NOMURA ASSET MANAGEMENT

NOMURA

Ideal Form of Business Management for Investee Companies

i) Proper Attention to Social Responsibilities

We believe that in order to be recognized as a corporate citizen, it is essential for companies to act consistently in a proper manner, which constitutes the foundation of sustainable business activity.
"Compliance" does not only include compliance with laws and regulations, but also aspects of corporate behavior such as commonly agreed practices and the observance of internal rules and regulations as a premise for companies to take appropriate action.
Moreover, we believe that a company's "proper" efforts in relation to social responsibilities that are included within the "ESG" framework, such as global environmental and social issues, will lead to the enhancement of long-term corporate value.

ii) Value Creation Through Capital Efficiency

We believe that in order for investee companies to enhance their corporate value and achieve sustainable growth, it is necessary for investees to create value by utilizing capital with the efficiency that exceeds capital cost over the medium to long term. We also believe that such value creation is necessary for companies to contribute to society.

iii) Adequate Performance of Corporate Governance Function

We believe that the following requirements should be met for the corporate governance practices of a company to enhance capital efficiency, to achieve sustainable growth, and create corporate value:

  1. (1)The board consists of an adequate number of qualified and diverse members who have the ability and experience for supervising the execution of management on behalf of shareholders and functions effectively.
  2. (2)The audit committee, audit and supervisory committee or the board of auditors consists of qualified members who are capable of auditing directors' operations on behalf of shareholders and functions effectively.
  3. (3)Committees relating to nomination and compensation have been established, each of which consists of qualified members and operates with independence.
  4. (4)Executive compensation is appropriate in terms of management incentive and commitment aimed at enhancing corporate value.
  5. (5)Corporate governance systems are in place to ensure sufficient internal control in terms of compliance and internal auditing.
  6. (6)Compliance with laws and regulations, and properly respond to the Corporate Governance Code.

iv) Adequate Information Disclosure and a Dialogue with Investors

We believe that companies need to uphold their accountability through timely and proper public disclosure in order for us to precisely grasp the state of investee companies. We also believe that investee companies should actively hold dialogue with each investor to appropriately reflect investors' opinions to corporate management.