are developed primarily by the Company on a group-wide basis. When any officer or employee of the Company and its Group companies discovers an event that may have a significant impact on the corporate value of the entire Group, they are required to report to the Compliance Committee chair of the Company, in addition to a regular reporting line, to discuss countermeasures.
Risks faced by the Company and its Group companies are identified and managed on a group-wide basis primarily by the Company through holding the Risk Management Committee meetings. In the event of a major crisis, the Group companies immediately report to the Company's Risk Management Committee chair, and the Company provides support according to the case.
Also, the Group companies develop their own risk management systems and crisis management systems.
Matters related to the management of the Group as a whole are discussed at the Group Management Council. In addition, the Keio Group Presidents Council is held on a regular basis to share the Group's management policies and management information.
To enhance and strengthen the audits for the entire Group, the Company's full-time Audit and Supervisory Committee Members receive reports from Audit & Supervisory Board Members of the Group companies, as appropriate, and hold the Group Audit & Supervisory Board meeting on a regular basis, while also verifying the status of audits performed by each company' Audit & Supervisory Board Members during and at the end of each fiscal period. In principle, full-time Audit & Supervisory Board Members of the Group companies belong to the Internal Audit Department, which is an internal audit department. Through mutual collaboration, they work to ensure appropriateness of the operations of the Group as a whole.

6. Matters Related to Employees to Assist Duties of the Audit and Supervisory Committee at Its Request, and Matters related to the Independence of Such Employees

- 31 -

Committee Members. For the transfer, personnel evaluation and disciplinary action on these employees, a consent from the full-time Audit and Supervisory Committee Members appointed by the Audit and Supervisory Committee is required.

7. Systems for Directors, Executive Officers and Employees to Report to the Audit and Supervisory Committee and Other Systems Related to Reporting to the Audit and Supervisory Committee

At the Company, Directors who are not Audit and Supervisory Committee Members ensure a system that allows Audit and Supervisory Committee Members to attend important meetings and state opinions. Moreover, Directors who are not Audit and Supervisory Committee Members and Executive Officers report the following items to the Audit and Supervisory Committee.

Reporting systems are also ensured at each Group company and the following items are reported to Audit & Supervisory Board Members of each Group company.

Important matters related to the decision-making of the Company;
Matters that could cause serious damage to the Company and the Group;
Audit plans and audit results of internal audits;
Misconducts or important matters in violation of laws and regulations and the Articles of Incorporation associated with the execution of duties of Directors who are not Audit and Supervisory Committee Members and Executive Officers of the Company and Directors and employees of each Group company;
Important matters related to compliance and risk management;
Important matters among the items that are subject to discussion and reporting set forth in the "Group Company Consultation Standard"; and
Other matters deemed necessary for the execution of duties of Audit and Supervisory Committee Members of the Company and Audit & Supervisory Board Members of each Group company, in addition to the above.

Employees who discover important matters related to (2) and (4) may report such matters directly to Audit and Supervisory Committee Members of the Company and Audit & Supervisory Board Members of each Group company.

Directors who are not Audit and Supervisory Committee Members and Executive Officers of the Company and Directors and employees of each Group company will not receive any disadvantages for reasons of having made such report to Audit and Supervisory Committee Members of the Company and Audit & Supervisory Board Members of each Group company.

8. Other Systems to Ensure That Audits by the Audit and Supervisory Committee are Performed Effectively

The Company's Directors who are not Audit and Supervisory Committee Members ensure the

- 32 -

following system so that effective audits can be performed in accordance with the audits plan prepared by the Audit and Supervisory Committee of the Company:

Hearing opinions from Directors who are not Audit and Supervisory Committee Members, Executive Officers and important employees as necessary;
Regular meetings with the Representative Director and Accounting Auditors;
Delivery of organizational audits in collaboration with the internal audit section;
Collaboration with the sections in charge of internal control;
Investigations on the Group companies;
Appointment of external experts selected independently as advisors, including lawyers and certified public accountants
Any costs arising from (6) will be borne by the Company.

9. Internal Control Committee

To supervise the systems mentioned in above 1. through 8., Internal Control Committee meetings are held, and thereby the development of internal control system will be promoted on a group-wide basis.

Compliance

In light of the misconduct at certain branches of Keio Travel Agency Co., Ltd. discovered in 2018, we stepped up efforts on education and awareness-raising for officers and employees of the Group companies, with a view to enhancing employee awareness of the importance of compliance. One example of such efforts is conducting compliance training at remote business sites. With regard to a whistleblowing system, in addition to further raising awareness of the inquiry counter, we gathered information to uncover potential harassment cases and investigated the cases that were thought to require response.

Risk Management

With regard to measures against railway accidents and incidents, following a fire at a substation, we made efforts to quickly restore normal operation by reducing power consumption, and as measures to prevent recurrence and the spread of damage, we formulated operation checking rules and duplicated communication lines to send an alert for abnormalities.

As for countermeasures against natural disasters, we formulated a disaster prevention action plan (timeline) in light of the damage caused by Typhoon Trami, which formed and landed on Japan in September 2018. In addition, following Typhoon Faxai and Typhoon Hagibis, which landed on Japan in September and October, respectively, we reviewed and improved the action plan and implemented various measures including planned suspension of railway operations. We also evaluated response measures using

- 33 -

hazard maps to prepare for river floods and sediment disasters. In addition, we continued to carry out quake-proof constructions and install lightning protection equipment.

As for the efforts in preparation for the Rugby World Cup 2019TM, we installed surveillance cameras in the driver's cabs of railway cars, at station platforms, and at railroad crossings, while also conducting joint training with police and fire departments. In addition, personnel was placed at the stations and railroad crossings on the match days, to ensure safe transportation during the event. We also enhanced the website management systems of the Group companies to combat cyber terrorism.

To address issues such as labor shortages and long working hours, we carried out recruitment activities all year round. As part of working style reforms, we also strived to reduce overtime working hours and increase the acquisition rate of paid holidays by such means as improvement of work efficiency by introducing mobile PCs and creating meeting management rules.

Furthermore, with regard to countermeasures against the new coronavirus infection, we set up response headquarters headed by President based on the BCP (business continuity plan), to understand the situation regarding the spread of infection in Japan and overseas. As a corporate group responsible for social infrastructure, we also endeavored to prevent the spread of infection and continue our business activities. To combat the spread of the virus, we implemented measures such as ventilation during operation and regular sanitization of train and bus vehicles, while canceling events for the merchandise sales business. To continue business activities, we ensured that our employees followed preventive measures against the virus, such as making it mandatory to wear a face mask during working hours, and made them aware of and confirmed the steps to be taken when an employee develops symptoms, while also promoting staggered commute times and work from home for employees of head office departments.

Internal Control for Financial Reporting

We conducted an internal control assessment based on the audit plans that were formulated in light of the materiality of impacts on the reliability of financial reporting.

Financial disclosure materials were disclosed after submission to the Board of Directors, following the confirmation by the Disclosure Committee.

Internal Audits

We conducted internal audits of the Company and the Group companies, including remote business sites, pursuant to the internal audit basic plan. We also visualized the operation flows in corporate transactions and identified risks, improving the effectiveness of risk control.

* For a schematic diagram related to the corporate governance system, please see Attachment 1.

IV. 2. Basic Views on Eliminating Anti-Social Forces and the Progress of System Development

[Basic Views on Eliminating Anti-Social Forces]

Our basic views on eliminating anti-social forces are described in 1. (7) of the Keio Group Basic Policies on Internal Control System.

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＜Major initiatives in fiscal 2019＞

As an initiative against anti-social forces, we ensured thorough implementation of rules for checking to confirm that new business partners are not anti-social forces.

V. Other

V. 1.	Adoption of Anti-Takeover Measures

	Adoption of Anti-Takeover Measures	Adopted

Supplementary Explanation

At the 98th Ordinary General Meeting of Shareholders held on June 27, 2019, the Company received approval for the "Basic Policy Regarding Countermeasures to Large-Scale Acquisitions of the Company Shares (Takeover Defense Measures)," which is intended to ensure and increase the Group's corporate value and common interests of its shareholders. Given this, at the Board of Directors meeting held on the same day, we resolved the "Plan for Countermeasures to Large-Scale Acquisitions of the Company Shares (Takeover Defense Measures)" (hereinafter, the "Plan). As part of this countermeasure, we filed a shelf registration for the issuance of stock acquisition rights.

For the Basic Policy Regarding the Takeover Defense Measures and details of the Plan, please see the Company's website (https://www.keio.co.jp/company/).

V. 2. Other Matters Concerning Corporate Governance System

The internal system for ensuring timely disclosure of our corporate information is described below.

The Company has formulated the "Disclosure Policy" to set forth basic views on information disclosure to the shareholders and investors, and has established the Disclosure Committee to achieve the matters stipulated in the said policy.

1. Disclosure Policy

Please see "III. 2. IR Activities" in this report.

2. Internal System

The procedures for collection and disclosure of information mainly conducted by the Disclosure Committee are as follows. We continue to enhance and strengthen internal controls related to preparation and disclosure of financial reporting through ensuring that our employees are fully aware of the laws and regulations and internal rules related to information disclosure.

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Collection

The secretariat of the Disclosure Committee collects information through attending internal meetings and receiving reports from business divisions, administrative divisions and the Group Business Management Department. Information on the Group companies is aggregated by the Group Business Management Department from each Group company.

The information to be collected by the secretariat is stipulated under internal regulations. To enable an appropriate and timely disclosure to shareholders and investors, information shall be managed in a centralized manner.

Disclosure

In principle, the Disclosure Committee determines whether or not information needs to be disclosed, and disclosure will be made after deliberation at the Board of Directors, etc.

In order to achieve more appropriate information disclosure, the contents of financial disclosure materials such as earnings summary and securities reports are confirmed by the Disclosure Committee in advance, prior to the submission to the Board of Directors, etc.

In addition, we disclose information beyond that required by laws and regulations, such as those requiring prompt disclosure in light of the purposes of timely disclosure, supplementary explanation materials for earnings summary and monthly business overview, in a timely and appropriate manner upon consent of the Disclosure Committee and in line with the procedures set forth in the internal regulations.

In the event of a disaster, accident or other fact necessitating an urgent disclosure, the Risk Management Committee chaired by a Director in charge of compliance and the Disclosure Committee discuss and promptly disclose the fact according to the judgment of the President and CEO.

Disclosure is made through posting at TDnet and EDINET, etc., in accordance with the procedures set forth under laws and regulations. We also strive to disclose information proactively through the Company's website.

※ For a schematic diagram related to the timely disclosure system, please see Attachment 2.

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[Attachment 1]

Corporate Governance System (as of November 13, 2020)

General Meeting of Shareholders

	Board of Directors
Governance Committee
	Directors who are not the Audit and	Audit			Audit and Supervisory
	Supervise
	Supervisory Committee members		Committee
Nomination and

Compensation Committee
		Audit
		Supervise
Group Management Council	Representative				Office of Audit and
				Supervisory
Executive Council	Director President				Committee
Management
	&
Environmental Management Council	Committee
CEO

Internal Control Committee						Accounting
Compliance Committee					Audit


Risk Management Committee						Auditor

Disclosure Committee
		Audit	Department	Audit Internal	Auditors / Supervisors
		of Group companies
	Business Departments and
Group companies

General Administration Departments

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[Attachment 2]

Timely Disclosure Outline Chart

Group companies

Collect

Business Departments, General Administration Departments and Group Business Management Department

Financial information

Information other than financial information

Financial statements

Securities report

Supplementary explanation

Capital

Occurrence of disaster,

Revision in the earnings

materials

expenditures, etc.

accident, etc.

forecasts

Monthly business overview, etc.

Collect

Disclosure Committee

Risk Management Committee

Disclosure Committee

(Judgement on disclosure)

(Deliberation)

Submit

Report

Board of Directors, etc.

Representative Director President & CEO

(Judgement on disclosure)

Disclosure

Tokyo Stock Exchange (TDnet), etc.

- 38 -

Attachments

Original document
Permalink

Disclaimer

Keio Corporation published this content on 31 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2021 06:03:06 UTC.

Delayed Japan Exchange Other stock markets 22:30:00 2024-05-16 EDT			5-day change	1st Jan Change
3,841 ^JPY	-0.13%		+0.71%	-13.47%

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	1st Jan change	Capi.
KEIO CORPORATION	-13.47%	3.03B
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