Internal Control System

The Tokyu Fudosan Holdings Group is thoroughly implementing compliance-based management to achieve its sustainable development and improve its corporate value. All members of the Group shall take steps to put in place and implement internal control systems to raise levels of efficiency andeffectiveness while ensuring proper business operations, achieve management priorities, and disclose information appropriately. In addition, Audit & Supervisory Board members monitor and validate the progress of development and the operational status of internal control systems.

Systems for Ensuring Appropriate Business Operations

1. Summary of resolutions on systems for ensuring appropriate business operations

The following is a summary of decisions made regarding systems for ensuring that the execution of duties by directors complies with laws and regulations, the Articles of Incorporation and other systems for ensuring appropriate business operations.

(1) System for ensuring that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation

To ensure that directors and employees comply with laws and regulations and carry out appropriate corporate activities, in addition to establishing the Tokyu Fudosan Holdings Group Code of Conduct and promoting thorough awareness through the Compliance Manual and compliance training, the Company will develop an environment of legal compliance in its business operations through the communication of information on the enactment and revision of laws and regulations and preparation of various legal manuals in the Tokyu Fudosan Holdings Group (“the Group”).
To promptly detect and improve risk information such as violations of laws and regulations, a whistleblowing system has been established in the compliance department.
Compliance with laws and regulations is thoroughly implemented through regular internal audits regarding the status of compliance.
In addition, the Company has no involvement with anti-social forces and takes a resolute stand against unjust demands.

(2) System related to storage and management of information concerning the execution of duties by directors

The Company conducts appropriate storage and management of the minutes of Board of Directors meetings, approval documents, and other information related to the execution of duties by directors in accordance with the internal rules regarding information management. Directors and auditors may consult these stored documents at any time as required.

(3) Regulations and other systems related to management of risk of loss

In order to conduct comprehensive management of the risk of loss that may impede the achievement of business objectives, the Company grasps serious risks of the whole company and implements countermeasures, etc. systematically and on a continuous basis according to priority.
Regarding major risks, a department is assigned to be in charge of each risk in accordance with the Risk Management Basic Rules, and the Risk Management Committee exhaustively and comprehensively manages the risks of the entire Group.
Furthermore, the adequacy of risk management systems and risk management operations is confirmed through internal audits and auditing regarding serious risks is systematically conducted according to priority.
In the event that an immediate and serious danger of loss arises or is detected, appropriate communication of information and decision-making are conducted in accordance with the Emergency Response Basic Provisions and a precise response is made to minimize the damage, etc.

(4) System for ensuring that the duties of directors are executed efficiently

By determining company-wide objectives such as the Medium-Term Management Plan, a system is established whereby each division can efficiently formulate the specific measures to be implemented every fiscal year.
To ensure that they execute their duties appropriately, directors realize the appropriate and efficient execution of duties in line with the Duty Authority Regulations and Decision Regulations, which clearly set out the authority and responsibilities of directors with regard to execution of duties in order to promote organized and efficient management, and conduct decision making on important matters through meeting structures such as the Board of Directors and Group Executive Committee.
Furthermore, the introduction of the Operating Officer System has clearly separated the management decision-making and supervisory function from the business execution function, strengthening the functions of the directors and ensuring the efficiency of their duties.

(5) System for ensuring appropriate business practices of the corporate group comprising the Company as well as its parent and subsidiaries

In order to ensure appropriate business practices of the Group as a consolidated corporate group and thoroughly implement compliance, the Company has established the Tokyu Fudosan Holdings Group Code of Conduct as a set of action guidelines and is promoting Group-wide compliance management by establishing the Risk Management Committee, etc. and strives to understand, evaluate, and analyze Group-wide risk information.
Business management of the Group is conducted by determining targets, policies, and business plans as a consolidated corporate group at business management meetings, and sharing these with all Group companies.
Furthermore, in order to ensure the reliability of financial reporting, the Company has established basic rules on internal control over financial reporting and internal control guidelines related to financial reporting for consolidated subsidiaries and complies with the internal control reporting system for financial reporting required by the Financial Instruments and Exchange Act of Japan.
Regarding the business management of subsidiaries, in accordance with Group management consignment agreements concluded with subsidiaries, the Company receives reports and consultations regarding matters with a significant impact on consolidated management, including compliance and risk management, through meeting structures and individual discussions and communications, and provides advices, guidance, and approval as necessary. The Company also conducts internal audits as appropriate.

(6) Matters relating to employees in the event that Audit & Supervisory Board members require them to assist in the execution of their duties

The Company has established the Office of Audit & Supervisory Board as an organization attached to the Audit & Supervisory Board. Employees assigned to the Office of Audit & Supervisory Board follow the instructions of the Audit & Supervisory Board members and assist them with their duties.

(7) Matters relating to ensuring the independence from directors of employees mentioned in (6) above and the effectiveness of instructions to such employees

Employees assigned to the Office of Audit & Supervisory Board are placed directly under the Audit & Supervisory Board and are not instructed or supervised by directors, and their independence is ensured by requiring prior consultation with Audit & Supervisory Board members concerning their treatment. In order to make this independence clear, the Office of Audit & Supervisory Board is positioned as an organization directly under the Audit & Supervisory Board and outside the jurisdiction of the Board of Directors.

(8) System for reporting to Audit & Supervisory Board members by directors, employees, and executive officers of subsidiaries, etc. and other systems for reporting to Audit & Supervisory Board members

The Company ensures the attendance of Audit & Supervisory Board members at important meetings. Directors and employees make regular reports, and report appropriately when necessary, to Audit & Supervisory Board members regarding the execution status of the Company's business and important matters, and directors and employees of the Group report promptly and appropriately whenever a report is required by Audit & Supervisory Board members.
The Internal Audit Department reports the results, etc. of internal audits of the Company and its subsidiaries to the Audit & Supervisory Board members and maintains close cooperation with them.
In the event that directors of the Group discover a matter that may cause significant damage to the Company, they report it either directly to the Audit & Supervisory Board members or through the person who received the report.

(9) System for ensuring that persons who make a report as referred to in (8) above are not subjected to unfavorable treatment on the grounds of making such a report

Regarding directors and employees of the Group who have made reports to Audit & Supervisory Board members, the Company prohibits unfavorable treatment on the grounds of making such a report and makes this known to all employees.

(10) Procedures relating to prepayment or reimbursement of expenses incurred by Audit & Supervisory Board members in the execution of their duties and other matters relating to the policy on expenses or debts incurred in the execution of such duties

When Audit & Supervisory Board members request the prepayment, etc. of expenses incurred in the execution of their duties, the Company will promptly process such payment, unless it has been recognized, upon deliberation by the division in charge, that the expenses or debts related to the requests are not necessary for the execution of duties by Audit & Supervisory Board members.

(11) Other systems to ensure that audits by Audit & Supervisory Board members are conducted effectively

Representative directors hold regular meetings to exchange opinions, etc. with Audit & Supervisory Board members to ensure mutual communication with them, and directors and employees make reports as appropriate regarding the status of compliance with laws and regulations, etc. based on results of audits by the Internal Audit Department.
If Audit & Supervisory Board members deem it necessary for the execution of their duties, an environment is provided for consultation with outside experts such as lawyers.

2. Outline of operational status of systems for ensuring the appropriateness of business

Regarding the above-mentioned “systems for ensuring the appropriateness of business,” in addition to making regular reports on the specific status of systems at Board of Directors meetings, the Company undertakes appropriate operations as necessary, such as reviews of the business execution structure and company regulations. The operational status of these systems is outlined below.

As of June 2024