Corporate Governance Report

Corporate Governance

Date of last revision: June 27, 2019
Nissan Shatai Co., Ltd.
President: Shohei Kimura
Inquiries: Tel. +81-463-21-8001
Code no.: 7222
http://www.nissan-shatai.co.jp


Details of Nissan Shatai’s corporate governance policies and procedures are set out
below.

I. Fundamental Corporate Governance Policies and Basic
Information on Capital Structure, Corporate Attributes, and
Other Matters

1. Fundamental Policies
To continually enhance corporate value, we believe it is vital for management to
be clearly accountable, to disclose information to shareholders and other
stakeholders in a timely and appropriate manner, and further, to maintain
transparency and proper execution of business operations by establishing internal
control systems. Nissan Shatai further enhances our corporate governance based
on principles of the Corporate Governance Code.

Reasons for not taking actions in line with principles of the Corporate Governance
Code

Supplementary Principle 1-2-4 – Use of electronic voting platform for
shareholders
At this time, we have no plans for establishing a platform for electronic voting by
shareholders. We will continue to study necessity of the use of this platform while
taking into consideration the composition of shareholders and other items. Meanwhile,
we will send convocation notice for a general shareholders meeting earlier and post the
notice on our website in Japanese and English earlier in order to give shareholders more
time to determine how to vote on proposals.

Supplementary Principle 4-1-3 – Succession plan for the Chief Executive Officer
The policy for the appointment of the next Chief Executive Officer is to select an
individual who has an extensive knowledge of the automobile industry and the ability
to bring about change, translate words into actions, and other characteristics required
of a manager. The Chief Executive Officer selects candidates and the Board of
Directors discusses the nominations and makes a decision. We will consider measures,
including the establishment of an advisory committee and the others, for the purpose of
increasing the objectivity and transparency of the selection of Chief Executive Officer
candidates.

Supplementary Principle 4-10-1 – Use of optional approach
Nissan Shatai does not have a Nominations Committee, Remuneration Committee or
other advisory committees. We will consider appropriate measures, including the
establishment of advisory committees and the others based on our view of the proper
role of independent outside directors regarding nominations, remuneration and other
matters concerning senior managements and directors.

Supplementary Principle 4-11 – Preconditions for Board of Directors and Board
of Statutory Auditors effectiveness
Nissan Shatai has six directors. Four directors are internal directors, who are individuals
with specialized knowledge about their respective areas of responsibility, including
experience with overseas operations, and experience of company management. Two
directors are independent outside directors who have extensive knowledge and
experience as senior executives outside the automobile industry. We believe that this
composition is suitable with respect to achieving both the diversity and proper size of
the Board of Directors. Nissan Shatai believes that measures concerning gender
diversity should be further studied.

Disclosure based on principles of the Corporate Governance Code (Updated)

Principle 1-4 – Cross-shareholdings
Nissan Shatai holds no listed stocks as cross-shareholdings.

Principle 1-7 – Related party transactions
We use procedures prescribed in the Companies Act for transactions with one or more
directors having a conflict of interests.Transaction prices for automobile to the parent
company are determined by negotiations that take into account the total cost of
manufacturing. Nissan Shatai’s Board of Directors confirms the process and contents
of these negotiations.

Principle 2-6 – Roles of corporate pension funds as asset owners
Nissan Shatai outsources the specific management of assets in the corporate pension
funds to several asset management firms and the company’s accounting section
monitors the performance of these firms. There is a Corporate Pension Fund Operations
Oversight Committee that includes labor union representation and managers at
Nissan Shatai involved with human resources, labor relations, and finance and
accounting. On a regular basis, this committee receives reports on the results of
monitoring of asset management performance, confirms suitability of the composition
of assets, asset management performance and other matters, evaluates the asset
management firms and performs other tasks on a regular basis. The objectives are to
prevent conflicts of interest between pension funds beneficiaries and Nissan Shatai and
to ensure the soundness of pension funds asset management. In addition, to ensure that
this framework functions properly, people with the necessary experience and
characteristics are assigned to these activities and there are training programs for these
people.

Principle 3-1 – Full disclosure
(i) Company objectives (e.g., business principles), business strategies and business
plans
This information is in the Vision/Management Philosophy and Medium-term
Management Plan section of the Nissan Shatai website.
http://www.nissan-shatai.co.jp/EN/COMPANY/PHILOSOPHY/
http://www.nissan-shatai.co.jp/EN/IR/MANAGEMENT/PLAN/

(ii) Basic views and guidelines on corporate governance based on each of the
principles of the Code
This information is stated in “I. 1. Fundamental Policies” of the Nissan Shatai Corporate
Governance Report and in “Initiatives to Comply with the Code” in the “For Investors”
section of the Nissan Shatai website.
http://www.nissan-shatai.co.jp/EN/IR/GOVERNANCE/CODE/index.html

(iii) Board policies and procedures in determining the remuneration of the senior
management and directors
The policy and procedure for determining remuneration for directors are explained in
“II. 1 Directors’ Remuneration” in the Corporate Governance Report.
Just as for directors, remuneration for senior management is determined each year based
on results of operations and the performance of each individual.

(iv) Policies and procedures for the Board of Directors to appointment/dismissal
senior management and to nominate director and statutory auditor candidates
The most important roles of the Board of Directors are discussing and reaching
decisions by objectively and multilaterally examining items submitted regarding
practicality, suitability, risk and other items, based on an exchange of opinions from
many viewpoints that use their experience, knowledge, specialized skills and other
resources of directors and statutory auditors at meetings, and supervising and auditing
in a suitable and timely manner the execution of these decisions. Suitable candidates
for directors and statutory auditors must be nominated and submitted at shareholders
meetings in order to make it possible to perform these roles.
Individuals with deep understanding of our business and our operating environment
and, as leaders of the organization, capable and experienced in adequately and with
speed implementing decisions taken by the Board of Directors will be appointed. A
senior management is terminated in the event that the behavior of an individual is
improper or inappropriate for the leader of an organization or that an individual is
determined to be unsuitable to serve as the leader of an organization.
Nissan Shatai does not have a Nominating Committee or other committees at this time.
However, studies will be conducted regarding the possible implementation of measures,
including the establishment of advisory committees, in order to consider the suitable
involvement of independent outside directors in decisions concerning appointments and
terminations of senior managements and selections of director and statutory auditor
candidates.

(v) Explanation of an appointment/dismissal or nomination when the Board of
Directors, according to the policies explained in the preceding item (iv), appoints
or dismisses a senior management or nominates a director or statutory auditor
Director and statutory auditor candidates are nominated according to the policies
described in item 3-1 (iv).
Explanations of specificnominations are provided in Reference Materials for General
Shareholder Meeting.
Senior managements are appointed and dismissed according to the policies explained
in item 3-1 (iv).
Supplementary Principle 4-1-1 – Summary of scope of delegations to senior
executive by the Board of Directors
The Board of Directors makes decisions about items that must be made by the Board
of Directors in accordance with laws and regulations and about important items
concerning business operations as stipulated in the Board of Directors Rules. For other
items, the internal regulations (delegation of authority) designate individuals with the
authority to make decisions and specify the decision-making process. The goals are
increasing transparency of the decision-making process and the efficiency of business
operations.

Principle 4.9 – Independence standards and qualifications for independent outside
directors
Candidates for independent outside directors are nominated and submitted to a general
shareholders meeting after discussions and examinations based on requirements for
outside directors of the Companies Act and standards for independent outside directors
of the Tokyo Stock Exchange.

Supplementary Principle 4-11-1 – Views concerning appropriate balance of
knowledge, experience, skills, diversity and size of the Board of Directors; policies
and procedures for nominating directors
According to the policies explained in “3-1 (iv) Policies and procedures for the Board
of Directors to appointment/ dismissal senior management and to nominate director and
statutory auditor candidates”

Supplementary Principle 4-11-2 – Directors and statutory auditors who
concurrently have outside positions
Information about concurrent outside position as directors and statutory auditors is
provided in the Business Report.

Supplementary Principle 4-11-3 – Analysis and evaluation by the Board of
Directors of the board’s effectiveness
The Board of Directors of Nissan Shatai has carried out an analysis and evaluation of
the effectiveness of the FY2018 Board of Directors and is announces an overview of
these results.
1. Method and process of evaluation
The Board of Directors distributed a questionnaire to all Directors and Statutory
Auditors including Outside Directors and Outside Statutory Auditors. The responses
from these individuals were first examined and discussed by all Directors and Statutory
Auditors. The FY2018 evaluation included questions used in prior years as well as
additional questions prepared with the cooperation of a third-party organization. Also,
studies were conducted based on the analysis performed by this organization and the
issues it identified. Next, responses were discussed and evaluated only by Outside
Directors and Outside Statutory Auditors. Finally, at a meeting of the Board of
Directors, all Directors and Statutory Auditors performed an analysis and self-
evaluation of the effectiveness of the Board of Directors and confirmed actions for
improving board’s effectiveness.
(Main items in the questionnaire)
(1) Objectives and roles of the Board of Directors
(2) Operation and effectiveness of the Board of Directors
(3) Composition of the Board of Directors
(4) Relationships with stakeholders
(5) Training for Directors
2. Overview of the evaluation results
As a result of the evaluation, Nissan Shatai’s Board of Directors confirms that the
effectiveness of the Board of Directors is ensured.
An appropriate system including size, composition and operations is implemented to
monitor decision making of significant management issues and business execution.
All the members, including Outside Directors and Outside Statutory Auditors, possess
a wide range of experience and expertise. They have a sufficient understanding of their
roles and duties, and they engage in active discussions and ensure an appropriate
decision-making process. In conclusion, the Board of Directors is operated effectively.
3. Measures to enhance effectiveness
The Board of Directors has been making improvements with importance of corporate
governance and effectiveness of the Board of Directors in achieving sustained growth.
In May 2019, Nissan Shatai established a Governance Study Committee with four
members, all of whom are either an Outside Directors or Outside Statutory Auditor.
The role of the committee is to conduct studies regarding the most suitable corporate
governance structure for Nissan Shatai and important issues concerning this structure.
Based on the results of this evaluation of the Board of Directors’ effectiveness and the
studies performed by the Governance Study Committee, Nissan Shatai plans to improve
how the Board of Directors operates in order to further increase its effectiveness.
(Information concerning improper final vehicle inspections)
In 2017 and 2018, improper procedures involving final vehicle inspection issue at the
vehicle assembly plants of Nissan Shatai and group companies were discovered. Nissan
Shatai asked external professionals to perform an investigation to determine the cause
of this issue and preventive measures. Based on the results of this investigation, Nissan
Shatai formulated preventive measures and has been implementing these measures. A
progress quarterly report concerning these measures has been announced on the Nissan
Shatai website beginning with the report in November 2017. The Board of Directors
receives reports about the preventive measures and progress with their implementation
and the directors discuss these reports. Nissan Shatai will continue to implement the
preventive measures as stipulated under the oversight of the Board of Directors.

Supplementary Principle 4-14-2 – Training policy for directors and statutory
auditors
New directors and statutory auditors receive explanations of basic information about
Nissan Shatai’s business operations, management, financial strategy and other items.
During their terms, these individuals also receive updated information as needed. In
addition, internal and external seminars are held as needed to provide directors and
statutory auditors with information about corporate governance, finance and accounting,
laws and regulations, and other subjects as needed.

Principle 5-1 – Policy for constructive dialogue with shareholders
We use the For Investors section of our website, general shareholders meetings and
other channels to explain in a manner that is easy to understand our results of operations,
business operations, management policies and other items. Proper shareholder
dialogues are performed with the oversight of the designated corporate officer upon
consultation with the company president, directors and all relevant departments. In
addition, shareholders’ opinions and other information from shareholder dialogues are
shared with the Board of Directors, Executive Committee and other organizational units
as needed.
We manage insider information during shareholder dialogues properly in accordance
with the Rule for Prevention and Management of Insider Trading, which is an internal
regulation.

2. Capital Structure (Updated)

Percentage of shares owned by foreign shareholders 30% or more

Major Shareholders (Updated)

No. of % of total
Name
shares held shares held
Nissan Motor Co., Ltd. 50.00%
67,726,898

MLI for Client General Omni Non Collateral 21,087,300 15.57％
Non Treaty-PB
GOLDMAN SACHS INTERNATIONAL 7,961,600 5.88％

ECM EF 7,182,800 5.30％

Nissan Shatai Supplier Stock Ownership Plan 2,750,000 2.03％

The Master Trust Bank of Japan, Ltd. (Trust 1,431,600 1.06％
Account)
Japan Trustee Services Bank, Ltd. (Trust 1,309,600 0.97％
Account)
NORTHERN TRUST CO.(AVFC) RE HCR00 1,102,700 0.81％

J. P. MORGAN SECURITIES PLC FOR AND
ON BEHALF OF ITS CLIENTS JPMSP RE 900,000 0.66％
CLIENT ASSETS-SEGR ACCT

JP MORGAN CHASE BANK 385151 895,357 0.66%



Controlling shareholders (other than parent
—
company)
Nissan Motor Co., Ltd.
Parent company (Listed on Tokyo Stock
Exchange, code no. 7201)

Supplementary explanation
Information about major shareholders is as of March 31, 2019.
Nissan Shatai holds 21,786,312 shares of treasury stock, but has been excluded from
the above list of major shareholders.


3. Corporate Attributes

Tokyo Stock Exchange
Stock exchange listing
First Section

Fiscal year-end March

Transportation
Sector
equipment
Number of employees at latest fiscal year-end
1,000 or more
(consolidated)
Between 100 billion and
Consolidated net sales for latest fiscal year
less than 1 trillion yen
Number of consolidated subsidiaries at latest fiscal
Fewer than 10
year-end

4. Guidelines for Measures to Protect Minority Shareholders When
Dealing with Controlling Shareholders (Updated)

Transaction prices for automobile to the parent company are determined by
negotiations that take into account the total cost of manufacturing. Nissan Shatai’s
Board of Directors confirms the process and contents of these negotiations. In
addition, two independent outside director and one independent outside statutory
auditors are appointed, which serves as an institutional guarantee for the protection
of minority shareholders.

5. Other Special Circumstances That May Have Material Effects on
Corporate Governance (Updated)

Nissan Motor Co., Ltd., the parent company, holds 50.01% of voting rights in
Nissan Shatai. Since 99.7% of Nissan Shatai sales come from the parent company,
its performance relies heavily on trends in vehicle sales by the parent company.
When formulating and implementing revenue, quality, and other plans for each
fiscal year, Nissan Shatai takes into account the parent company’s management
policies. Transaction prices for automobile to the parent company are determined
by negotiations that take into account the total cost of manufacturing. Nissan
Shatai’s Board of Directors confirms the process and contents of these
negotiations. While Nissan Shatai maintains close cooperative relationships with
Nissan Motor and its group companies throughout our business activities, we also
preserve a certain level of independence from the parent company.
II. Management Organization for Operational Decision-Making,
Execution, and Supervision, and Other Corporate Governance
Structures

1. Organizational Structure, Operation, Etc.

Organizational form Company with auditors


Directors

Number of directors specified in the Articles of
No upper limit set
Incorporation
Term of office for directors specified in the Articles of
Two years
Incorporation

Chairperson of the Board of Directors President

Number of directors Six

Outside directors appointed Yes

Number of outside directors Two

Number of outside directors designated as
Two
independent directors

Relationship to company (1) (Updated)

Relationship to company*
Name Affiliation
a b c d e f g h i j k

Seiichiro From
Ichikawa another
company
Masayuki
From
Imai
another 〇
Seiichiro
company
Ichikawa

* Selection criteria regarding relationship with the Company.
〇 is used if the individual in question is applicable to each item, current or recent,
while △ is used if he/she was applicable in the past.
● is used if a relative of the individual in question is applicable to each item,
current or recent, while ▲ is used if he/she was applicable in the past.
a. Person executing business of the listed company or its subsidiary
b. Person executing business or non-executive director of the parent of the listed
company
c. Person executing business of a fellow subsidiary of the listed company
d. Person/entity dealing with the listed company as its major business partner or
the person executing its business
e. Major business partner of the listed company or the person executing its business
f. Consultant, accounting expert or legal expert gaining significant amount of
money or properties from the listed company, apart from officer remuneration
g. Major shareholder of the listed company (if such shareholder is a corporation,
the person executing its business)
h. Person executing business (himself or herself only) of a business partner of the
listed company (applicable to none of d, e or f above)
i. Person executing business (himself or herself only) of another company holding
crossdirectorships/ cross-auditorships with the listed company
j. Person executing business (himself or herself only) of an entity to which the
listed company provides donations
k. Others


Relationship to company (2) (Updated)

Reason for being appointed as
Indepen outside director (including
Supplementary explanation
Name dent reason for being designated as
of applicable items
director independent director if so
designated)
Mr. Ichikawa has abundant and
broad insight into corporate
management and corporate
governance from many years of
Mr. Seiichiro Ichikawa was
experience in a different
a senior managing director
industry.
of Sapporo Breweries Ltd.
Seichiro He has also been designated as
There are no capital ties and
Ichikawa ○ an independent director as
business relations between
stipulated by Tokyo Stock
Nissan Shatai and this
Exchange, Inc. because he
company.
fulfills the requirements for the
position, and is judged to
present no risk of a conflict of
interest with general
shareholders.
Mr. Masayuki Imai is a Mr. Imai has been involved
director of Kanagawa Chuo with corporate finance and
Kotsu Co.,Ltd. There are no accounting in a different
Masayuki capital ties between Nissan industry and has much
Imai ○ Shatai and this company. knowledge of the department
Nissan Shatai uses this and a broad insight as an
company's bus, taxi and executive. He has also been
hotel services as a general designated as an independent
customer. Sales of this director as stipulated by Tokyo
 company to Nissan Shatai Stock Exchange, Inc. because
were insignificant (less than he fulfills the requirements for
1% of annual consolidated the position, and is judged to
sales) in FY2018. Nissan present no risk of a conflict of
Shatai recorded no sales to interest with general
this company. shareholders.

Statutory Auditors



Board of Statutory Auditors established Yes

Number of statutory auditors specified in the Articles
No upper limit set
of Incorporation

Number of statutory auditors Three


Collaboration among statutory auditors, accounting auditor, and internal audit
division (Updated)

The accounting auditor reports to the statutory auditors on audit plans and results,
and both parties exchange views in an effort to achieve efficient and effective
audits. The statutory auditors and the Internal Audit Office collaborate and
exchange information as required.


Outside statutory auditors appointed Yes

Number of outside statutory auditors Two

Number of outside statutory auditors designated as
One
independent statutory auditors

Relationship to company (1) (Updated)

Relationship to company*
Name Affiliation
a b c d e f g h i j k l m

Tetsunobu Ikeda From another
〇 △
company
From another
Izumi Inoue △
company

* Selection criteria regarding relationship with the Company.
○ is used if the individual in question is applicable to each item, current or recent,
while △ is used if he/she was applicable in the past.
● is used if a relative of the individual in question is applicable to each item,
current or recent, while ▲ is used if he/she was applicable in the past.
a. Person executing business of the listed company or its subsidiary
b. Non-executive director or accounting advisor of the listed company or its
subsidiary
c. Person executing business or non-executive director of the parent of the listed
company
d. Audit & supervisory board members of the parent of the listed company
e. Person executing business of a fellow subsidiary of the listed company
f. Person/entity dealing with the listed company as its major business partner or
the person executing its business
g. Major business partner of the listed company or the person executing its
business
h. Consultant, accounting expert or legal expert gaining significant amount of
money or properties from the listed company, apart from officer remuneration
i. Major shareholder of the listed company (if such shareholder is a corporation,
the person executing its business)
j. Person executing business (himself or herself only) of a business partner of the
listed company (applicable to none off, g or h above)
k. Person executing business (himself or herself only) of another company
holding crossdirectorships/ cross-auditorships with the listed company
l. Person executing business (himself or herself only) of an entity to which the
listed company provides donations
m. Others

Relationship to company (2) (Updated)

Reason for being appointed as
Independ
Supplementary outside statutory auditor
ent
Name explanation of applicable (including reason for being
statutory
items designated as independent
auditor
statutory auditor if so designated)




Mr. Ikeda has abundant and broad
insight into corporate
Tetsunobu
- management and finances from
Ikeda
many years of experience in
financial institution.
 Mr. Izumi Inoue was a
director and managing
executive officer of
Sompo Japan Insurance
Inc. (currently Sompo
Japan Nipponkoa
Insurance Inc.). There
are no capital ties
between Nissan Shatai
and this company.
Mr. Inoue has abundant insight
Nissan Shatai purchases
into corporate management, risk
insurance from this
management relating to business
company, but premiums
activities and corporate
paid by Nissan Shatai to
governance from many years of
this company in FY2017
experience in financial institution.
were insignificant(less
Izumi He has also been designated as an
than 1% of this
Inoue ○ independent statutory auditor as
company's annual
stipulated by Tokyo Stock
ordinary income) and
Exchange, Inc. because he fulfills
there were no sales to
the requirements for the position,
this company. Mr. Inoue
and is judged to present no risk of
was an employee of this
a conflict of interest with general
company until June
shareholders.
2003, but his
employment at this
company ended many
years ago (more than 10
years). In addition, there
are no capital ties and
business relations
between Nissan Shatai
and any other companies
where Mr. Inoue was
employed.

Independent Directors and Independent Statutory Auditors (Updated)

Number of independent directors and independent
Three
statutory auditors

Other matters related to independent directors and independent statutory auditors

All outside directors and outside statutory auditors who are eligible to be
independent directors or independent statutory auditors have been so designated.

Incentives
 Introduction of
Measures granting incentives to directors performance-linked
remuneration system

Supplementary explanation (Updated)

Part of the remuneration of directors is linked to Nissan Shatai’s results of
operations and the performance of individual directors in order to clarify the
directors’ accountability regarding their performance and responsibilities in each
fiscal year.


Persons granted stock options


Supplementary explanation

—

Directors’ Remuneration

Individual directors’
Disclosure (of individual directors’ remuneration) remuneration is not
disclosed.

Supplementary explanation

The total amount of directors’ remuneration is disclosed in the securities report
and the business report.

Policies for deciding remuneration amount or
Yes
calculation method

Disclosure of policies for deciding remuneration amount or calculation method
(Updated)

Remuneration for Directors for the fiscal year that ended in March 2019 has two
components: (1) Annual base salary that is fixed and based on each Director’s
roles and responsibilities and (2) performance-based remuneration that is
determined in accordance with the achievement of major Nissan Shatai
performance targets and the performance of each Director. Only Directors who are
also Corporate Officers are eligible to receive performance-based remuneration.
Outside Directors receive only annual base salary.
Statutory Auditors receive only annual base salary and the amount of this
remuneration is determined by the Statutory Auditors.
Remuneration for Directors and Statutory Auditors is based on resolutions
approved at the general shareholders meeting held on June 30, 1982. These
resolutions limit total monthly remuneration to 30 million yen for Directors and 5
million yen for Statutory Auditors. At the end of this general shareholders meeting,
Nissan Shatai had 15 Directors and 2 Statutory Auditors.
 In accordance with a resolution approved by the Board of Directors,
Representative Director Shohei Kimura has the authority to determine the
allocation of remuneration among the Directors. Mr. Kimura has the authority to
determine this remuneration within the aggregate remuneration limit approved by
shareholders and based on remuneration guidelines for each executive title at
Nissan Shatai.
For the fiscal year that ended in March 2019, the Board of Directors granted
Representative Director Shohei Kimura authority to determine the remuneration
of individual Directors in accordance with the remuneration guidelines. Mr.
Kimura subsequently made decisions for the remuneration of individual Directors,
consisting of annual base salary and performance-based remuneration, which is
explained later.

Remuneration linked to results of operations and performance
For the internal management of results of operations, Nissan Shatai uses operating
income, profit attributable to owners of parent and free cash flows. Consolidated
results of operations include Nissan Shatai and four manufacturing subsidiaries
associated with the core motor vehicle production operations of Nissan Shatai.
These three performance indicators are also used for calculating remuneration
linked to results of operations. These three indicators were selected because they
are representative of the preservation of a sound foundation for business operations
for many more years. Targets for quality, productivity improvements and other
aspects of operations involving the roles of each Director are also established for
use as indicators to determine the performance of individual Directors.
Remuneration linked to results of operations is calculated by multiplying the
maximum payment ratio for the titles of Directors who are also Corporate Officers
(40% of annual base salary for the President and 30% for other Directors) by the
degree to which each individual’s performance targets were achieved in the
applicable fiscal year. The resulting payment ratio and the annual base salary for
the fiscal year are then multiplied to calculate the amount of remuneration linked
to results of operations and performance.

Performance indicator targets for remuneration linked to results of operations for
the fiscal year ended March 2019 and actual results.
Indicators for Target Actual
Actual/Target (%)
results of operations (billion yen) (billion yen)
Operating income 12.6 7.6 60
Profit attribute to
8.7 5.5 63
owners of parent
Free cash flows 3.9 7.6 195


Support Systems for Outside Directors and Outside Statutory Auditors
(Updated)

The Secretariat regularly collaborates with outside directors, and the Auditors’
Office regularly collaborates with outside statutory auditors.
Directors receive documents associated with upcoming meetings of the Board of
Directors prior to these meetings as well as preliminary explanations of agenda
items as needed.
2. Functions Including Business Execution, Audit, Supervision,
Appointments, and Remuneration Determination (Outline of Current
Corporate Governance Systems) (Updated)

Nissan Shatai has Board of Directors, which decides material business activities of
Nissan Shatai and monitors the activities of individual directors. In addition,
statutory auditors who comprise Board of Statutory Auditors audit the activities of
the directors. Furthermore, Nissan Shatai’s Board of Directors is relatively small,
so it is structured with a transparent and logical system of delegation, by which the
authority to perform business activities is properly delegated to corporate officers
and other employees.
There are six directors, including two who is an outside and independent director
as stipulated by Tokyo Stock Exchange, Inc. As a rule the Board of Directors meets
monthly to make decisions on important business matters.
In addition, the Executive Committee consisting of corporate officers and other key
managers meets once a week in principle to discuss specific management issues.
There are three statutory auditors, including two outside statutory auditors, one of
whom is an independent statutory auditor as stipulated by Tokyo Stock Exchange,
Inc. Statutory auditors attend meetings of the Board of Directors, and audit the
overall execution of work by the Board of Directors in accordance with audit
policies the Board of Statutory Auditors determines.


3. Reasons for Adoption of Current Corporate Governance System
(Updated)

Through robust discussion at Board of Directors meetings and other means, Nissan
Shatai strives to achieve a situation where directors monitor each others’ work. In
order to ensure sound supervision of directors, the three statutory auditors, one of
whom is an outside statutory auditor, audit directors’ execution of work primarily
by attending meetings of the Board of Directors and other key bodies, receiving
business reports from directors, etc., and reviewing important documents. The
audit function is further strengthened by appointing two independent statutory
auditors to supervise work from an objective and neutral standpoints. The current
system has been adopted to ensure sound business supervision through such
measures.

III. Measures Relating to Shareholders and Other Stakeholders

1. Efforts to Invigorate General Shareholders Meetings and Facilitate the
Exercise of Voting Rights

Supplementary explanation
Notice is dispatched three or more
Early dispatch of convocation notice
working days prior to legally designated
for a general shareholders meeting
date.
 Avoidance of peak date when Most common date for convening general
setting the date for a general shareholders meetings in Japan is
shareholders meeting avoided.
The English version of the Notice of
Notice of Convocation (Abstract) in Ordinary General Shareholders Meeting is
English available on Nissan Shatai website as well
as the Tokyo Stock Exchange website.
Business reports with many slides, product
Other exhibitions and explanations and other
activities

2. Investor Relations Activities
Explanation by
Supplementary explanation
representative
Nissan Shatai’s fundamental approach to
investor relations (IR) activities is to
maintain a high degree of transparency in
communications on an ongoing basis. We
aim to sustain high-quality communication
that enables all our stakeholders—
including securities analysts and a diverse
range of individual investors in addition to
institutional investors—to make
appropriate and satisfactory investment
decisions.

In keeping with this approach, Nissan
Shatai discloses information on matters
such as operating performance and
Preparation and business activities in accordance with
publication of applicable laws and ordinances, the Tokyo
disclosure policy Stock Exchange’s Securities Listing
Regulations, and other rules. Nissan Shatai
ensures that corporate information thus
disclosed is always accurate, and
disseminates it in a timely, appropriate,
and fair manner.
Information about our IR information
disclosure policy is available on Nissan
Shatai IR site.
Japanese: http://www.nissan-
shatai.co.jp/IR/MANAGEMENT/POLICY
/index.html
English: http://www.nissan-
shatai.co.jp/EN/IR/MANAGEMENT/POL
ICY/index.html
 The IR sites contain all IR information
related to our company, including the
following sections: IR News, Message
from President, Medium-term
Management Plan, Corporate Profile,
Share Price, IR Calendar, Financial
Results, various types of Financial
Information, Corporate Governance,
information about General Shareholders
Meeting, history of dividends, Articles of
Incorporation, and information for
individual investors. Historical information
has also been made available through the
IR Library as far as possible, and an RSS
service has been set up for the News
section to enhance convenience for
readers.
Posting of IR
Japanese: http://www.nissan-
materials on
shatai.co.jp/IR/TOPPAGE/index.html
corporate website
English: http://www.nissan-
shatai.co.jp/EN/IR/index.html
IR website for smartphones and tablets is
also available that contains IR News,
Financial Results and other IR information.
Japanese: http://www.nissan-
shatai.co.jp/SP/JA/index.html
English: http://www.nissan-
shatai.co.jp/SP/EN/index.html
In addition, Nissan Shatai provides
information through SNS (Facebook and
Twitter).
Facebook:
https://www.facebook.com/NissanShataiJP
Twitter:
https://twitter.com/Nissan_ShataiJP

Establishment of
units
Units responsible for IR: Administration
(or position)
Department.
responsible for
IR

3. Respect for Stakeholder Views (Updated)

Supplementary explanation
The Environmental and CSR Report is
Environmental conservation
posted on the website. Nissan Shatai
initiatives, corporate social
conducts plant tours, mainly for students
responsibility (CSR) activities, etc.
of nearby elementary schools include
 information associated with social studies
lessons. There are also plant toursfor
parents and children during summer
vacation and on holidays, and other times
Business sites hold festivals for residents
of neighboring communities. Also, the
roof of the head office building is
designated as a tsunami evacuation site
by the city of Hiratsuka.
Nissan Shatai attaches great importance
to ensuring internal and external
Formulation of policies about the transparency with regard to our
provision of information to management activities, and put effort into
stakeholders making sure that information disclosure is
carried out in an appropriate and timely
manner for our stakeholders.
Based on a dedication to diversity, Nissan
Shatai has a training program that
incorporates career plans in order to
increase the number of female managers.
There are currentlya female general
manager and managers at Nissan Shatai.
In addition, there are activities for
increasing the percentage of women hired
when new graduates are recruitedand for
improving the working environment to
enable women to continue advancing
their careers at Nissan Shatai. These
efforts were highly regarded and Nissan
Shatai acquired “Kurumin certification”
This is the first case as a company with
more than 300 employees in Hiratsuka.
Nissan Shatai will continue to promote
Other
diversity activities and strive to make
more comfortable working environment
as one of the priority issues of Medium-
Term Management Plan.
Nissan Shatai was for the first time
recognized as a White 500 Company in
the 2019 Certified Health and
Productivity Management Organization
Recognition Program promoted jointly by
Japan’s Ministry of Economy, Trade and
Industry and Nippon Kenko Kaigi.
The Certified Health and Productivity
Management Outstanding Organizations
Recognition Program is a system under
which the Nippon Kenko Kaigi examines
large enterprises, SMEs and other
organizations engaging in initiatives for
 overcoming health-related challenges in
communities or for promoting health-
conscious activities led by the Nippon
Kenko Kaigi, and recognizes outstanding
enterprises engaging in efforts for health
and productivity management. Nissan
Shatai was recognized under the large
enterprise category.
Under our corporate policy, we
systematically implement activities to
care and promote the health of employees
and implement measures for pleasant and
lively workplace environments and have
industrial physicians, a public health
nurse, medical nurses, counselors and
others. We also utilize external medical
institutions to provide health care
services. Our employees have access to
programs to prevent lifestyle diseases,
deal with mental health issues and receive
other assistance for maintaining a sound
mind and body. These include health
guidance based on the results of medical
examinations, food seminars, and sports
events. Based on stress checks we also
implement mental health measures and
workplace environment improvement
activities at workplaces with high stress
levels. We also work toward clarifying
issues based on data. We have also been
implementing activities to prevent
psychosomatic disorders.
We implement a PDCA cycle every year
to check the effectiveness of these
measures and make improvements.
We are dedicated to a corporate culture
that enables our employees to realize
their full potential. To accomplish this
goal, we willcontinue to conduct
programs for health maintenance and
promotion and implement measures for
pleasant and lively workplace
environments that contribute to a high
level of motivation.

IV. Internal Control Systems

1. Internal Control Systems: Basic Approach and Systems Established
Based on the provisions of the Companies Act and the Ordinance for Enforcement of
the Companies Act, the Board of Directors has resolved to establish the following
internal control systems (i.e., systems to ensure that the work of Nissan Shatai is
properly carried out).

1) Systems to ensure that directors and employees comply with laws, ordinances,
and the Articles of Incorporation in the execution of their duties

Recognizing the importance of directors and employees of Nissan Shatai
acting with sound judgment as members of society, Nissan Shatai develops
the Nissan Shatai Code of Conduct-Our Promise in the aim of ensuring legal
compliance and proper execution of duties. In-house training and other
courses promote dissemination of the Code of Conduct, and all directors and
employees submit written oaths of compliance with the Code of Conduct.
Furthermore, each Nissan Shatai group company develops own code of
conduct based on Nissan Shatai's code and promote dissemination of their
respective code. The Internal Audit Office also conducts audits of Nissan
Shatai and its group companies, primarily to check compliance with laws,
ordinances, and the Articles of Incorporation.

Nissan Shatai and its group companies introduce hotline system(internal and
external) so that employees of Nissan Shatai and its group companies can
freely and directly submit opinions, questions or requests and provide
information about suspected actions of none compliance, and such issues are
promptly identified and rectified. If a matter that could contravene the Code
of Conduct is reported, a solution is immediately discussed at meeting of the
Nissan Shatai Compliance Committee or its group companies' Compliance
Committees and implemented. The Compliance Committee provides
monthly reports to the Executive Committee on its activities.

Furthermore, Nissan Shatai and its group companies strive to enhance
internal control mechanisms to ensure the reliability of financial reporting in
accordance with the Financial Instruments and Exchange Law together with
its related rules and standards.

2) Systems for storage and management of information relating to the exercise of
directors' duties

Nissan Shatai and its group companies' minutes of general shareholders
meetings and of Board of Directors meetings, together with records of
decisions made pursuant to the authority criteria and documentation on other
decisions, are stored and managed in accordance with laws and internal
regulations at Nissan Shatai and its group companies respectively. Directors,
statutory auditors and some others have access to such documentation for the
purpose of performing their business activities.

Nissan Shatai and its group companies implement Information Security
Policy respectively to enhance proper and strict retention and management
of information and to prevent improper use of information and unintended
disclosure of such information. Furthermore, Nissan Shatai and its group
 companies have Information Security Committee respectively, which is
engaged in overall management of information security and make decisions
with respect to information security matters.

3) Risk management regulations and systems

Nissan Shatai and its group companies prevent the occurrence of risks that
could hinder business continuity or threaten stakeholder safety or security
and, if they occur, mitigate the magnitude of losses and prevent recurrence
by sensing such risks as early as possible and implementing appropriate
countermeasures.

The Risk Management Committee chaired by Nissan Shatai's president is
responsible for the management of Nissan Shatai and its group companies'
risk, which implements necessary measures and monitor the progress of such
measures.

Key risks for Nissan Shatai and its group companies include environmental,
quality, and safety issues. Nissan Shatai regularly convenes meetings of
specialist committees including Environmental Committee, Quality
Committee, and Safety Council, and develops regulations, standards,
manuals and other rules and conduct rigorous training programs in order to
prevent the occurrence and, if they occur, mitigate the magnitude of losses
and prevent recurrence.

4) Systems to ensure efficient execution of duties by directors

Nissan Shatai has Board of Directors, which decides material business
activities of Nissan Shatai and monitors the activities of individual directors.
In addition, statutory auditors who comprise Board of Statutory Auditors
audit the activities of the directors.

Nissan Shatai's Board of Directors is relatively small, so it is structured with
a transparent and logical system of delegation, by which the authority to
perform business activities is properly delegated to corporate officers and
other employees.

The Executive Committee consisting of corporate officers and other key
managers meets once a week in principle to discuss specific management
issues.

Nissan Shatai enacts Responsibilities of Each Department for the purpose of
defining the responsibilities of each department and enacts Delegation of
Authority for the purpose of clarifying the deciders and decision making
processes, and speeding up the execution of business activities. Likewise, its
group companies enact objective and transparent Responsibilities of Each
Department and Delegation of Authority. Nissan Shatai and its group
companies periodically review those Responsibilities of Each Department
and Delegation of Authority to assure prompt and efficient decision making.
 Nissan Shatai ensures the efficient and effective management of its business
by determining and sharing management policy and business direction in
Nissan Shatai and its group companies through establishment of the mid-
term management plan and the annual business plan.

5) Systems to ensure proper conduct of work in the corporate group consisting of
Nissan Shatai and its parent company and subsidiaries

[1] Systems to ensure efficient execution of duties by subsidiaries' directors
and the like

To achieve consistency and efficiency in group management, Nissan Shatai
holds regular meetings with the parent company and Nissan Shatai group
companies respectively and shares with management policies and other
important information. Each department of Nissan Shatai enhances
cooperation with corresponding function of the group companies and
achieves consistency and efficiency in group management.

[2] Systems to ensure that directors and the like and employees comply with
laws, ordinances, and the Articles of Incorporation in the execution of their
duties

To ensure that directors and employees of Nissan Shatai group companies'
comply with laws, ordinances, and the Articles of Incorporation, Nissan
Shatai implements the measures described in "(1) Systems to ensure that
directors and employees comply with laws, ordinances, and the Articles of
Incorporation in the execution of their duties". Nissan Shatai's code of
conduct is made in compliance with the parent company's code of conduct
and sets out consistent philosophies on matters such as compliance and
information security. In addition, Nissan Shatai implements hot line system
by which employees of Nissan Shatai group companies are able to submit
information directly to its parent company.

When necessary, directors and employees of Nissan Shatai are appointed
concurrently as directors or auditors in its group companies and supervise
execution of duties and accounting practices on an ongoing basis.

Furthermore, statutory auditors of Nissan Shatai and its group companies
periodically have Group Statutory Auditors Meeting for the purpose of
ensuring effective auditing of group companies and share information and
exchange opinions from the viewpoint of consolidated management.

[3] Risk management regulations and systems of the subsidiaries

To manage risk of Nissan Shatai group companies, Nissan Shatai implements
the measures described in "(3) Risk management regulations and systems".

[4] Systems for reporting from directors and the like to the company about
the execution of their duties
 Nissan Shatai requests its group companies to report about important
information of their duty executions.

6) Matters relating to employees appointed to assist Nissan Shatai's statutory
auditors in their duties and the independence of such employees from
directors, and systems to ensure the effectiveness of instruction by statutory
auditors

To improve the effectiveness of audits by Nissan Shatai's statutory auditors
and enable the statutory auditors to perform audits smoothly, Auditors Office
has been established and staffed with managers and/or other employees and
perform its duties under the instruction and supervision of statutory auditors.

To ensure the independence of the managers and other employees, their
appointment, dismissal, appraisal, transfer to another department and
disciplinary action require prior consent from the Board of Statutory Auditors.

7) Systems for reporting to Nissan Shatai's statutory auditors and systems to
ensure that a person who reported to the statutory auditors is not unfairly
treated because of making such report

[1] Systems for reporting to Nissan Shatai's statutory auditors from its
directors and employees

When Nissan Shatai's directors or employees find any issues that had or may
have a material impact on the management of Nissan Shatai or its group
companies, and caused or may cause material violation of code of conduct,
they promptly report such issues to the Nissan Shatai's statutory auditors. In
addition, Nissan Shatai's directors and employees are required to make an ad-
hoc report to the statutory auditors regarding the situation of business
activities when so requested.

In accordance with annual audit plan, Nissan Shatai's statutory auditors
attend meetings of the Board of Directors and representative of statutory
auditors attends Executive Committee meetings to identify important
decisions made by Nissan Shatai and its group companies and to ascertain
the execution status of such decisions. Progress with implementation and
issues under consideration are also reported to statutory auditors during
regular business hearings of divisions. Moreover, the Internal Audit Office
provides reports regularly about audit plan and audit result to the Board of
Statutory Auditors.

[2] Systems for reporting to Nissan Shatai's statutory auditors from directors,
statutory auditors, the like, and employees of subsidiaries or a person who
received information from them

Directors and statutory auditors, other executives, and employees of Nissan
Shatai group companies report promptly to directors and employees of
Nissan Shatai when any issues that should be reported to Nissan Shatai's
statutory auditors occur. And then directors and employees who are reported
 about such issues report them to Nissan Shatai's statutory auditors. In
addition, directors and statutory auditors, other executives, and employees of
Nissan Shatai group companies are required to make an ad-hoc report to
Nissan Shatai's statutory auditors regarding the situation of business
activities and any other issues when so requested.

[3] Systems to ensure to prevent disadvantageous treatment of those who
made a report as stated in [1] and [2] above on the basis of making such report

Nissan Shatai prohibits disadvantageous treatment of those who made a
report as stated in [1] and [2] above on the basis of making such report.
Nissan Shatai takes necessary measures to protect those who made such
report and takes strict actions, including disciplinary actions, against
directors and employees of Nissan Shatai and its group companies who gave
disadvantageous treatment to those who made such report.

8) System for advance payment or settlement of expenses arising from the
execution of the duties of Nissan Shatai's statutory auditors and the policy
for settlement of expenses arising from the execution of their duties.

Nissan Shatai promptly processes advance payment or settlement of
expenses and liabilities arising from the execution of their duties when
statutory auditors so requests. In accordance with Companies Law, except
when it is proven that the expenses and liabilities are unnecessary.
Appropriate amount of budget for audit activities is secured.

9) Other systems to ensure effective audits by statutory auditors

At least 50% of the statutory auditors are outside statutory auditors. The
statutory auditors hold meetings of the Board of Statutory Auditors and
Statutory Auditors Meeting periodically in order to share tasks by
exchanging information and opinions. Ad-hoc meetings are also held
whenever necessary.

Nissan Shatai's statutory auditors and president periodically hold meetings to
exchange information and views about the financial condition, tasks to be
tackled and risks associated with Nissan Shatai's business activities.
Statutory auditors receive periodic audit reports from the accounting auditor.

2. Elimination of Antisocial Forces: Basic Approach and Systems
Established

(1) Basic approach to elimination of antisocial forces

Nissan Shatai is resolute in its opposition to antisocial forces. In the event that
directors or employees are approached in any way by members of antisocial
groups, they quickly report the matter to their superiors and relevant divisions
and follow instructions. If directors or employees directly or indirectly
encounter dishonest or criminal conduct such as fraud or extortion in the
course of their duties, or if they suspect such conduct, they resolutely refrain
 from involvement, quickly report the matter to their superiors and relevant
divisions, and follow instructions.


(2) Establishment of systems aimed at elimination of antisocial forces

The “Nissan Shatai Code of Conduct—Our Promise” sets out Nissan Shatai’s
determination to act in accordance with the basic approach outlined above.
Other systems established are listed below.

1) Designation of supervisory division and appointment of manager
responsible for preventing unreasonable demands

Nissan Shatai has designated a division in charge of supervising responses to
antisocial forces and appointed a manager responsible for preventing
unreasonable demands. Systems have been put in place to ensure that
information on any unreasonable demands from antisocial forces to Nissan
Shatai is immediately communicated to the division and the manager.

2) Collaboration with external specialists

Nissan Shatai regularly communicates with the police and the external
organizations it belongs to that aim to defend companies against antisocial
forces, and immediately seeks advice and guidance in the event of any
demand from such forces.

3) Gathering and managing information on antisocial forces

Through collaboration with the police and the external organizations it
belongs to, Nissan Shatai gathers information on the latest trends and
responses to antisocial forces, and uses this information to raise awareness
within Nissan Shatai.

4) Response manual

Nissan Shatai has prepared a manual for responding to unreasonable
demands, and acts in accordance with the manual in the event of any such
demands.

5) Training

All employees receive training about compliance that includes dealing with
antisocial forces and everyone signs a pledge to comply with compliance
guidelines.

V. Other Matters

1. Takeover Defense Measures
 Takeover defense measures introduced No


Supplementary explanation

—


2. Other Matters Related to Corporate Governance Systems

—
Organization Chart and Internal Controls




Timely Disclosure System Overview
Corporate information is passed to the Administration Department, which is
responsible for handling such information and decides whether timely disclosure is
required. If disclosure is required, the information is communicated to the Tokyo
Stock Exchange (TSE) via TDnet and posted on the Nissan Shatai website, etc.
(1) Information on resolutions

Resolutions made by Nissan Shatai’s decision-making bodies, the Board of
Directors and the Executive Committee, are communicated to
Administration Department.

(2) Information on occurrences

Communicated to the Administration Department by each division within
Nissan Shatai.

(3) Information on financial results

Communicated to the Administration Department by the Finance
Department.