Corporate Governance Report

Last Update: November 12, 2021

Mitsubishi UFJ Financial Group, Inc.

President & Group CEO Hironori Kamezawa

https://www.mufg.jp/english/index.html

The Corporate Governance of Mitsubishi UFJ Financial Group is described below.

I Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company that encompasses several subsidiaries including MUFG Bank, Ltd., Mitsubishi UFJ Trust and Banking Corporation, and Mitsubishi UFJ Securities Holdings Co., Ltd. MUFG's management has determined that designing and executing a corporate governance framework is one of the most important issues in achieving its medium- to long-term goal of being "the world's most trusted financial group," as outlined in "MUFG Way" below.

Since its establishment, MUFG has worked to build a stable and effective corporate governance structure, putting emphasis on ensuring

external oversight. As the company with three committees, MUFG aims to strengthen the board of directors' oversight functions through the separation of execution and oversight at the holding company level, to construct an effective and efficient governance framework, that is more comprehensible for overseas stakeholders, as befits a G-SIBs (Global Systemically Important Banks).

In April 2021, MUFG renamed its Corporate Vision as "MUFG Way" and newly defined its social purpose - the purpose of its existence, along with its shared values and medium- to long-term goal. "MUFG Way" serves as the group's basic policy in conducting its business activities and provides guidelines for all group activities. MUFG stipulates the Code of Conduct which encapsulates the standards that guide employees' conduct and decision-making in our day-to-day business activities under "MUFG Way".

MUFG Way
	Empowering a brighter future.
	1.Integrity and Responsibility 2.Professionalism and Teamwork 3.Challenge Ourselves to Grow
	Be the world's most trusted financial group

Code of Conduct

The Code of Conduct encapsulates the standards that guide employees' conduct and decision-making in our day-to-day business activities under "MUFG Way". It is designed to provide guidance in times of doubt, or when we find it difficult to know if we are making the right choice. The Code of Conduct is organized into three chapters.

Chapter 1 Customer Focus

Our customers are at the center of everything we do, and should always be the focus of our thoughts. Our aim should be to win the trust and confidence of our customers at all times. MUFG exists today because of the trust and confidence that customers have placed in us over many years. Our role is to increase and strengthen this bedrock of trust and confidence. Our activities are not driven by the prospect of short-term gains. Instead, we look to build ongoing relationships with our customers to support their long-term growth.

Chapter 2 Responsibility as a Corporate Citizen

As we develop our business globally, we comply with all the domestic and international laws and rules that may apply. We do all we can to maintain stability and confidence in the global financial system, and contribute to the sound and healthy growth of society. Aware of the responsibility and accountability each of us has as a member of MUFG, we carry out fair and transparent corporate activities with honesty and integrity, in a manner that supports and strengthens the trust and confidence MUFG has earned from society over many years.

Chapter 3 Attitudes and Behaviors in the Workplace

We strive to respond and adapt promptly to the diversifying and evolving needs of our customers and the rapidly changing environment in which we work. The working environment at MUFG fosters mutual respect, enables individuals to make the most of their abilities as professionals, and maximizes the power of teamwork across regions and different areas of business, encouraging all staff members to embrace new challenges. We work always to protect and maintain the tangible and intangible assets and property that MUFG has accumulated.

In light of the growing awareness of environmental and social issues, we have identified 10 prioritized issues such as response to climate change

• environmental protection, response to aging population & low birthrate, and are promoting sustainability management. With regard to climate change, we will strengthen our efforts as stated in the MUFG Carbon Neutrality Declaration. (https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20210517-003_en.pdf)

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

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The contents are based on the Corporate Governance Code revised in June 2021. In addition, the contents for the prime market, which will be applied after April 4, 2022, will be voluntarily described in advance. MUFG has determined that the design and operation of a corporate governance framework based on the concepts outlined above is one of its most important issues. MUFG implements all of these individual principles in compliance with MUFG Corporate Governance Policies.

[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1.4]

1. Strategic shareholdings policy

The circumstances surrounding strategic shareholdings (1) have changed greatly in recent years due to, among other things, the tightening of international financial regulations and the introduction of the Corporate Governance Code in Japan.

Based on these changes, MUFG has adopted a basic policy that its Group banks (2), taking into account shareholding risk, capital efficiency and international financial regulations, shall reduce the amount of shares held for the purpose of strategic investment (3), following sufficient consultation with the relevant corporate business clients.

Shares held for the purpose of strategic investment will be examined for their significance and economic rationale from the perspectives of our corporate business clients' growth and earnings and the strengthening of business relations. We shall proceed with selling those shareholdings for which there is insufficient rationale, after securing an understanding of the relevant corporate business clients. Even where there is sufficient rationale, we may sell those shareholdings in accordance with our basic policy of reducing strategic shareholdings, taking into account, among other things, the market environment and our business and financial strategy.

In fiscal year 2020, MUFG reduced its strategic shareholdings by approximately 137 billion yen (simple combined revenue of Group banks, acquisition cost basis). MUFG aims to reduce its strategic shareholdings by more than 300 billion yen over three years from fiscal year 2021 to 2023.

Note:

1. "Strategic shareholdings" refers to shares excluding trading investments (shares of subsidiaries and affiliates are not included). These are classified into three categories: 1. strategic investments, 2. business strategy and 3. revitalization support, with most falling under 1.
2. "Group banks" refers to MUFG Bank, Ltd. and Mitsubishi UFJ Trust and Banking Corporation, consolidated subsidiaries of MUFG.
3. "Shares held for the purpose of strategic investment" refers to shares held for the purpose of increasing the medium- to long-term economic profits of MUFG and Group banks through maintaining and expanding comprehensive business relations with our corporate business clients.

2. Examination of significance and economic rationale of shareholdings

At each Group bank, all shares held for the purpose of strategic investment are being confirmed for their significance and economic rationale (risk-return) over the medium- to long-term from the perspectives of our corporate business clients' growth and earnings and the strengthening of business relations. Based on Principle 1-4 of the Corporate Governance Code, individual strategic shareholdings (4) are examined by

MUFG's Board of Directors.

Economic rationale is examined based on overall business RORA(5) target value, which is set based on MUFG's capital costs. The results of the March 31, 2021 validations are as follows.

• We confirmed the validity of the significance of these shareholdings as most of the validation targets were held with the aim of enhancing the medium- to long-term economic interests of MUFG and Group banks.
• Regarding economic rationality, the overall business RORA of all of the verification targets as a whole exceeded 1.2 times larger than the target value. 75% of the business partners exceeded the target value on company number basis, the sum total of the said shares MUFG held accounts for 81% on book value basis and 70% on market value basis. (6) We aim to improve profitability from business with the business partners which do not meet the target value and, if the profitability is not improved within a certain time of period, may consider selling their shares.

Note:

1. The aggregate market value held as of March 31, 2021 was approx. 5.1 trillion yen (book value: approx. 1.9 trillion yen).
2. Overall business RORA (Return on Risk-Weighted Assets) is calculated by dividing Profit (Income from banking transactions and trust banking transactions with a concerned business partner group as well as stock dividends from the said group - Expected loss - Expenses etc.) by risk assets (total value of credits and shares) which are based on the internal rating based approach in comply with the capital adequacy requirements. In addition, risk asset shares are calculated based on market values.
3. The profitability is determined by whether overall business RORA of a concerned business partner group exceeded a target value or not.

3. Standards with respect to the exercise of voting rights

In order to ensure the appropriate exercise of voting rights of shares held for the purpose of strategic investment, MUFG and Group banks will make comprehensive decisions on every proposal for the agenda of a shareholders meeting after confirming the following two points:

1. Will it increase the medium- to long-term corporate value and lead to continuous growth including ESG(7) elements of the relevant corporate business client?
2. Will it increase the medium- to long-term economic profits of MUFG and Group banks?

Significant agenda of a shareholders meeting that could have material impact on medium- to long-term improvement of corporate value of the relevant corporate business client and economic benefit for MUFG and Group banks will be determined through communication with the relevant corporate business client, etc. as necessary. Following agendas are considered significant by MUFG and Group banks:

• Agenda on disposal of surplus (when disposal significantly lacks balance with financial soundness and retained earnings)
• Agenda on election of directors or corporate auditors(when the relevant corporate business client has caused a disgraceful affair, posted a loss for a certain consecutive period, Return on Equity is sluggish, or not had multiple independent officers, etc)
• Agenda on election of outside directors or outside corporate auditors (when a concerned outside director or outside corporate auditor does not satisfy a required attendance rate or the independence standards, etc)

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• Agenda on retirement benefits for corporate auditors, etc
• Agenda on organizational restructure
• Agenda on takeover defense, etc.

The status of the exercise of voting rights of the most important strategic shareholdings(8) will be reported to MUFG's Board of Directors.

Note:

1. Environment (E), Society (S), and Governance (G)
2. Regarding the most important strategic shareholdings, the aggregate market value held as of March 31, 2021 was approx. 3.6 trillion yen (book value: 1.2 trillion yen), covering approx. 70 percent of the total market value of the (listed) equities held by Group banks for the purpose of strategic investment.

[Principle 1.7]

Related party transactions

MUFG has established "MUFG Guidelines for Related Party Transactions" to ensure that transactions between MUFG and its related parties, such as directors and corporate executives (related party transactions), do not harm the interests of MUFG. The Guidelines provide, among other things, that transactions with related parties, such as directors and corporate executives, require the approval of the board of directors, and that when the board of directors deliberates granting such approval, the relevant director or corporate executive shall not participate in that deliberation.

The "MUFG Guidelines for Related Party Transactions" can be viewed here: (https://www.mufg.jp/english/profile/governance/report/index.html#jump01)

[Supplementary Principle 2.4.1] ■ Approach to Ensure Diversity

With the purpose above, we have positioned the three-year term of this new Medium-term Business Plan as three years of new challenges and transformation, and set the goal at the end of this three-year period to leverage our financial and digital capabilities to be the leading business partner that pioneers the futures. As the needs of society and customers change rapidly, it is increasingly important to engage in innovation that creates new services and customer experiences. Diversity is essential for generating innovation. We value individual employees with various personalities, abilities, and knowledge, and we respect their diversity. We also encourage ideas and innovative behavior that go beyond the boundaries of precedent, encourage them to constantly learn, and continue to grow. In addition, we will create a foundation where not only women, foreign nationals, and mid-career hires but also personnel with diverse individuality, abilities, and experience can thrive through the evaluation and reward based on the demonstrated abilities, which will lead to initiatives that contribute to our sustainable growth.

■ Status of Voluntary and Measurable Goals for Ensuring Diversity (1)Female employees

With the commitment of top management, MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation, and Mitsubishi UFJ Morgan Stanley Securities have set a joint numerical target of 18% for the ratio of women in line management or higher positions in Japan by March 31, 2024. Having upgraded our conventional target, this new target places greater emphasis on increasing the ratio of women in senior managerial positions. Through the pursuit of this target, we will ensure that diverse perspectives and a sense of values are reflected in decisions made by employees hierarchically closer to top management. As of April 2021, a total of 20 women, including four foreign nationals, are serving as directors or executive officers at MUFG, MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Morgan Stanley Securities or NICOS. For women in senior management positions such as branch managers and deputy general managers, we provide special training programs for selected employees while maintaining a mentoring program. In this way, we help raise women's awareness of the possibility of becoming officers and encourage the acquisition of sophisticated management skills.

(2)Overseas employees

Today, the MUFG Group has expanded into more than 50 countries around the globe, and approximately 52% of its entire workforce is accounted for by overseas employees (as of May 31, 2021). As we aim to secure and nurture professionals in a variety of fields at home and abroad, we are employing a globally unified human resources platform supporting robust processes for title management, employee evaluation, wage determination and other human resources practices that are consistent with market standards. Also, we began implementing job-level based training programs on a global basis to ensure all Group members understand the MUFG Way and embrace a shared culture. For example, we provide the Global LEAD Program targeting those in managing director or similar positions at MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities, Krungsri, MUFG Union Bank and other Group companies to help such individuals acquire essential leadership knowledge as well as necessary perspectives and in-depth expertise on global operations. Today, a growing number of individuals hired overseas have been promoted to managerial posts. For example, 13 of these individuals, including three women, have assumed executive officer positions at MUFG Bank (as of March 31, 2021). Currently, the percentage of foreign nationals in middle managerial positions is 29% (as of March 31, 2021, calculated by the number of overseas employees in the middle managerial positions divided by the total number of mangers both domestically and globally *1), and we will continue to work on ensuring diversity with the aim of maintaining or improving the current level in FY2022 and beyond.

(3)Mid-career hires

MUFG is pushing ahead with nurturing and securing genuine professionals equipped with sophisticated skills and strengths in their areas of specialty. As the expansion into new business fields requires a robust pool of employees who have specialist competencies and are ready to operate in such fields, we are also active in hiring external human resources. In fiscal 2019, MUFG, as the holding company, launched an employment framework aimed at directly hiring in-house human resources with competencies in operational fields that require highly sophisticated specialist expertise and are commonly handled by multiple Group subsidiaries ("MUFG Direct Employment System"). Under this framework, candidates are offered wages linked with external market benchmarks. There has been a progress in hiring specialists mainly in the field of governance and wealth management.

Since fiscal 2020, we also have been using this system as a framework for recruiting highly qualified outside specialists, who could not be acquired under the existing compensation system.

We are also working on mid-career hires through MUFG Direct Employment System. The percentage of mid-career hires in managerial positions is 9.9% (as of March. 31, 2021, calculated by mid-career hires in the middle managerial positions divided by the total number of domestic managerial positions*2). In FY2022 and beyond, we will continue to work on ensuring diversity with the aim of maintaining or improving the current level. Furthermore, in fiscal 2020, we decided to allow Group employees to voluntarily apply for inclusion in this framework. This

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employment framework provides yet another career path for those who aim to fully take advantage of their specialist strengths on a group-wide basis, enabling them to pursue career ambitions in a way that transcends conventional human resources practices.

■ Approach to Human Resource Development, Internal Environmental Development, and Implementation Status to Ensure Diversity

We consider diversity an essential value enabling us to maintain organizational resilience in a time of rapid change. Accordingly, MUFG has positioned "Inclusion & Diversity" as one of the 10 priority issues to be tackled via sustainability management. Thus, we are striving to develop and foster an organization and culture in which employees with diverse values, backgrounds and perceptions of work can respect and inspire each other while freely pursuing personal growth and career success.

In addition, we aim to increase employee engagement and corporate value by promoting creative and collaborative activities in which diverse opinions can be actively voiced and shared.

MUFG has positioned promoting work style reforms as one of the 10 priority issues to be addressed via sustainability management. As we aim to enable employees to realize their full potential, we have promoted the revision of administrative procedures and the streamlining of meeting practices while going paperless and developing infrastructure for remote working. By doing so, we help employees allocate more time to engaging in direct communications with customers and taking on new challenges.

Currently, a growing number of employees are opting for remote working due to the spread of the COVID-19 virus. Against this background, the number of satellite offices, which utilize vacant space in domestic branches and other facilities, that we maintain grew from seven in 2019 to 33. Looking ahead, we will support employees' free choice of flexible work styles.

Based on the assumption that remote working will gain a certain degree of popularity, we are planning to rebuild the main building of MUFG Bank and consolidate the headquarters functions of the holding company, MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation and Mitsubishi UFJ Morgan Stanley Securities at this facility. This move to construct a new MUFG headquarters building is expected to enhance our group-wide, integrated management approach and serve as a place for innovation by gathering together and enabling interaction among diverse individuals.

*1 MUFG Bank and Mitsubishi UFJ Morgan Stanley Securities cover overseas branches affiliates which are substantially treated as a branch, such as MUFG Union Bank. Mitsubishi UFJ Trust and Banking Corporation only covers overseas branches.

*2 Managers are not limited to line managers (All employees who are in managerial positions are included).

[Principle 2.6]

Roles of Corporate Pension Funds as Asset Owners

• MUFG Group banks adopts fund-type corporate pension plan. In order to fulfill its roles to be expected as the asset owner, the pension fund declares adherence to the "Principles for Responsible Institutional Investors" (Japan's Stewardship Code).
  MUFG Bank Pension Fund (Japanese only) http://www.mufg-kikin.or.jp/stewardshipcode/index.html
  Mitsubishi UFJ Trust and Banking Corporation Pension Fund (Japanese only) https://www.mutb-kikin.jp/stewardship_code/stewardship_code.html
• Upon managing the pension fund, staffs with expertise in asset management are allocated at the secretariat. In addition, a framework has been established to realize stable asset building for the participants in the corporate pension plan and appropriate management of financial administration of pension. For instance, in Asset Management Committee, consisting of the members who are well versed in the fields of human resources, finance, risk and market trading, deliberations are made on asset allocation and management style for portfolios, as well as on composition of pension fund managers.

[Principle 3.1 i)]

"MUFG Way" and medium-term business plan

MUFG has formulated and announced "MUFG Way" and medium-term business plan.

• "MUFG Way"(www.mufg.jp/english/profile/philosophy/)
• Medium-termbusiness plan(www.mufg.jp/english/profile/strategy/)

[Principle 3.1 ii)]

Basic approach and key policies for corporate governance

See "2. Approach to corporate governance" ("2-1. Basic approach", "2-2. Role as a holding company", "2-3. MUFG's governance structure") of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for our basic approach to, and key policies of, corporate governance.

[Principle 3.1 iii)]

Policies and procedures for determining compensation

See "7-3. Compensation Committee" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for the policies and procedures for determining the compensation of directors.

[Principle 3.1 iv)]

Policies and procedures for elect dismissal directors

See "7-2. Nominating and Governance Committee" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for the policies and procedures for elect dismissal of senior management and nomination of directors.

[Principle 3.1 v)]

Grounds for elect dismissal of senior management and nomination of director candidates

For explanation on elect dismissal and nomination of individual senior management and director candidates based on iv) see "7-2. Nominating and Governance Committee" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) and here:

(https://www.mufg.jp/english/profile/governance/report/index.html#jump02)

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[Supplementary Principle 3.1.3]

MUFG discloses its sustainability initiatives in its Integrated Report

・Integrated Report (https://www.mufg.jp/english/ir/report/annual_report/index.html)

MUFG supports the recommendations on climate-related financial disclosures formulated by the Task Force on Climate-related Financial Disclosures (TCFD). In line with these recommendations, we are disclosing information on climate change-related risks and opportunities in our Governance, Strategy, Risk Management, and Metrics and Targets. Details of our disclosures based on the TCFD recommendations can be found on pages 79-82 of our Integrated Report (MUFG Report 2021). The relevant initiatives are overseen by the board of directors.

To develop human resources that embody the "MUFG Way", MUFG offers a variety of human resource development programs, including those in digital and global fields, as well as systems and training to promote the success of diverse human resources, and career challenge programs that support the growth and challenge of each employee.

MUFG is also working to enhance engagement with employees through initiatives such as townhall meetings by top management members and promotion of the "MUFG Way".

In the area of intellectual capital, MUFG is working on open innovation aimed at creating new businesses by utilizing the technologies and knowledge of startups through investment and other activities. In addition, we aim to establish our standing as a financial and digital platform operator by broadly providing a new model of financial services in collaboration with external businesses with large numbers of customer contact points. In addition, we are using digital technologies to reduce the volume of operations and to use intellectual capital in growth areas.

[Supplementary Principle 4.1.1]

Summary of scope of delegation to management

See "3-1. Role of the Board of Directors" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for a summary of the scope of delegation to management.

[Principle 4.8]

Effective Use of Independent Directors

See "5-1. Composition" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for the policy to have independent outside directors compose a majority of the board in principle.

[Principle 4.9]

Independence standards of outside directors

See 2.1 of this report ("Independent directors") for independence standards of MUFG aimed at securing the independence of independent outside directors.

[Supplementary Principle 4.11.1]

View on the balance of knowledge, experience and skills, and diversity and size, of the board of directors as a whole

The Board of Directors of MUFG decides key management policies and is responsible for management oversight. In order for the Board of Directors to appropriately fulfill its role, it is necessary to have an appropriately balanced composition as a whole with diverse knowledge and expertise related to finance, financial accounting, risk management, compliance and so forth as well as diversity, in addition to deep knowledge of MUFG Group's business. Specifically, it is as follows.

・Independent outside directors shall have a wealth of knowledge and experience in the fields of corporate management, finance, financial accounting and law and the qualities required for oversight of the execution of duties by management from an independent and objective standpoint.

・Executive directors shall have extensive knowledge of MUFG Group's business and the ability to appropriately perform management of MUFG Group.

・In addition, the Board of Directors as a whole has directors who have the experience in "global" fields in view of the MUFG's business development and "IT and digital" and "sustainability" to lead the resolution of social issues such as the digital shift and climate change.

Directors ExecutiveDirectors Outside

Current Directors

Mariko Fujii

Keiko Honda

Kaoru Kato

Satoko Kuwabara

Toby S. Myerson

Hirofumi Nomoto

Yasushi Shingai

Koichi Tsuji

Tarisa Watanagase

Ritsuo Ogura

Kenichi Miyanaga

Kanetsugu Mike

Saburo Araki

Iwao Nagashima

Junichi Hanzawa

Hironori Kamezawa

Knowledge , expertise and experience

Corporate	Finance		Financial	Law	Global	IT/Digital	Sustain
MGT		accounting	ability
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Internal directors	shall have extensive	●
●	●	●
knowledge of MUFG Group's business
		●
and the ability to appropriately perform
●		●
management of MUFG Group.
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See "5-1. Composition" and "5-2. Election of Directors" of MUFG Corporate Governance Policies (https://www.mufg.jp/english/profile/governance/policy/) for policies and procedures for election of directors outlining MUFG's view on the balance of knowledge, experience and skills, and the diversity and size, of the board of directors as a whole.

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