Odakyu Electric Railway : Corporate Governance Report

Note: This document has been translated from a part of 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. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Corporate Governance Report

Last Update: June 29, 2021

Odakyu Electric Railway Co., Ltd.

Koji Hoshino, President & CEO

Contact: [phone]

Securities Code: 9007

https://www.odakyu.jp

The corporate governance of Odakyu Electric Railway Co., Ltd. (hereinafter, the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views Updated

Basic Views

With regard to enhancing and strengthening the Company's corporate governance, the Company is implementing various measures with the recognition that it is vital to strengthen the function to make decisive decisions unshackled by precedents or customs as well as to strengthen the supervisory function for business execution, by ensuring transparency, fairness and speed when carrying out key strategies. The aim is to maximize the interest of various stakeholders, including our shareholders as well as our customers, business partners, creditors and local communities, and achieve sustained growth as well as enhance the medium- to long-term corporate value of the Company.

Basic Policies

(1) Securing the Rights and Equal Treatment of Shareholders

The Company provides the necessary information for the exercise of rights by shareholders in a timely and appropriate manner, and develops an environment in which shareholders can exercise their rights without hesitation. The Company also gives consideration to substantially ensuring the rights and equal treatment of various shareholders, including minority shareholders.

(2) Appropriate Cooperation with Stakeholders Other Than Shareholders

The Company recognizes that it is vital to cooperate with stakeholders, including employees, customers, business partners, creditors and local communities, to realize sustained growth and the creation of medium- to long-term corporate value. With this recognition, the Company strives to appropriately cooperate with such stakeholders.

(3) Ensuring Appropriate Information Disclosure and Transparency

The Company appropriately discloses financial information, such as financial standing and operating results, and non-financial information, such as business strategies and business issues, risk and governance, in compliance with the relevant laws and regulations. In addition, the Company provides other information through news releases, etc. to stakeholders.

The Company also makes efforts to provide accurate, clear and useful information, including non-financial information, taking into consideration that disclosed and provided information will serve as the basis for constructive dialogue with shareholders.

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(4) Fulfilling Responsibilities of the Board of Directors

The Board of Directors sets the strategic direction of the Company mainly through the Management Vision "UPDATE Odakyu-Becoming a Community-Based Value Creation Company" and the Medium-Term Management Plan based on the Group Management Principle. The Company also establishes an environment where appropriate risk-taking by Directors is supported, while electing highly independent Outside Officers and carrying out effective oversight of Directors.

(5) Dialogue with Shareholders

The Company engages in constructive dialogue with shareholders even outside the General Meeting of Shareholders, mainly at financial results briefings, with the aim of achieving sustained growth of the Company and enhancing the corporate value over the medium to long term. In such dialogue with shareholders, Directors participate in interviews to the extent reasonable and give appropriate feedback mainly to full-time officers on the views and demands of shareholders grasped during the dialogue. Through these and other efforts, the Company pays due attention to the interests and concerns of shareholders. The Company also makes efforts to explain its business policies to shareholders in an understandable manner so as to gain their support, while at the same time striving to develop a balanced understanding of the positions of shareholders and other stakeholders and act accordingly.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company implements all the principles of the Corporate Governance Code.

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

Principle 1.4 Strategic Shareholdings

The Company considers it necessary to maintain and develop business relations with various companies in order to achieve the Group Management Principle of helping its customers create "irreplaceable times" and "rich and comfortable lifestyles." To this end, the Company holds shares that are deemed necessary as a policy based on comprehensive consideration of factors such as business relationships with the issuing company. With regard to strategic shareholdings held by the Company, the Board of Directors annually verifies the aim and rationale of holding from a qualitative perspective, such as contribution to the maintenance and development of business relations with the issuing company, as well as from a quantitative perspective such as cost of capital and dividend income. Our policy calls for reducing shares for which the significance of holding has diminished through sale and other means as a result of such verification.

The Company also exercises the voting rights on strategic shareholdings for all proposals. In exercising the voting rights, the Company pays special attention to proposals that may damage shareholder value in accordance with the Company's standards for exercising voting rights based on factors such as the business condition, dividend condition and presence or absence of anti-social acts and other scandals of each company. In addition, the Company receives an explanation of the proposal from the issuing company as necessary.

Supplementary Principle 1.4.1 Response to Cases Where Companies Holding the Company's Shares as Strategic Shareholdings Indicate Their Intentions to Sell These Shares

The Company will not imply a possible reduction of business transactions and the like for the purpose of hindering the sale of the Company's shares held by shareholders who hold them as strategic shareholdings.

Principle 1.7 Related Party Transactions

At the Company, competing transactions and conflict-of-interest transactions by Directors are specified as proposals to be resolved by the Board of Directors under the Regulations of the Board of Directors. In addition to this, transactions between the Company or its consolidated subsidiaries and officers and their close relatives are also verified to determine the presence of any such transactions and their details every fiscal year, while the details of transactions that fall under the accounting standards and the guidelines for the application of such standards for related party disclosure are disclosed.

Principle 2.6 Roles of Corporate Pension Funds as Asset Owners

In order to enhance the efficiency of pension asset management, the Company periodically holds a Pension Asset Management Advisory Council (hereinafter, "Advisory Council") with the Manager of Finance & Accounting Department as the chairperson and the Manager of Personnel Department as the vice chairperson. At the Advisory Council, participants discuss matters such as asset allocation for pension fund management,

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management strategy and the entrusted management company, based on their professional or general knowledge and experience commensurate with each position and responsibility.

In determining the specific asset allocation for pension fund management, management strategy and the entrusted management company, the Company has a system to receive advice from outside pension fund management experts as necessary. The Company requests the pension fund management consultant of Rating and Investment Information, Inc. (hereinafter, "R&I"), a group company of Nikkei Inc., to act as an outside expert. By receiving advice on pension fund management from R&I from a neutral and fair position, the Company has a system that does not allow conflicts of interest to arise between pension fund beneficiaries and the Company.

In order to enhance professional knowledge and experience in pension fund management, the Company utilizes advice from R&I and also endeavors to develop, appoint and assign personnel with the appropriate credentials for such fund management.

Principle 3.1 Full Disclosure

1. The management principle, management plans and other information are disclosed in the securities reports and the Company's website (https://www.odakyu.jp/company/philosophy/).
2. Basic views and policies on corporate governance are stated in "I. 1. Basic Views and Basic Policies" of this report.
3. Policies and procedures for determining compensation are stated in "II.1. [Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" of this report.
4. In electing the senior management (Directors concurrently serving as Executive Officers) and nominating candidates for Directors and Auditors, persons with outstanding personality and insights are required. In addition, in the case of in-house candidates, persons who are well versed in the Company's operations based on experience gained at several departments are elected and nominated for the senior management and Directors, and persons who have expertise regarding finance, accounting and legal affairs as well as knowledge of the Company's business are elected and nominated for Auditors. In the case of candidates who come from another company or institution, for both Directors and Auditors, the Company nominates those capable of fulfilling roles and functions to enhance management supervising functions, along with career history, experience and professional knowledge, etc. that differ from those of in-house candidates. In addition, election and nomination are conducted by considering the balance between knowledge, experience and skills of the Board of Directors as a whole, and diversity. Also, the dismissal of the senior management is decided in light of the election policy.
   Based on the policy above, the election/dismissal of the senior management and nomination of candidates for Directors and Auditors are decided by the Board of Directors following deliberations by the Nomination and Compensation Advisory Committee, in which Independent Outside Directors comprise a majority of the members. In addition, the Company explains the matter concerned to Outside Auditors prior to the meeting of the Board of Directors.
5. The individual reasons for the election/dismissal of the senior management, candidates for Directors and Auditors are disclosed in the Reference Documents of the Notice of the General Meeting of Shareholders.

Supplementary Principle 4.1.1 Summary of Scope and Content of Matters Delegated to the Management

In addition to matters stipulated in relevant laws and regulations and the Articles of Incorporation, the Company stipulates matters to be resolved by the Board of Directors, such as long-term comprehensive plans in the Regulations of the Board of Directors. Furthermore, the Company sets the standard for the amount, etc. according to importance in the criteria for discussing matters at the Board of Directors, and also resolves matters deemed important in accordance with such standards, such as investments and loans, at the Board of Directors.

Regarding decisions on matters other than those resolved by the Board of Directors and business execution, matters such as the duties and authority of each position are stipulated in the Official Authority Rules and are delegated to each level of management.

Principle 4.9 Independence Standards and Qualification for Independent Outside Directors Independence Standards for Outside Officers specified by the Company are stated in "II.1. [Independent Directors/Auditors] Matters relating to Independent Directors/Auditors" of this report.

Supplementary Principle 4.11.1 View on Balance between Knowledge, Experience and Skills of the

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Board of Directors as a Whole, and on Diversity and Size of the Board of Directors

The Company's Board of Directors comprises a combination of Executive Directors who are well versed in the Company's operations, in-houseNon-Executive Directors and full-time Auditors, as well as several Outside Directors and Outside Auditors who have career history, experience and professional knowledge that differ from those of in-house Directors and Auditors and are fully capable of fulfilling roles and functions to enhance management supervising functions. In this way, the Company strives to ensure the balance between knowledge, experience and skills of the Board of Directors as a whole, and diversity. The Company also works to have an appropriate size for the constitution of the Board of Directors in light of factors such as business scale and type of operations. The Articles of Incorporation stipulates that the number of Directors shall be 17 or less and the number of Auditors shall be five or less. Based on the policy above, the Board of Directors currently comprises 12 Directors and five Auditors. Among them, the professional background of the four Independent Outside Directors (including one female) consists of three corporate managers and a head of local government, and the professional background of the three Independent Outside Auditors (including one female) consists of two corporate managers and an attorney-at-law.

Supplementary Principle 4.11.2 Status of Concurrent Positions Held by Directors and Auditors at Other Companies

The status of significant concurrent positions held by Directors, Auditors, and their candidates is disclosed every year in the Reference Documents and the Business Report of the Notice of the General Meeting of Shareholders.

Supplementary Principle 4.11.3 Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole

The Company conducts self-evaluations of Directors and Auditors every year by means such as questionnaire surveys concerning decision-making and oversight functions of the Board of Directors and the support structure of the Board of Directors. Based on the results of such evaluations, the effectiveness of the Board of Directors as a whole is analyzed and evaluated by the Board of Directors. During the fiscal year ended March 31, 2021, as a result of analyses and evaluations, it was confirmed that the Board of Directors was effective. Furthermore, based on the results of analyses and evaluations in the fiscal year ended March 31, 2020 and in prior fiscal years, the Company increased the number of deliberations on companywide strategy, endeavored to enhance discussions regarding future directions in light of changes in the environment, and expanded the scope of monitoring. As a result of analyses and evaluations in the fiscal year ended March 31, 2021, the Company recognizes that it is necessary to develop a system to enhance the quality of discussions on the medium-term management plan, implement initiatives that contribute to the vitalization of discussions, and increase opportunities for Outside Officers to acquire information and knowledge. With this recognition, the Company will consider further enhancing the effectiveness of the Board of Directors including response to such matters.

Supplementary Principle 4.14.2 Training Policy for Directors and Auditors

The Company provides information on the Company's business, among other things, as needed to Outside Directors and Outside Auditors, in addition to mainly creating opportunities to inspect the Company's facilities and areas along the Odakyu Line as appropriate to support efforts to deepen understanding of the Company's business. Furthermore, the Company invites outside lecturers to have them give lectures every year on topics such as internal control to Executive Directors and in-houseNon-Executive Directors and full- time Auditors. For Executive Directors, the Company also explains and provides information on the details of business of the department they will be in charge of when they assume their respective offices. The Company takes these measures for each Director and Auditor and also provides financial support required for such measures.

Principle 5.1 Policy for Constructive Dialogue with Shareholders

The Company makes efforts to improve the quality of IR activities through the formulation and disclosure of the Disclosure Policy as well as the following initiatives, in order to promote constructive dialogue with shareholders and investors.

1. The Company appoints a Director in charge of overseeing the department responsible for engaging in dialogue with shareholders and investors (Investor Relations Office).
2. Primarily the responsible department gives feedback on the views and demands made by shareholders and investors through regular exchange of information with related departments such as the Management Strategy
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Department, the Group Management Department, the General Affairs Department and the CSR/Corporate Communications Department, as well as the Group companies, while working to promote understanding inside the Company and the Group.

1. For analysts and institutional investors, initiatives such as briefings for each business by the responsible officers and tours of the Company's facilities are taken, in addition to holding financial results briefings (twice a year), in which the President and other members of management participate. Furthermore, for individual investors, company information meetings are held in cooperation with securities companies and other institutions.
2. The Company provides opportunities to regularly report mainly on the status of IR activities and the views and demands made by shareholders and investors at meetings of the Board of Executive Officers, primarily comprising full-time officers and department managers, in addition to feedback given to officers, etc. by the responsible departments as appropriate.
3. Important information is strictly handled under the internal rules concerning the management of internal information. In addition, a quiet period is set before the announcement of financial results to restrict external coverage and inquiries.

2. Capital Structure

		Foreign Shareholding Ratio			From 10% to less than 20%
[Status of Major Shareholders]	Updated
		Name / Company Name			Number of Shares Owned			Percentage (%)
				(Shares)
	The Master Trust Bank of Japan, Ltd. (Trust		35,993,500	9.85
	Account)
	The Dai-ichi Life Insurance Company,		20,273,626	5.55
	Limited
	Nippon Life Insurance Company		16,763,615	4.59
	Custody Bank of Japan, Ltd. (Trust Account)		16,316,260	4.46
	The Master Trust Bank of Japan, Ltd.		12,908,000	3.53
	(Retirement Benefit Trust Account, Mitsubishi
	Electric Corporation Account)
	Meiji Yasuda Life Insurance Company		7,676,721	2.10
	MUFG Bank, Ltd.		5,750,000	1.57
	SUMITOMO LIFE INSURANCE		5,500,000	1.50
	COMPANY
	STATE STREET BANK WEST CLIENT -		5,434,985	1.49
	TREATY 505234 (Standing Proxy: Settlement
	& Clearing Services Department, Mizuho
	Bank, Ltd.)
	Custody Bank of Japan, Ltd. (Trust Account 5)		4,911,300	1.34
		Controlling Shareholder (except for Parent			-
		Company)
		Parent Company			None

Supplementary Explanation Updated

1. The status of major shareholders as of March 31, 2021 is stated.
2. The Dai-ichi Life Insurance Company, Limited has contributed an additional 2,000 thousand shares of the Company to a retirement benefit trust and retains rights of instruction in regard to shareholder voting rights of the shares.
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