Philosophy and policies

We here at Nomura Real Estate Holdings believe in governance that maximizes the value of the corporate group over the long term while considering the interests of its shareholders and other stakeholders. As a holding company, we manage and supervise the business activities of our subsidiaries and strive to build a more transparent management system in accordance to the ""Basic Corporate Governance Policy"" with the aim of improving the profitability of the entire group.

Corporate governance report

Corporate Governance System

Chart of Corporate Governance System

Chart of Corporate Governance System

Board of Directors

The Board of Directors bears the responsibility of realizing effective corporate governance for all shareholders, and through this, achieving sustainable growth of the Company and working to maximize long-term corporate value. To fulfill this responsibility, the role of the Board of Directors is to ensure the fairness and transparency of management by fully supervising management, and make the best decisions for the Company through important business execution decisions, etc. The Company’s Board of Directors comprises seven Directors (excluding Directors who serve as Audit & Supervisory Committee Members) (of which one is External Director) and six Directors who serve as Audit & Supervisory Committee Members (of which four are External Directors). The Company elects diverse Directors with various knowledge, experience and skills in order to ensure the necessary balance and diversity as a holding company that manages companies that conduct business in various areas. In order to strengthen the supervisory function of the Board of Directors and realize highly fair and transparent management, five out of the 13 Directors are Independent External Directors.

Board Members

Audit and Supervisory Committee

Nomura Real Estate Holdings has an Audit and Supervisory Committee which comprises a majority of Outside directors, and is responsible for management oversight. It conducts audits utilizing the Company's internal control system, regularly receives reports on the status and results of internal audits from the Internal Audit Department. In addition, the committee can, if necessary, request reports from directors, executives, and business execution departments of the Group companies and the Company. The Audit and Supervisory Committee members attend meetings of the Executive Committee and other important meetings, collect information on the status of business operations, and can express their opinions, all to conduct effective audits and supervision.
The members of our Audit and Supervisory Committee are as follows:

Chairperson: Takao Orihara (Full-time)
Members: Takao Orihara (Full-time), Yasushi Takayama (Full-time), Akira Ono (Independent External Director), Yoshio Mogi (Independent External Director), Akiko Miyakawa (Independent External Director) and Tetsu Takahashi (Independent External Director)

Nomination and Compensation Advisory Committee

The Company has set up an Advisory Committee Relating to Nominations and Compensation, the majority of which are independent external directors, as an advisory organization to strengthen the impartiality, objectivity and accountability of the functions of the board of directors in relation to decisions on director and executive officer nominations and compensation. The committee will discuss matters relating to the nomination of and compensation for directors and executive officers, successor plan, policy for training, etc. and shall report the outcome of discussions to the Board of Directors.
The Members of the Advisory Committee Relating to Nominations and Compensation of the Company are as follows.

Chairperson:Atsushi Yoshikawa (Director and Chairperson of the Board of Directors)
Members:Atsushi Yoshikawa (Director and Chairperson of the Board of Directors), Tetsuro Higashi (Independent External Director), Akira Ono (Independent External Director and Audit & Supervisory Committee Member), Yoshio Mogi (Independent External Director and Audit & Supervisory Committee Member) and Shoichi Nagamatsu (Part-time Director)

Management Committee

The Company has introduced a system of executive officers with an aim to strengthen Group management, to separate and enhance the business execution function from the decision-making and supervisory functions. Each executive officer appointed by the Board of Directors is delegated management authority based on the Company’s internal rules and other stipulations to execute business under the direction of the president & representative director and policies approved by the Board of Directors of the Company.
The Management Committee, which is comprised of the Chief Executive Officer and Executive Officers, determines certain matters regarding the execution of business at overall group companies. Director and Chairperson of the Board of Directors and Directors who are Audit & Supervisory Committee Members attend meetings of the Committee, where they express their opinions as necessary.

Other Committees

Under the Management Committee, there are the following committees that discuss the Group’s management policies, issues to be coped with, etc.

[Budget Committee]
For the compilation of budgets, preparation of medium-term business plans and other matters, the Committee discusses the planning, exercise and other matters regarding budgets and medium-term business plans.

[Risk Management Committee]
With the aim of securing the continuity and stable development of business through the exercise of risk management, the Committee discusses matters in connection with internal controls, risks in the Group’s management and other matters.

[Sustainability Committee]
The Committee discusses matters on the promotion of sustainability/CSR/ESG and others for the purpose of establishing policies and plans and managing results regarding the promotion of sustainability/CSR/ESG, deepening Group employees’ understanding and disclosing various information thereof.

[DX Strategy Committee]
The Committee discusses matters on DX strategy and investment plans for preparing the ICT base and building information systems to establish policies and plans regarding the promotion of DX, and to improve the ICT environment and to use it effectively.

Accountability of the Board of Directors

Appointment of directors

The directors of Nomura Real Estate Holdings are elected at the general meeting of shareholders every year in accordance with the Articles of Incorporation, differentiating directors who are Audit and Supervisory Committee members from other directors. In order to ensure the necessary balance and diversity as a holding company that oversees companies operating in a wide range of fields, directors are those with a variety of knowledge, experience and ability, regardless of nationality and gender. In order to function effectively, we have no more than 12 directors (excluding directors who are Audit and Supervisory Committee members) and no more than 6 directors who are Audit and Supervisory Committee members.

Independent external directors

In order to strengthen the supervisory function of the Board of Directors and achieve fair and highly transparent management, one independent external director (excluding Directors who are Audit & Supervisory Committee Members) and four independent external directors who serve as Audit & Supervisory Committee Members are appointed. The main role of independent external directors is, based on their own knowledge, to give appropriate advice from the viewpoint of the Company’s sustainable growth and improving the corporate value, to supervise management through significant decision making by the Board of Directors, to supervise conflicts of interest between the Company and management or major shareholders, etc., and to appropriately express the opinions of shareholders and other stakeholders to the Board of Directors from a standpoint independent from management.
The Board of Directors of the Company has formulated its own standards for Impartiality of independent external directors as described below, in addition to the independence standards set out by the Tokyo Stock Exchange, and candidates for independent external directors are nominated in accordance with these standards.

[Independence standards for Outside directors]

Extract from Article 14 of the Basic Corporate Governance Policy
Article 14: The Board of Directors has established its own standards for the independence of Outside directors in addition to the standards stipulated by the Tokyo Stock Exchange when appointing a candidate as an Outside director.
(1) Executives of other companies that have mutual offices with the Company or its subsidiaries
(2) Major business partners*1 of the Company or its subsidiaries, or persons whose main business partner*1 is the Company or its subsidiaries (if the business partner is a corporation, the person who carries out the business)
(3) Consultants, accounting professionals, or legal professionals who have earned more than 10 million yen in monetary or other property benefits in addition to executive compensation from the Company or its subsidiaries in the last fiscal year
(4) Persons who belong to corporations that provide specialized services such as law firms, accounting firms, consulting firms, etc. that earn large amounts monetary or other property benefits*2 from the Company or its subsidiaries
(5) Major shareholders of the Company (if the major shareholder is a corporation, the person who executed the business of the corporation or the person who executed the business in the past), executives or previous executives of lead securities companies
(6) Close relatives of persons described in (1) and (5)

*1. Major business partners are those whose transactions with the Group exceed 2% of the annual consolidated sales of the Company or the business partner in the last fiscal year
*2. A large monetary or other property benefits are profits that exceed 2% of the annual consolidated sales for the previous fiscal year of the corporation

Full name Reason for appointment Main activities
Tetsuro Higashi Mr Higashi was selected as an Outside director to contribute to strengthening the supervisory function of the Board of Directors and ensuring fair and transparent management by drawing on his wealth of knowledge, experience, and profound insights related to corporate management in his long career as a corporate manager. Furthermore, based on his attributes and relationship with NREH, it was determined that there is no risk of conflict of interest with general shareholders as specified by the Tokyo Stock Exchange and he was designated as an Independent Director. Mr. Higashi attended 13 out of 13 meetings of the Board of Directors held after he assumed the position on June 25, 2019, and asked questions and expressed opinions on proposals, deliberations and other matters as necessary.
Akira Ono Mr Ono has great knowledge, experience and profound insights as a legal expert acquired through his many years working as an attorney. Although he has no direct experience in the management of a company, he was selected as an Outside director who is also an Audit & Supervisory Committee Member because it is expected that his extensive experience and knowledge will contribute to strengthening the supervisory function and the corporate governance structure of the Board of Directors, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, it was determined that there is no risk of conflict of interest with general shareholders as specified by the Tokyo Stock Exchange before he was designated as an Independent Director. Mr. Ono attended 15 out of 16 meetings of the Board of Directors and 13 out of 13 meetings of the Audit & Supervisory Committee held during the fiscal year under review and asked questions and expressed opinions on proposals, deliberations and other matters as necessary.
Yoshio Mogi Mr Mogi has great knowledge, experience and profound insights concerning corporate management acquired through his many years working as a corporate manager. He was selected as an Outside director who is also an Audit & Supervisory Committee Member because it is expected that his extensive experience and knowledge will contribute to strengthening the supervisory function and the corporate governance structure of the Board of Directors, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, it was determined that there is no risk of conflict of interest with general shareholders as specified by the Tokyo Stock Exchange before designating him as an Independent Director. Mr. Mogi attended 13 out of 13 meetings of the Board of Directors and 9 out of 9 meetings of the Audit & Supervisory Committee held after he assumed the position on June 25, 2019, and asked questions and expressed opinions on proposals, deliberations and other matters as necessary.
Akiko Miyakawa Ms Miyakawa has great knowledge, experience and profound insights as an expert at accounting and auditing acquired through her many years working as a Certified Public Accountant. Although she has no direct experience in the management of a company, she was selected as an Outside director who is also an Audit & Supervisory Committee Member because it is expected that her extensive experience and knowledge will contribute to strengthening the supervisory function and the corporate governance structure of the Board of Directors, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, it was determined that there is no risk of conflict of interest with general shareholders as specified by the Tokyo Stock Exchange before designating him as an Independent Director. Ms. Miyakawa attended 13 out of 13 meetings of the Board of Directors and 9 out of 9 meetings of the Audit & Supervisory Committee held after she assumed the position on June 25, 2019, and asked questions and expressed opinions on proposals, deliberations and other matters as necessary.
Tetsu Takahashi Tetsu Takahashi has great knowledge, experience and profound insights as a legal expert acquired through his many years working as a lawyer. He has never in the past been involved in the management of a company except as an outside director, however he has been selected as an External Director as Audit & Supervisory Committee Member because it is expected that his extensive experience and knowledge as a representative of a law firm and an outside director and outside audit & supervisory board member of other companies will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, we determined that there is no risk of conflict of interest (Translation) 12 with general shareholders as specified by the Tokyo Stock Exchange before designating his as an Independent Director -

Assessing the effectiveness of the Board of Directors

For the Assessment of the Effectiveness of the Board of Directors in Fiscal Year ended March 2020, as was the case in the previous fiscal year, the Company conducted questionnaires and interviews of all directors (including Audit & Supervisory Committee Members) utilizing a thirdparty evaluation organization. The analysis and assessment based on discussions at a meeting of the Board of Directors regarding the results are outlined below.

Evaluation results
Members: The scale of the Board of Directors and the ratio of independent external directors are broadly appropriate.
Discussions: Discussions are free and lively, exceeding internal and external limits and leveraging the knowledge and experience of each Director. In particular, discussions were further enhanced in the fiscal year ended March 31, 2020 through the opinions, etc. from newly appointed external directors.
Operation: Continuous improvements to the operation, such as ensuring provision of materials prior to meetings, were broadly evaluated as having contributed to improving the effectiveness of the Board of Directors. On the other hand, there is further room for improvement regarding the operation, such as further clarifying the discussion points in the proposal explanations and materials. By continuing to strive for thorough improvements to the operation, the Company will take measures to further improve the effectiveness of the Board of Directors.
Matters for discussion: Discussions about various management challenges were enhanced by continuous improvements to the operation, such as narrowing down of matters for discussion by the Board of Directors and providing opportunities for deliberation outside of regular Board of Directors meetings. For Fiscal Year ending March 2021, the Company aims to improve strategic discussions further about enhancing corporate value and corporate governance.

Internal control system

Internal control system

Nomura Real Estate Holdings has established the Board of Directors, the Audit and Supervisory Committee, and the Nomination Compensation Advisory Committee for internal control.

Risk management system

Nomura Real Estate Holdings established a Risk Management Committee to promote risk management activities within the Group. The Committee is made up of directors and executive officers of the Company and Group companies, and deliberates matters relating to risk management, compliance, and information security for the entire Group, and discusses countermeasures for when risks occur.

Compliance System

The Nomura Real Estate Group Code of Ethics was formulated as a guideline, as we consider compliance, such as observance of laws, regulations, and corporate ethics as one of the most important management issues. Furthermore, the Risk Management Committee and the Group Legal Compliance Department were established to promote continuous education and enlightenment activities for executives and employees as a group and provide advice, guidance and support to group companies. There has also been a whistle-blowing hotline set up for group employees to collect information on risks. The Company guarantees the anonymity of whistleblowers and prohibits the negative treatment of whistleblowers.

Internal Audit System

With the exception of some small companies, the Group has an internal audit department in each company. This department maintains organizational independence by setting up officers under the direct control of the president or directors who do not hold additional office in other business divisions. In addition, the Group Audit Department was established in Nomura Real Estate Holdings, which oversees, monitors, and evaluates the internal audit of the entire group in coordination with the accounting auditor. The results are reported to the Board of Directors and the Audit and Supervisory Committee.

Audit and Supervisory Committee Audit System

The Audit & Supervisory Committee is comprised of six members, two Audit & Supervisory Committee Members (full-time) and four Audit & Supervisory Committee Members (Independent External Directors). (Translation) 25 Of the four Audit & Supervisory Committee Members (Independent External Directors), one Member was newly elected at the 16th Ordinary General Meeting of Shareholders of the Company, held on June 23, 2020. The two full-time Members were elected to strengthen the effectiveness of audit and supervision functions through the collection of information from Directors (excluding Directors who are Audit & Supervisory Committee Members), Executive Officers, employees, etc., attendance at important meetings and close cooperation with the Internal Audit Dept.
The Audit & Supervisory Committee holds regular meetings prior to monthly Board of Directors meetings with all Members attending the meetings. It also holds irregular meetings as necessary. During the fiscal year ended March 2020, the Committee held 13 meetings. Each of the monthly meetings took approximately three hours. After receiving audit reports from the Internal Audit Dept., reports on important meetings, including those of the Management Committee, from the full-time Audit & Supervisory Committee Members and quarterly financial reports from the Finance & Accounting Dept., the Members of the Audit & Supervisory Committee, among other activities, exchanged opinions with Group CFO, Executive Officer and Supervisor of Management Division on a regular basis and confirmed what was discussed at meetings of the Advisory Committee Relating to Nominations and Compensation. The Company also adopts measures to enhance the effectiveness of audits, having established an Audit & Supervisory Committee Dept. to support the execution of duties by the Audit & Supervisory Committee and appointed full-time staff dedicated to the department.

Accounting audits

1. Name of auditing firm
Ernst & Young ShinNihon LLC
The Company appointed Ernst & Young ShinNihon LLC as the Accounting Auditor pursuant to the Companies Act.

2. Continued auditing period
Since June 2004

3. Certified Public Accountants involved in auditing
CCertified Public Accountant/ Designated and Engagement Partner Shuji Kaneko
Certified Public Accountant/ Designated and Engagement Partner Toru Nakagiri
Certified Public Accountant/ Designated and Engagement Partner Natsuki Saiki
Ernst & Young ShinNihon LLC takes measures to ensure that Engagement Partners do not continue their involvement in NREH accounting audits for more than seven consecutive accounting periods (Translation) 30 (five accounting periods for Head Engagement Partners at listed companies).

4. Assistants involved in auditing
Certified Public Accountants: 6/ Part-qualified Accountants, etc.: 5/ Other: 8

5. Auditing company selection policy and reasons
The Audit & Supervisory Committee established the standards concerning the evaluation and selection of Accounting Auditors. When a need arises to select an Accounting Auditor, the Audit & Supervisory Committee chooses an appropriate audit firm after it obtains necessary information from candidates, hold interviews and make questions focused on the quality assurance systems, independence, audit execution systems and estimates for audit fees.
Furthermore, the committee discusses and determines the appropriateness of reappointment of the Company’s Accounting Auditor and the team engaged in the audit each year after it obtains necessary information and receives reports from the Accounting Auditor and considers the execution conditions of its duties (including the execution conditions in the previous fiscal years), based on the above evaluation criteria for the Accounting Auditor.
If the Accounting Auditor is recognized as falling under any of the items listed in Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Committee shall dismiss the Accounting Auditor with the unanimous consent of all Audit & Supervisory Committee Members. In addition, notwithstanding the above, if it is recognized that the Accounting Auditor’s fulfilment of appropriate auditing would be difficult due to the occurrence of reasons that compromise the eligibility or independence of the Accounting Auditor, the Audit & Supervisory Committee shall propose the dismissal or non-reappointment of the Accounting Auditor at a General Meeting of Shareholders.

6. Evaluation of the Accounting Auditor by the Audit & Supervisory Committee
The Audit & Supervisory Committee judges it proper to reappoint the current audit firm based on the evaluation from the aspects of the audit firm’s quality management conditions, independence of the audit team in charge of the Company and expression of its professional skepticism, appropriateness of audit fees, effectiveness of communication between management and the Audit & Supervisory Committee and response to fraud risks.

Shareholder Rights and Securing Impartiality

Cross-holding shares

Nomura Real Estate Holdings formulated the “Basic Policy on Cross-holding Shares” within the “Basic Corporate Governance Policy” for cross-held shares.

[Basic Policy on Cross-holding Shares]
Excerpt from “Basic Corporate Governance Policy”

Article 4 1. The Company's policy on cross-holding shares, is that they enhance the corporate value of the Company by strengthening business relationships and aid in the creation of strategic business tie-ups.
2.While cross-holding shares, the Board of Directors annually evaluates the rationality of continuing to own said shares by regularly monitoring the state of transactions with the Group and the management status of investee companies, and seeing how they contribute to the enhancement of corporate value. Shares that do not pass this evaluation will be sold.
3. When voting on cross-held shares, the Company judges whether or not they contribute to the enhancement of the corporate value of the company through the enhancement of corporate value of the investee company.
4. In the event that a company that holds the Company's shares as cross-held shares (a cross-held share holder) has indicated its intention to sell or otherwise transfer said shares, the Company will take the appropriate measures so as to not impede the sale of shares, such as by suggesting reductions in transactions, etc.
5. Transactions with cross-held shareholders will only be made after fully verifying economic rationality, as with other business partners.

Performance

Initiatives to promote

FY2019 Conference Results

Types of MeetingsNumber of meetings held
Board of Directors16
Audit and Supervisory Committee13
Management Committee41
CSR Committee(Current Sustainability Committee)/ CSR Promotion Committee5
Risk Management Committee and Group Risk Meeting 12

* Scope of report: Nomura Real Estate Holdings

Attendance rate at meetings of the Board of Directors and the Audit & Supervisory Committee

Fiscal Year ended March 2018 Fiscal Year ended March 2019 Fiscal Year ended March 2020
Board of Directors* (%) 98.6 100 99.0
Of which external directors (%) 96.8 100 97.5
Audit & Supervisory Committee (%) 98.3 100 100
Of which external directors who serve as Audit & Supervisory Committee Members (%) 97.2 100 100

* In the fiscal year ended March 2018, the number of times that some directors withheld attendance at the Board of Directors meeting based on the purpose of Article 369, Paragraph 2 of the Companies Act is excluded.

Attendance of external directors at meetings of the Board of Directors and the Audit & Supervisory Committee held in the fiscal year ended March 2020

NameBoard of DirectorsAudit & Supervisory Committee
Satoko Shinohara Attended 15 out of 16 meetings held
Tetsuro Higashi Attended 13 out of 13 meetings held*
Akira Ono Attended 15 out of 16 meetings held Attended 13 out of 13 meetings held
Yoshio Mogi Attended 13 out of 13 meetings held* Attended 9 out of 9 meetings held*
Akiko Miyakawa Attended 13 out of 13 meetings held* Attended 9 out of 10 meetings held*

* The meetings of the Board of Directors and the Audit & Supervisory Committee held after they were appointed as a director or Audit & Supervisory Committee Member on June 25, 2019 are included.