Corporate Governance report on companies of Japan

1.Honda

2.Toyota

3.Mitsubishi Corporation

Submitted by-

SECTION B

Group 3:

Chandrashekhar Jindal

Kanumuri Rajshekhar

Raunak Vasandani

Advait Bhobe

Sangram Korekar

HONDABased on its fundamental corporate philosophy, Honda is working to enhance corporateBased on its fundamental corporate philosophy, Honda is working to enhance corporategovernance as one of its most important management issues. Our aim is to have ourcustomers and society, as well as our shareholders and investors, place even greater trustin us and to ensure that Honda is a company that society wants to exist.

Corporate Governance Practices Followed by Honda

1. For Japanese companies that employ a corporate governance system based on a board of corporate auditors (the “board of corporate auditors system”), including Honda, Japan's Company Law has no independence requirement with respect to directors. The task of overseeing management and, together with the accounting audit firm, accounting is assigned to the corporate auditors, who are separate from the company's management and meet certain independence requirements under Japan's Company Law. In the case of Japanese companies that employ the board of corporate auditors system, including Honda, at least half of the corporate auditors must be “outside” corporate auditors who must meet additional independence requirements under Japan's Company Law. An outside corporate auditor is defined as a corporate auditor who has not served as a director, accounting councilor, executive officer, manager, or any other employee of the company or any of its subsidiaries. Currently, Honda has three outside corporate auditors which constitute 60% of Honda's five corporate auditors.

2. Like a majority of Japanese listed companies, Honda employs the board of corporate auditors system as described above. Under this system, the board of corporate auditors is a legally separate and independent body from the board of directors. The main function of the board of corporate auditors is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company: to monitor the performance of the directors, and review and express an opinion on the method of auditing by the company's accounting audit firm and on such accounting audit firm's audit reports, for the protection of the company's shareholders.

3. Japanese companies that employ the board of corporate auditors system, including Honda, are required to have at least three corporate auditors. Currently, Honda has five corporate auditors. Each corporate auditor has a four year term. In contrast, the term of each director of Honda is one year.

4. With respect to the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees, Honda relies on an exemption

under that rule which is available to foreign private issuers with boards of corporate auditors meeting certain criteria.

5. Honda's directors are elected at a meeting of shareholders. Its Board of Directors does not have the power to fill vacancies thereon. Honda's corporate auditors are also elected at a meeting of shareholders. A proposal by Honda's Board of Directors to elect a corporate auditor must be approved by a resolution of its Board of Corporate Auditors. The Board of Corporate Auditors is empowered to request that Honda's directors submit a proposal for election of a corporate auditor to a meeting of shareholders. The corporate auditors have the right to state their opinion concerning election of a corporate auditor at the meeting of shareholders.

6. Maximum total amounts of compensation for Honda's directors and corporate auditors are proposed to, and voted on, by a meeting of shareholders. Once the proposals for such maximum total amounts of compensation are approved at the meeting of shareholders, each of the Board of Directors and Board of Corporate Auditors determines the compensation amount for each member within the respective maximum total amounts.

7. Currently, Honda does not adopt stock option compensation plans. If Honda were to adopt such a plan, Honda must obtain shareholder approval for stock options only if the stock options are issued with specifically favorable conditions or price concerning the issuance and exercise of the stock options.

Group governance system

• Behavioral guidelines

The Honda Conduct Guidelines, formulated to guide the behavior of all employees, is posted on the Honda Worldwide website. In addition, each division produces more detailed behavioral guidelines according to its specific attributes.

• Self-assessment checklist

Each division approaches compliance and risk management in a systematic way. For example, each division has a checklist that clarifies specific laws and risks to consider related to its particular business, and conducts regular self-assessments. The results of such assessments are reported to the director in charge of each division, and the overall status of compliance and riskmanagement is evaluated regularly by the Management Council.

HONDA has different sections which take care of Corporate Governance:

Compliance system

Honda has appointed a Compliance Officer, who is a director in charge of compliance-related initiatives. Other key elements of our compliance system include the Business Ethics Committee and the Business Ethics Improvement Proposal Line.

• Business Ethics Committee

Honda’s Business Ethics Committee is chaired by the Compliance Officer and consists of directors and corporate officers. The Committee deliberates matters related to corporate ethics and compliance. It met four times in fiscal 2006.

• Business Ethics Improvement Proposal Office

Honda places high priority on open communications. It has also set up the Business Ethics Improvement Proposal Office to receive suggestions related to corporate ethics issues. By devising appropriate responses to suggestions received, Honda is constantly working to enhance corporate ethics. The system is designed to ensure the protection of those who provide information, who can either use their real name or remain anonymous. The Business Ethics Committee supervises the operation of the Business Ethics Improvement Proposal Line and submits status reports to the Board of Corporate Auditors.

Risk management system

Each division works to address and mitigate its particular set of risks. In addition, the Honda Crisis Response Rules are designed to address company-wide crises, such as major natural disasters. Honda has appointed a Risk Management Officer, who is a\ director in charge of risk management-related initiatives. It has also established the Company-Wide Response Headquarters to address crisis situations.

Storage and management of information on execution of business by directors

Documents and other information related to the execution of business by directors are stored and managed appropriately, according to the document management policies of Honda Motor Co., Ltd. and its affiliates.

Business audits

The Audit Office is an independent supervisory department under the direct control of the President. This office audits the performance of each department and works to improve the internal auditing of affiliates.

Disclosure Committee

The Disclosure Committee, which consists of members of the Board of Directors, deliberates matters related to the accuracy and appropriateness of corporate information to be disclosed in business results announcements and financial reports.

CORPORATE GOVERNANCE PROGRESS FOR YEARS

TOYOTA CORPORATION

Toyota Motor Corporation abbreviated TMC, is a Japanese multinational automaker headquartered in Toyota, Aichi, Japan. In 2010, Toyota employed 300,734 people worldwide, and was the third largest automobile manufacturer in 2011 by production behind General Motors and Volkswagen AG Toyota is the eleventh largest company in the world by revenue. In July 2012 the company reported that it had manufactured its 200 millionth vehicle.The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries, it created its first product, the Type A engine, and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation group companies are Toyota (including the Scion brand), Lexus, Daihatsu and Hino Motors along with several "non-automotive" companies. TMC is part of the Toyota Group, one of the largest conglomerates in the world.

Toyotas headquarters in Toyota city, Japan.

The Perspective of Corporate Governance in Toyota.

Toyota Industries strives to enhance the long-term stability of its corporate value and maintain society's trust by earnestly fulfilling its CSR commitments in accordance with its Basic Philosophy. To that end, Toyota Industries strives to enhance its corporate governance based

on the belief that maintaining and improving management efficiency and the fairness and transparency of its corporate activities is of utmost importance. Specifically, Toyota has introduced a unique management system focused on prompt decision making for developing our global strategy and speeding up operations.Furthermore, Toyota has a range of long-standing in-house committees and councils responsible for monitoring and discussing management and corporate activities from the viewpoints of various stakeholders to ensure heightened transparency and the fulfilment of social obligations.

Toyota has a unique corporate culture that places emphasis on problem solving and preventative measures. Toyota's approach is to build in quality through manufacturing processes, enhancing the quality of everyday operations and consequently strengthening corporate governance. Toyota's management team and employees conduct operations and make decisions founded on that common system of checks and balances and on high ethical standards.

Toyota Industries has adopted a board of corporate auditors system. Two full-time corporate auditors and three outside corporate auditors attend meetings

of the Board of Directors to monitor the execution of duties by directors. At the same time, meetings of the Board of Corporate Auditors are held once a month

to discuss and make decisions on important matters related to auditing. The full-time

corporate auditors carry out auditing by attending primary meetings and receiving reports directly from directors.

We have assigned dedicated personnel, while corporate auditors monitor the legality and efficiency of management through collaboration with independent auditors and the Audit Department.

As a publicly listed company, Toyota Industries strives to ensure the fairness and transparency of management. Following the Securities Listing Regulations stipulated respectively by the Tokyo Stock Exchange, Osaka Securities Exchange and Nagoya Stock Exchange, we designated as independent auditors two outside auditors who have no conflicts of interest with our shareholders to further enhance our corporate governance.

Aiming to Steadily Increase Corporate Value over the Long TermToyota's top management priority is to steadily increase corporate value over the long term. In order to achieve that, Toyota builds favourable relationships with all of its stakeholders, including shareholders, customers, business partners, local communities and employees. We are convinced that providing products that fully cater to customer needs is essential to achieve stable, long-term growth. Given this situation, Toyota is seeking to strengthen its corporate governance through various policies in order to further enhance its competitiveness as a global corporation.

Toyota's Management System - Systems for Ensuring Appropriate ManagementIn the current managerial system, introduced in 2003, the Chief Officers, who are directors, serve as the highest authorities of their specific operational functions across the entire company, while non-board Managing Officers implement the actual operations. The distinctive feature of this system is that based on Toyota's philosophy of emphasizing developments on the site, the Chief Officers serve as the link between management and on-site operations, instead of focusing exclusively on management.This system enables the management to make decisions directly with on-site operations, by reflecting on-site personnel opinions on management strategy and swiftly implementing management decisions into actual operations.To monitor the management, Toyota has adopted an auditor system that is based on the Japanese Corporation Act.In order to increase transparency of corporate activities, four of Toyota's seven corporate auditors are external auditors.As a system to ensure appropriate management, Toyota has convened meetings of its "International Advisory Board (IAB)" annually since 1996. The IAB consists of approximately 10 distinguished advisors from overseas with backgrounds in a wide range of fields, including politics, economics, the environment, and business. In 2011, we established Regional Advisory Committees in major regions, such as North America, Europe and Asia, and receive advice on diverse business issues from a global perspective.

Under the basic policies established in May 2006, Toyota implements an internal control system while conducting necessary enhancements. Responding specifically to a series of quality issues that caused anxiety for Toyota customers, it established the "Toyota Special Committee for Global Quality" in March 2010 and the “Risk Management Committee in June 2010.Basic Approach to Internal ControlsAn internal control system has been developed under the following basic policies organized in May 2006.

Fundamental Approach Draw out the good will, enthusiasm, and autonomous decision-making abilities of the people who perform work, based on the idea of "respect for people"

Establish structures within the work processes carried out by people and organizations that incorporate internal controls and establish checks and balances as well as management and oversight by directors

Establish inter-departmental organizations to supplement internal controlsBasic Policy

1. Legal compliance by Directors2. Retention and management of information relating to the execution of responsibilities

by Directors3. Regulations and other systems related to the management of risk of losses4. Efficiency of execution of responsibilities by Directors5. Legal compliance by employees6. Appropriateness of the business operations of the group7. Employees assisting the Corporate Auditors8. Independence of employees described in the preceding item (7)9. Report to Corporate Auditors10. Ensure the efficient execution of audits by the Auditors

TMC’s Basic Policy on Corporate Governance and Capital Structure, Business Attributes and Other Basic Information

Basic Policy TMC has positioned the stable long-term growth of corporate value as a top-priority management issue. We believe that in carrying this out, it is essential that we achieve long-term and stable growth by building positive relationships with all stakeholders, including shareholders and customers as well as business partners, local communities and employees, and by supplying products that will satisfy our customers. This position is reflected in the “Guiding Principles at Toyota”, which is a statement of TMC’s fundamental business policies. Also, TMC adopted and presented the CSR Policy “Contribution towards Sustainable Development”, an interpretation of the “Guiding Principles at Toyota” that organizes the relationships with its stakeholders. We are working to enhance corporate governance through a variety of measures designed to further increase our competitiveness as a global company.

Mitsubishi Corporation

Corporate Governance practiced by Mitsubishi MC's corporate philosophy is enshrined in the Three Corporate Principles-corporate

responsibility to society, integrity and fairness, and Global Understanding through Business. Through corporate activities rooted in the principles of fairness and integrity, Mitsubishi Corporation strives to continuously raise corporate value. The Company believes that by helping to enrich society, both materially and spiritually, it will also meet the expectations of shareholders, customers and all other stakeholders.

A key management theme in achieving these goals is to strengthen corporate management on an ongoing basis, as the foundation for ensuring sound, transparent and efficient management. MC is thus working to build a corporate governance system, based on the Corporate Auditor System that is even more effective. To this end, the Company has employed various measures, including the further separation of management and execution by introducing the executive officer system, as well as the enhancement of supervision by appointing a total of eight outside directors and outside corporate auditors (five outside directors and three outside corporate auditors) who meet the requirement to act as independent director or auditor.

MC is committed to strengthening its corporate management system through the ongoing development of effective corporate governance that is both sound and transparent. We also work to continually upgrade and reinforce our compliance system in order to ensure that we conduct business in a manner which is legal and fair

With respect to outside directors, MC has established selection criteria for outside directors and outside corporate auditors to clarify the roles and selection policy for

these directors and corporate auditors. Currently, five out of 12 directors are outside directors selected in accordance with these standards and involved in management from an external perspective.

MC also has a Governance & Compensation Committee and an International Advisory Committee as advisory bodies to the Board of Directors. These committees are made up mostly of outside directors and corporate auditors as well as other experts from outside the Company.

The Governance & Compensation Committee conducts continuous reviews of corporate governance-related issues at the Company and also discusses the remuneration system for directors and corporate auditors, including the policy for setting remuneration and appropriateness of remuneration levels for these corporate officers, and monitors operation of this system. The International Advisory Committee holds discussions on management issues and advises the Company management from a global perspective.

The five corporate auditors, including three outside corporate auditors, utilize staff members of the Corporate Auditors' Office, which is under their direct control, in conducting their audits. At the same time, the corporate auditors attend meetings of the Board of Directors and other important meetings and hold discussions with internal departments, including important offices in Japan and overseas, as well as visit main subsidiaries that are important from the perspective of Group management to conduct audits.

Regarding internal audits, the Internal Audit Dept. conducts audits of the Company, overseas regional subsidiaries and affiliated companies from a Company-wide perspective. These internal audits are conducted after selecting audit targets and are based on annual audit plans. The results of audits are reported to the president, corporate auditors and other concerned parties as well as regularly to the Board of Directors and the Executive Committee.

In addition, each business group has established its own internal audit organization and, based on objectives that have been set-to suit, as necessary, the specific group characteristics, these organizations audit the operations that fall under their respective group’s organization.

Selection Criteria for Outside Directors and Outside Corporate Auditors

Selection Criteria for Outside Directors1. Outside directors are elected from among those individuals who have an eye for

practicality founded on a wealth of experience as corporate managers, as well as an objective and specialist viewpoint based on extensive insight regarding global conditions and social and economic trends. Through their diverse perspectives, outside directors help ensure levels of decision-making and management oversight appropriate to the Board of Directors.

2. To enable outside directors to fulfill their appointed task, attention is given to maintaining their independent stance; individuals incapable of preserving this stance will not be selected to serve as outside directors.

3. MC operations span a broad range of business domains; hence there may be cases of conflict of interest stemming from business relationships with firms home to the corporate managers appointed as outsider directors. MC copes with this potential issue through the procedural exclusion of the director in question from matters related to the conflict of interest, and by preserving a variety of viewpoints through the selection of numerous outside directors.

Selection Criteria for Outside Corporate Auditors1. Outside corporate auditors are selected from among individuals possessing a wealth of

knowledge and experience across various fields that is helpful in performing audits. Neutral and objective auditing, in turn, will ensure sound management.

2. To enable outside corporate auditors to fulfill their appointed task, attention is given to maintaining their independent stance; individuals incapable of preserving this stance will not be selected to serve as outside corporate auditors.

ComplianceCompliance, which is defined as acting in compliance with laws and regulations and in

conformity with social norms, is regarded as a matter of the highest priority in conducting business activities. MC has formulated a Code of Conduct for all officers and employees, which specifies basic matters in relation to compliance. Efforts are made to ensure that all officers and employees are familiar with the Code of Conduct and that the Company's corporate philosophy is understood and practiced.

To promote compliance, MC has established a cross- organizational framework headed by the Chief Compliance Officer. MC is also taking preventive and corrective measures such as offering training regarding various laws and regulations and has established a dedicated compliance organization.

Regarding the status of compliance, in addition to a framework for receiving reports from all organizations throughout the Company, MC has established an internal whistleblower system. Through these structures and systems, MC identifies problems and shares information. Regular reports are also made to the Board of Directors on the status of compliance.

Risk ManagementRegarding risks associated with business activities, MC has designated categories of risk-

such as credit, market, business investment, country, compliance, legal, information management, environmental, and natural disaster-related risks-and has established departments responsible for each category. MC also has in place policies, systems and procedures for managing risk. Furthermore, MC responds to new risks by immediately designating a responsible department to manage such risks.

With respect to individual projects, the person responsible for the applicable department makes decisions within the scope of their prescribed authority after analyzing and assessing the risk-return profile of each project in accordance with Company-wide policies and procedures. Projects are executed and managed on an individual basis in accordance with this approach.

In addition to managing risk on an individual project basis, MC assesses risk for the Company as a whole with respect to risks that are capable of being monitored quantitatively and manages these risks properly, making reassessments as necessary.

Management and Storage of InformationRegarding information related to business activities, personnel responsible for managing

business activities classify information individually in accordance with its degree of importance. These individuals also instruct users on the handling of this information. The aim is to ensure information security while promoting efficient administrative processing and the sharing of information.

Responsible personnel store for a predetermined period documents that must be stored by law and information that the Company specifies as important in terms of internal management. For all other information, responsible personnel determine the necessity and period for storage of information and store such information accordingly.

Ensuring Proper Business in Group ManagementMC specifies a responsible department for the oversight of each subsidiary and affiliate

and quantitatively monitors business performance, management efficiency and other operational aspects of each company every year. Efforts are also made to monitor qualitative issues such as compliance and risk management.

MC strives to ensure proper business conduct by subsidiaries and affiliates by sending directors to sit on their boards, executing joint venture agreements, exercising its voting rights and in other ways. In this way, and through various initiatives designed to sustain growth at each company, MC aims to raise corporate value on a consolidated basis.

Auditing and MonitoringEach organization takes responsibility for reviewing and improving its business activities

on a regular basis. In addition, to more objectively review and evaluate the business activities of each organization, MC conducts regular audits through an internal audit organization.

Corporate AuditorsCorporate auditors attend and express opinions at meetings of the Board of Directors

and other important management meetings. In addition, corporate auditors gather information and conduct surveys, keeping channels of communication open with directors, employees and others who cooperate with these efforts.

If there is a risk of a certain level of financial loss or a major problem, the person responsible for the department concerned is required to immediately report to corporate auditors in accordance with predetermined standards and procedures.

To raise the effectiveness of audits conducted by corporate auditors, personnel are appointed to assist corporate auditors in carrying out their duties. Mindful of the need for independence, the opinions of corporate auditors are respected and other factors taken into consideration when evaluating and selecting people to assist them.

Financial ReportingTo ensure the proper and timely disclosure of financial statements, MC appoints

personnel responsible for financial reporting and prepares financial statements in conformity with legal requirements and accounting standards. These financial statements are released after being discussed and confirmed by the Disclosure Committee and then obtaining the approval of the Board of Directors.

Regarding the internal controls over financial reporting, MC conducts internal control activities and monitors internal controls in accordance with the internal control reporting system based on the Financial Instruments and Exchange Act of Japan. The Company develops activities on a Group-wide basis to ensure the effectiveness of internal controls.