Corporate Governance

Basic Approach

Based on the Code of Conduct, “Be Ethical (Reliability and sincerity, creativity and ingenuity, transparency and integrity),” and the Declaration of the Group Code of Conduct, Itochu Enex remains committed to thorough compliance as a corporate citizen, focusing on shareholder interests and ensuring management transparency in business management. To that end, it is continually strengthening corporate governance to respond to the changing business environment.

Corporate Governance System

The Company has a Board of Directors and Audit & Supervisory Board Members (Audit & Supervisory Board). In accordance with laws and regulations, the Company’s Articles of Incorporation,rules of the Board of Directors and other internal rules, the Board of Directors makes decisions on material matters and oversees the Directors’ performance of their duties. Each Director executes his or her duties based on the roles defined by the Board of Directors,and in accordance with laws and regulations, the Articles of Incorporation and internal rules. To strengthen the Board of Directors’ decision-making and oversight functions and increase the efficiency of business execution, the Company has adopted an executive officer system. As delegated by the Board of Directors and Representative Directors, Executive Officers execute the duties assigned to them based on decisions made by the Board of Directors.

About Committees

①Board of Directors(Meetings in FY2019: 13)

The Board of Directors, consisting of eight Directors in total—five Inside Directors and three Outside Directors—determines the fundamental management policies of the Company and is responsible for management oversight. In addition to the exclusive rights defined in laws and regulations, the Board makes decisions on business execution matters that are of high quantitative or qualitative significance. However, given the importance of prompt decision-making, the Board delegates decision-making on ordinary business execution to the Directors and Executive Officers wherever possible and oversees the status of that execution. The Directors, as trustees appointed by shareholders to manage the Company, have the obligation to exercise due care and loyal fulfillment of their duties and to contribute to the sustained growth of the Company, as well as medium-to-long-term improvement in corporate value.

②Audit & Supervisory Board(Meetings in FY2019: 11)

The Audit & Supervisory Board consists of four members in total (including three outside members), of whom two are full-time and two are part-time members. In accordance with the regulations of the Audit & Supervisory Board, the standards for audits by Audit & Supervisory Board Members, the audit policy established by the Audit & Supervisory Board, and the allocation of duties, Audit & Supervisory Board Members attend meetings of the Board of Directors and other important meetings, receive updates on the status of execution of duties from Directors and others, review key documents that support decision-making,examine the business and assets of the head office and major business sites,request sales reports from subsidiaries when necessary, and strictly audit the execution of duties of Directors and Executive Officers. In addition, the Audit & Supervisory Board conducts activities focused on cooperation with corporate auditors of consolidated Group companies, including establishing and holding meetings of the Group Corporate Auditors Conference, which consists of audit and supervisory board members of major Group companies.

③Management Advisory Conference(Meetings in FY2019: 17)

For proper and agile decision-making on execution of duties, the Management Advisory Conference has been set up as an advisory body to the CEO. At meetings of the Management Advisory Conference, deliberations are held on the Group’s overall management policies, business plans and other important matters concerning execution of duties, and consolidated management indicators and management plans are formulated.

④Governance Committee(Meetings in FY2019: 12)

The Governance Committee consists of six members, of whom five are independent officers (three Outside Directors and two Outside Audit & Supervisory Board Members) and one is an Inside Director. As a voluntary advisory committee to the Board of Directors, the Governance Committee was set up to strengthen and enhance the effectiveness of management oversight and the transparency of decision-making by the Board of Directors. It examines the methods of selecting Directors and Audit & Supervisory Board Members and individual appointment and dismissal proposals, analyzes and evaluates the most appropriate form for the Director remuneration system (the appropriateness of compensation-setting policies and level of compensation) and the effectiveness of the Board of Directors as a whole, and discusses governance-related proposals.

⑤Risk Management Committee(Meetings in FY2019: 6)

The Risk Management Committee leads ongoing management enhancement and risk mitigation by identifying and analyzing risks that could have a material impact on management, implementing countermeasures, preventing the occurrence and materialization of risks and promoting risk awareness (including investment reviews for cross-shareholdings and verification of the necessity of holding such shares, etc.).

⑥Internal Control Committee(Meetings in FY2019: 6)

To ensure that the internal control system is operating appropriately, the Company reviews the development and implementation status of the internal control system at the Internal Control Committee meeting every six months for each item in the Basic Policy. The results of discussions in the Internal Control Committee are reported to the Board of Directors, and a final assessment is made on the development and implementation status of the internal control system at a Board of Directors meeting. At the meeting held on April 30, 2020,the Board of Directors evaluated the development and implementation status of each item enumerated in the Basic Policy for FY2019, and confirmed that there were no significant deficiencies or flaws.

⑦Disclosure Committee(Meetings in FY2019: 4)

The Disclosure Committee consists of persons in charge of departments, and was established for the purpose of raising the accuracy of decision-making on disclosure. The Disclosure Committee deliberates matters concerning the development and implementation of internal controls over disclosure of corporate information and financial reporting.

⑧Outside Consultant

The Group has established inside and outside whistleblowing contact points.These contact points offer a prompt response to employees with concerns that they may have violated or be about to violate the Declaration of the Group Code of Conduct or laws, or when they know of a violation committed by an officer or another employee and cannot point out the violation to that person, or when they have determined that a violation is likely to occur.

Response to Japan’s Corporate Governance Code

The Company endorses the goal of “growth-oriented governance” called for in Japan’s Corporate Governance Code, issued by Tokyo Stock Exchange, Inc. (TSE). The Company is taking measures aimed at ensuring sound leadership by senior managers and transparent and fair decision-making, and is addressing all items in the Corporate Governance Code.

Outside Officers

In selecting outside offi cer candidates, the Company seeks to enhance its corporate value by selecting individuals who have knowledge in specialized fi elds such as management, law, accounting and energy, and who can be expected to contribute to oversight of the Company’s management and business execution from various perspectives. The Company sets its own criteria for determining the independence of outside offi cers, in addition to the requirements for independent offi cers set forth by the TSE and other securities exchanges in Japan. Please see the Company’s Corporate Governance Report for details.

■Outside Officer Skills Matrix

Evaluation of the Effectiveness of the Board of Directors

The Company requested all Directors and Audit & Supervisory Board Members to submit opinions about the effectiveness of the Board of Directors for FY2019, based on each Director’s self-evaluation. After deliberations by the Governance Committee,referring to these opinions and assessment by an independent evaluation organization, the Board of Directors met to analyze the results.